Best Cash Back Credit Cards
When it comes to reward credit cards, most of your choices are between travel rewards and cash back. Travel rewards can be fun and exciting, but they can also be hard to redeem and have unpredictable value. That’s why many credit card users still prefer the simplicity and solid value offered by cash back reward credit cards.
What the Market for Cash Back Credit Cards Looks Like
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Just as with other types of credit cards, the market for cash back cards is extremely competitive. Credit card issuers are constantly looking to acquire new customers using their cash back cards, while they struggle to retain existing cardholders in the face of new competing products.
Cash back credit cards come in two basic varieties. First, there are the simple cards that offer a single rate of return on all purchases. Long ago, the standard was 1% cash back, but now 1.5% is the minimum that you should expect, and there are some cards that can offer you 2% or more.
More common are the cards that offer you a bonus of 2% to up to 6% on select types of purchases, and then 1% cash back elsewhere. These cards are a very popular way to earn bonus rewards, so long as you realize that you’ll be getting a less competitive rate of return on your purchases that don’t qualify for a bonus.
Another factor that differentiates cash back reward cards are the fees. Most cash back reward cards have no annual fee, but some of the cards that offer the highest rates of return have a significant annual fee associate with them. With these cards, you have to consider the cost of the annual fee with the amount of rewards that you can earn from the card against the amount of rewards you can earn with a similar card that has no annual fee.
Another fee to look out for is the foreign transaction fee. These are fees often imposed by card issuers on all charges processed outside of the United States. Many credit cards now have no foreign transaction fees, but those that still do typically add 3% to your foreign purchases. This unnecessary fee can easily exceed the amount of cash back you earn, so you should always carry a card without this fee when you travel outside the United States or when you make a purchase that may be processed in another country. Also, most credit cards have late fees, but there are a few that don’t, or that offer a waiver of your first late payment fee.
You may also want to consider a cash back credit card’s sign-up bonus, which can be very valuable. Many cash back cards offer new applicants $100 to $200 in cash back after meeting a minimum spending requirement within a specified period of time, typically three months.
Finally, you may wish to consider the card’s standard interest rate if you plan on carrying a balance. Like other reward credit cards, cash back cards will always have higher standard interest rates than other credit cards that don’t offer rewards. You should use a non-reward card when you need to carry a balance, as the higher standard interest rates on rewards cards will negate most if not all of the value of the rewards that you earned. However, many cash back reward credit cards will include introductory promotional financing offers for new purchases, balance transfers, or both.
The Best Cash Back Credit Cards
Cards that offer you the same rewards for all purchases
Citi® Double Cash Card
The Citi® Double Cash Card from Citi, a Credit Cards House advertiser, set a new standard by offing you as much as 2% cash back everywhere, with no limitations on how much cash back you can earn. However, it has a slightly different rewards program that offers you the cash back in two stages. With the Double Cash card, you earn 1% cash back at the time of purchase, and another 1% when you pay for your charges, for a total of up to 2% cash back everywhere.
This card also offers new accounts 18 months of 0% APR financing on balance transfers, with a 3% balance transfer fee. Afterwards, the standard interest rate is 18.49% - 28.49% based on your creditworthiness when you applied. There’s no annual fee for this card, but it does have a 3% foreign transaction fee.
Alliant Cashback Visa® Signature Credit Card
This card offers exceptional rates of cash back on all purchases, albeit with an annual fee. You earn 3% cash back during your account’s first year, and 2.5% cash back after that. These rates apply to all purchases and there’s no limit. In fact, Alliant markets this card to those who will use it to spend over $50,000 in a year. It has a $59 annual fee that’s waived the first year, and no foreign transaction fees.
Capital One® Spark® Cash for Business
If you are looking for a small business credit card that offers you cash back, this card is far ahead of its competitors. The Capital One® Spark® Cash for Business small business card offers you 2% cash back on all purchases, with no limits. New cardholders can also earn $500 in cash back after using their card to spend $4,500 within three months of account opening, one of the best cash back sign-up bonuses offered anywhere. Other benefits include free employee cards as well as quarterly and annual spending reports. Your purchases are also covered by a damage and theft protection policies that covers them for their first 90 days, and extended warranty that can add one year to your manufacturer’s warranty.
As part of the Visa Signature program, the Capital One Spark Cash also offers a range of travel and shopping benefits and discounts. The standard interest rate for this card is 20.99% APR. There’s a $95 annual fee for this card that’s waived the first year, and as with all Capital One cards, there are never any foreign transaction fees.
Cards that offer you bonus cash back on some purchases
The Costco Anywhere Visa® Card by Citi
This warehouse store is known for its great prices and its co-branded Costco Anywhere Visa® Card by Citi, a Credit Cards House advertiser, offers strong bonus rates of cash back. You earn 4% cash back on up to $7,000 a year in eligible gas purchases worldwide, including those at Costco stores. You also earn 3% cash back on restaurant and eligible travel purchases worldwide, and 2% cash back at Costco stores and from Costco.com. Finally, you earn 1% cash back on all other purchases.
