Cash-back credit cards can be worthwhile tools to have in your financial workshop. They offer cardholders the chance to earn rewards on everyday purchases and, in some cases, even offer bonus cash back in specific categories.
The key with these cards, as with any credit card, is to ensure that you’re using them smartly and that you’ve selected a card that aligns with your spending habits, financial goals and credit history.
Before jumping into a credit card application, take some time to understand the three types of cash-back credit cards.
The average American credit card holder has four credit cards in his/her wallet, and there are literally hundreds of options out there. If you’re looking to add a cash-back credit card to your portfolio, we can help. We can even give you some ways in which to use more than one cash-back credit card to maximize your rewards.
We reviewed several of our favorite cash-back credit cards, taking a look at their reward structures, credit score needed, best features, potential drawbacks and more. Still have questions? Reach us at firstname.lastname@example.org.
Why We Like It: Flat-rate cash-back rewards cards are great for the "I just want to earn but don't want to think about it" crowd." This particular card also happens to be good for the person who wants to think that while traveling abroad as it doesn't charge foreign transaction fees.
Bonus: Jump start your cash back with a $150 bonus after spending just $500 in the first three months of card membership.
Annual Fee: $0
Rewards Rate: Earn 1.5 percent cash back on all your purchases without worrying about categories or spending caps. Plus, if you're looking for a 0 percent intro, this card has you covered with nine months no interest on purchases and balance transfers (then, 14.24% - 24.24% (Variable))
Why We Like It: We love the cash-rich features on this card, especially for people who enjoy the thrill (and rewards) of tracking rotating categories.
Bonus: Discover will MATCH all the cash back new cardholders earn during the first year of card membership.
Annual Fee: $0
Rewards Rate: Earn 5 percent back on the first $1,500 spent in categories that rotate quarterly.The 2018 bonus categories calendar features the following: January-March 2018: gas stations and wholesale clubs; April-June 2018: grocery stores; July-September 2018: Restaurants; October-December 2018: Amazon.com and wholesale clubs. Earn 1 percent back on all your other purchases and on any purchases over the cap in the bonus categories.
Why We Like It: Get the most out of 5 percent cash back in multiple categories. The categories rotate quarterly, but being strategic with your spending can mean big bucks. Plus Chase Ultimate Rewards® points are highly useful.
Bonus: Earn a $150 bonus after you spend $500 in the first three months.
Annual Fee: $0
Rewards Rate: Earn 5 percent back on up to $1,500 in purchases in quarterly bonus categories when you sign up (then 1 percent). Earn 1 percent on all your other purchases. From Jan. 1-March 31, 2018, the bonus categories are gas stations; internet/cable/phone services; and Chase Pay®, Apply Pay®, Android Pay™ and Samsung Pay purchases.
Why We Like It: With a simple earning structure that allows you to earn more than the typical flat-rate card, this is a winner. (Citi is a CardRatings advertiser)
Bonus: There's not a traditional bonus, per se, but this card does offer you 18 months of no interest on balance transfers (then, 14.74% - 24.74%* (Variable)), which could be "bonus" enough if you're paying hefty interest charges on a balance you're carrying on another card.
Annual Fee: $0*
Rewards Rate: You'll earn 1 percent back when you make your purchase and another 1 percent back when you pay your bill.
Why We Like It: Sure we love a good intro bonus offer, but we really love a card that has a solid intro bonus AND offers a bonus opportunity each year of card membership.
Bonus: Get started with a $150 bonus after you spend $500 in the first three months of card membership. Then, each year after your account anniversary, you'll receive a loyalty bonus of 10 percent of the rewards you earned during the previous year.
Annual Fee: $0
Rewards Rate: Earn 1.5 percent on each $1 spent. There are no caps or categories to think about. At the end of each year, your loyalty will be rewarded with a 10 percent bonus on all the rewards you've earned.
