Alliant Visa Signature Credit Card Offers 3% Cash Back First Year, 2.5% Thereafter

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There’s a new 2.5% cash back credit card on the block that comes with 3% cash back on all purchases the first year.

The “Alliant Visa Signature Credit Card” from the Alliant Credit Union is currently available for “select Alliant members,” but will be available to “all” come April.

It’s only the second credit card to offer 2.5% on all purchases, all year long, joining the other newcomer in this space, USAA Limitless Visa.

What makes it a slightly sweeter deal, at least in year one, is the 3% cash back rate. After 12 months, it drops to 2.5% cash back, which matches the generous rate on the Limitless Visa.

Both cards beat out Chase Freedom Unlimited and Capital One Quicksilver by a full percentage point, and beat out Citi Double Cash by half a percent.

There is one other card that offers 3% cash back on all purchases during year one, that being the Discover it Miles card. However, after those 12 months are up it drops down to a cash back rate of 1.5%.

Meanwhile, the Alliant Visa Signature Credit Card holds strong at 2.5% cash back for perpetuity.

There Is One Little String…

There’s one teeny-weeny little string though. This card has an annual fee of $59, which is waived the first year.

In other words, it’s not really 2.5% cash back, is it? Instead, it’s some other to-be-determined rate based on how much money you spend on the card each year.

Put simply, the more you spend, the higher the cash back rate, and vice versa.

Let’s look at a few examples to determine what your effective cash back rate could be after year one, when the rate falls to 2.5%:

$1,000 spending per month: 2.01%
$2,000 spending per month: 2.25%
$2,500 spending per month: 2.30%
$5,000 spending per month: 2.40%
$7,500 spending per month: 2.43%
$10,000 spending per month: 2.45%
$20,000 spending per month: 2.48%

Is the Alliant Visa Signature Credit Card a Good Deal?

As you can see, many cardholders wouldn’t actually earn anything close to the 2.5% cash back rate once the $59 annual fee was figured in. For those spending just $1,000 a month on the card, the cash back rate would be very close to 2%.

At $2,000 a month, it jumps up to 2.25%, and then we see some diminishing returns as we get higher and higher.

The long and the short of it is that you won’t actually earn 2.5% cash back with this card if you factor in the annual fee. And if you don’t spend more than $1,000 a month, you might be better off going with a 2% cash back credit card instead.

If Alliant ditched the annual fee altogether it’d be in a league of its own (or in a league of two with USAA), but that $59 fee really hits your cash back rate because it takes $2,360 in annual spending just to offset it at a rate of 2.5% cash back.

You could call it a sneaky marketing tactic, but it’s really just basic math.

In summary, if you’re able to apply for the USAA credit card instead, it’ll be the better deal, though it does come with the direct deposit requirement, which is another potential gotcha.

Author: Colin Robertson

Colin created this blog after spending several years in a job that required him to scour credit reports on a daily basis. His goal is to help individuals better understand their credit and get the most out of credit cards.

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