Shopping benefits include damage and theft protection and extended warranty coverage. And when traveling, you’re covered by trip cancellation and trip interruption protection. The standard interest rate is 19.74%. There’s no annual fee for this card with your paid Costco membership, and no foreign transaction fees.
Blue Cash Preferred® Card from American Express
The Blue Cash Preferred® Card from American Express, a Credit Card Explained advertiser, offers unrivaled bonus cash back at U.S. supermarkets, as well as strong rewards at U.S. gas stations and select department stores. With this card, you earn 6% cash back on up to $6,000 in annual spending at U.S. supermarkets and unlimited 3% cash back at U.S. gas stations and at select U.S. department stores. You can also earn unlimited 1% cash back on all other purchases. Benefits include extended warranty coverage, damage and theft protection and return protection policies.
New accounts can earn a $200 statement credit after spending $1,000 within three months of account opening. New cardholders also receive 12 months of 0% introductory APR on both new purchases and balance transfers, with a 3% balance transfer fee. The standard interest rate for this card is 18.49% - 29.49%, based on your creditworthiness. There’s a $95 annual fee for this card and a 2.7% foreign transaction fee.
This cash back rewards card features 5% cash back bonus categories that change every quarter, and 1% cash back on all other purchases. You can earn 5% cash back on up to $1,500 spent each quarter at featured stores and merchant categories, and 1% cash back on all other charges. For instance, in the fourth quarter of 2018, the qualifying purchases are at department stores, wholesale clubs, and charges made via Chase Pay. To receive these bonuses, you have to login to your account and activate your bonus spend categories during the quarter.
New cardholders can earn $150 in bonus cash back after making $500 in purchases within three months of account opening. New accounts also receive 15 months of 0% APR financing on both new purchases and balance transfers, with a 5% balance transfer fee. Afterwards, the standard interest rate will be 17.24% – 25.99% APR, based on your creditworthiness. There’s no annual fee for this card, but there is a 3% foreign transaction fee.
US Bank Cash+ Visa Signature Card
This card features a flexible rewards formula that lets you choose the spending categories that you want to earn a bonus on. You earn 5% cash back on your first $2,000 in combined eligible net purchases each quarter on two categories you choose, such as clothing stores or cell phone service. You also earn 2% cash back on one everyday category, such as gas or groceries, and 1% cash back on all other purchases. New accounts can earn $150 in bonus cash back after spending $500 within 90 days of account opening. The standard interest rate for this card is 15.24% to 24.24% based on your creditworthiness when you open your account. There’s no annual fee for this card, but there is a 3% foreign transaction fee.
Bank of America® Cash Rewards Credit Card
This large national retail bank has a strong bonus cash back offer and a chance for its checking and savings account holders to earn even more. With the Bank of America® Cash Rewards Credit Card, you can earn 1% cash back on every purchase, 2% at grocery stores and wholesale clubs and 3% on gas for the first $2,500 in combined grocery/wholesale club/gas purchases each quarter. If you are a Bank of America customer with a qualifying checking or savings account, then you’ll receive a 10% customer bonus each time you redeem your cash back.
New cardholders can also earn a $200 bonus after making at least $500 in purchases within 90 days of account opening. New accounts also receive 12 billing cycles of 0% APR financing on both new purchases and balance transfers completed within 60 days of account opening, with a 3% balance transfer fee. The standard interest rate for this card is 13.99% - 23.99% APR. There’s no annual fee for this card, but it does have a 3% foreign transaction fee.
SimplyCash® Plus Business Credit Card from American Express
The SimplyCash® Plus Business Credit Card from American Express, a Credit Cards House advertiser, offers generous bonuses for frequent business purchases. It features 5% cash back at U.S. office supply stores and on wireless telephone services purchased directly from U.S. service providers. You also get 3% cash back on purchases from your choice of categories including U.S. gas stations, restaurants, airfare, and hotel rooms. 5% and 3% rewards apply to your first $50,000 of purchases per calendar year, and all other purchases earn 1% cash back.
New cardholders also receive 15 months of 0% APR financing on both new purchases. Afterwards, the standard interest rate will be 14.49% - 21.49% APR. There’s no annual fee for this card, but it also has a 2.7% foreign transaction fees.
The market for cash back credit cards is as broad as it is competitive. Some cash back credit cards are offering exceptional bonuses on some purchases, while others are featuring strong rewards on everything you buy. By taking a look at how you use your credit cards, and what features are most important to you, you can find the best cash back credit card for your needs.
Frequently Asked Questions
How do you choose a cash back card?