Why We Like It: Another flat-rate cash-back option, but this one offers the added perk of cell phone protection that covers you for covered damage and theft to your phone when you pay your cellular bill with your card. Additionally, you can redeem your cash rewards directly from a Wells Fargo ATM.
Bonus: Earn a $200 bonus after you spend $1,000 in the first three months. Plus, earn 1.8 percent cash back when you use your Android Pay™ or Apple Pay™ mobile wallet during the first 12 months.
Annual Fee: $0
Rewards Rate: Earn an unlimited 1.5 percent back on all your purchases.
Why We Like It: This card rewards you handsomely for living your everyday life – groceries, gas and select department stores all earn bonus cash back. (American Express is a CardRatings advertiser)
Bonus: Earn a $200 statement credit after you spend $1,000 within the first three months.
Annual Fee: $95. Terms apply. See Rates and Fees
Rewards Rate: Earn 6 percent back on up to $6,000 in purchases at U.S. supermarkets annually; earn 3 percent back at U.S. gas stations and select U.S. department stores; earn 1 percent back on all other purchases.
Editor's Tip: If you like the sound of the categories, but can't justify the annual fee, consider the "lite" version of this card, the Blue Cash Everyday® Card from American Express. You'll earn a bit less (3 percent on the first $6,000 spent annually at U.S. supermarkets, then 1 percent; 2 percent at U.S. gas stations and select U.S. department stores; and 1 percent on all your other purchases) but you won't pay any annual fee.
Why We Like It: The convenience of a flat-rate rewards card along with the flexibility and value of Ultimate Rewards® points goes a long way in our book.
Bonus: Earn a $150 cash-back bonus after you spend just $500 in the first three months. Plus, take advantage of 15 months no interest on purchases and balance transfers (balance transfer fee applies). After the intro period, the rate jumps to 16.24% - 24.99% Variable.
Annual Fee: $0
Rewards Rate: Earn a flat 1.5 percent back on all your purchases.
Jumping into the cash-back credit card world requires that you ask a few questions before you begin applying for a card.
You've followed our advice and narrowed the field down to your perfect card. Congratulations! Here's more expert advice to keep in mind as you use your card and rack up cash back.
When your circumstances change - and they likely will – your card needs will likely change . Periodically review your spending situation and make sure your cards are working for you. Don’t be afraid to break up with your card if things aren't working out.
It sounds simple, but different cards maximize different things. Be aware before you swipe and always use the best card for the situation; don't just grab Old Trusty because it's handy.
When it comes to card rewards, is it better to focus on cash or miles?
A lot of that depends on your lifestyle and goals but in order to make an apples-to-apples decision, the trick is to come up with the dollar equivalent of a mile or point then think about your use cases.
Say someone flies on United twice a month. The earning potential of getting a United Airlines branded credit card, or another points card, might allow the miles to accrue so fast that realizing rewards is a snap.
Contrast that with someone else who doesn’t fly or stay in hotels often. In this case, a cash-back program is the better and quicker path to getting the cash to spend on a flight or hotel stay – and allow you to spend that cash back on other things as well.
This really goes back to what we discussed earlier in the “Questions to ask” section. Know your goals and your spending habits before making a credit card decision.
You are the best person to accurately assess which credit card will fit seamlessly into your lifestyle. Don’t be wooed by introductory offers from cards you know won’t ultimately be the best fit. Don’t fall into the “I’ll change my spending habits to make this card work because that intro offer is just too good to pass up” trap. Chances are, you’ll just end up carrying around the wrong credit card and not reaping maximum rewards.
Instead, do your research and take the time to know what you need. When it comes to credit cards, “To thine own self be true.”
Disclaimer: The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we cannot guarantee the accuracy of the information in this article. Reasonable efforts are made to maintain accurate information. See the online credit card application for full terms and conditions on offers and rewards. Please verify all terms and conditions of any credit card prior to applying.
This content is not provided by any company mentioned in this article. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any such company. CardRatings.com does not review every company or every offer available on the market.