You have to decide between a card that offers you the same rate of cash back on all purchases and one that features bonus levels of cash back for some purchases, and just 1% cash back on everything else. People who don’t want to have to think about bonus categories are generally more satisfied with the cash back cards that offer the same rate of return everywhere, while others really like getting a bonus on their most common purchases.
Another strategy that some people prefer is to have one or more cards that offer bonuses for certain purchases, while using another card for non-bonus spending. This strategy will maximize the cash back rewards that you earn, but it will also mean that you will have additional credit cards to manage each month. You’ll also need to decide which card to use every time you make a purchase.
Will your credit suffer when you use a cash back rewards card?
There are several myths surround the use of reward credit cards, especially cash back cards. Some people believe that the credit card issuers only want customers who carry a balance, and your credit will suffer when you avoid interest charges by paying your balance in full. In fact, credit card issuers will profit from these users, as they still earn merchant fees that total as much as 3% of each transaction. Furthermore, those who consistently pay their balance in full represent a very low risk of default.
Others feel that their credit will suffer when they apply for a new credit card, making the sign-up bonuses too good to be true. Actually, signing up for a single credit card will have very little effect on your credit score, so long as you manage it responsibly. This means that you should carry very little debt and always make your payments on-time. When you manage your new credit card responsibly, it will add to your credit history and help to improve your credit score, regardless of whether it’s cash back card, another type of a rewards card, or a card that earns no rewards.
Should you to pay an annual fee to earn cash back rewards?
There are many cash back reward credit cards that don’t have an annual fee, so you certainly don’t have to pay one. Some of the cards that have no annual fee also offer competitive rewards on all purchases or on bonus categories of spending.
However, there are a few cards that offer extremely high levels of rewards that can justify the annual fee. For example, the Alliant Cashback Visa® Signature Credit Card offers an extremely high 3% cash back on all purchases during your account’s first year, and 2.5% cash back afterwards. It does have a $59 annual fee that’s waived the first year, but the rewards will be worth it for most cardholders. Likewise, the American Express Blue Cash Preferred offers an excellent 6% cash back on up to $6,000 spent each year at US supermarkets. This cash back alone is worth up to $360 a year, far beyond the $95 annual fee.
Are cash back rewards better than travel rewards?
There are many award travel enthusiasts who swear by their credit cards that earn airline miles and hotel points. These loyalty programs can be very complicated, but when you really understand them, then it’s possible to earn premium class international flight awards and free nights in luxury hotels. When you compare the retail price of these awards with the amount of cash back you could have earned, then you might conclude that the travel rewards cards are more valuable.
However, this depends on how you value these luxury awards. Very few award travelers are actually saving the money they would have actually spent on a business class flight or a luxury hotel stay. Instead, they are simply accepting the retail cost of these flights as savings (which they technically are not). And if these award travel enthusiasts were to substitute the points and miles they would have earned for cash back, then they would find that there was a tremendous opportunity cost associated with their “free” travel awards.
For everyone else, the opportunity to earn cash back makes them immune from hazards of finding value in the complex and unpredictable airline and hotel loyalty programs. For example, these programs can and will suddenly change their terms, instantly devaluing the rewards that you’ve earned. To many, this feels like they’ve proverbially “moved the goalposts.” But with cash back, a dollar will always equal a dollar, and it is rare that you could lose the value of the rewards that you’ve already earned.
Insider tips to earning cash back rewards
Don’t feel like you have to be loyal to your credit card.
When you use a cash back card instead of an airline or hotel card, you are opting out of these traditional loyalty programs and declaring yourself a free agent. As the credit card industry evolves and new products are released, there’s no reason why you can’t switch to a new card that offers you the most possible return on your spending.
Likewise, there’s no reason why you have to make all your purchases on a single card. Many savvy credit card users have multiple cards, and they always use the card that will offer them the greatest rewards for a particular purchase. To keep all of these rewards programs straight, all you have to do is put a small piece of tape on the top of each card and label it with the bonuses you’ll get with that card. As long as you are comfortable managing multiple credit card accounts, then you shouldn’t have an issue.
Make the most of your bonus categories.
When you have the chance to earn exceptional bonus cash back from purchases at certain kinds of stores, then you should think carefully about everything that you can buy there. For example, a card that offers you bonus rewards at grocery stores allows you to earn extra cash back not just on groceries, but possibly on gifts, pharmaceuticals, event tickets, and anything else that’s sold at the local supermarket. Likewise, most cash back reward credit cards that offer bonuses at restaurants will also give you the extra cash back for purchases of fast food and takeout.
Watch out for spending limits.
Many of the best cash back reward credit card offers include limits on the amount of spending that qualifies for the cash back. There could be a certain amount of eligible spending each quarter, or an annual limit on how much will qualify for the bonus. To keep track of how close you are to a particular spending limit, be sure to login to your account regularly.
Editorial Note: The information related to Chase Freedom® Card has been collected by Credit Cards House and has not been reviewed or provided by the issuer of this card.
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Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.