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With so many credit cards to choose from, how do you know if you’re getting the best deal on your rewards card – especially a credit card promising cash-back benefits?
There’s no single card that’s right for everyone, but there are some ways you can get the biggest bang for your buck with a cash-back card that’s right for your specific circumstances.
Here are three questions you should ask and answer, along with tips to know if your cash-back credit card is competitive in today’s environment. After these tips, I’ll also suggest my picks for five cash-back credit cards that outshine the competition.
1: Have you shopped around for a better credit card deal within the last year?
Interest rates continue to fluctuate, and that means many banks, credit unions and other credit card issuers could use competitive rate offers to attract new customers – and keep existing clients. Credit cards with an intro 0% APR period are particularly enticing.
But that’s not all.
Banks are also dangling juicy cash-back rewards and special cash sign-up bonuses to win over new customers.
So, if you last got a credit card more than a year ago, chances are you’re not only paying a higher rate than you should – you’re probably also not getting the biggest and best cash incentives now being offered.
2: Is it easy or realistic for you to earn cash rewards?
You don’t want a cash-back card that makes you jump through a ridiculous number of hoops just to sign up for or qualify for the cash reward. So, my recommendation is to stay away from cards that:
- Require way too much time and effort to get your cash back.
- Impose excessive spending requirements, or …
- …only give cash back based on random, unrealistic categories for which you’re not likely to have normal or recurring charges.
Focus instead on cash-back credit cards that give you rewards, money or statement credits based on spending that you already do and have frequently done in the past. That’s the best way to ensure that a cash-back card will truly pay off for you.
3: Have you received a cash-back sign-up bonus or other cash incentive lately from your credit card issuer just for becoming or continuing as a customer?
Banks and other financial service firms often devote most of their marketing efforts to customer acquisition. That’s just one reason it pays to shop around and be aware of the latest credit card offers.
It doesn’t mean, however, that you can’t be loyal to a particular credit card or bank – especially if it continues to reward you for your ongoing business.
But loyalty is a two-way street, and we’ve all heard the expression: “What have you done for me lately?” If you feel that way about the plastic in your wallet, or the company that issued it, now is a good time to search for a better credit card offer.
In summary: If you can’t answer “Yes” to each of the three questions above, you can likely benefit from getting a new cash-back credit card.
My top cash-back credit card recommendations
Now that you know the questions and factors that should guide your decision-making, let’s look at some of the best cash-back cards available today.
Depending on your needs and spending patterns, any of the following five cash-back credit cards is well worth carrying in your wallet. If you’re an average spender, they can all easily net you $300 to $500 each year. Big spenders can earn a lot more.
CardName
Why I like this card: It offers everyone the best opportunity for the maximum cash back.
Explanation: Some cash-back cards are geared mainly toward business travelers and those who fly a lot. But you don’t have to be a frequent flyer to take full advantage of this card’s perks because it has a generous, industry-leading cash-back offer in a category that everyone spends money on – food.
With the CardName discontinued you get a whopping 6% cash back on up to $6,000 in purchases at U.S. supermarkets annually (then 1%). We all have to eat, right? In fact, the average U.S. household with a family of four spends roughly $9,600 a year, or about $800 a month, on groceries.
So, by using this card each time you hit a U.S. supermarket, you’ll earn cold, hard cash just for doing spending you were going to do anyway.
Reach the $6,000 spending cap on U.S. supermarket purchases alone, and as a cardholder, you’ll be rewarded with a cool $360. Your cash award comes in the form of a statement credit.
You also earn a healthy 3% cash back at U.S. gas stations and on transit purchases, as well as 6% on select U.S. streaming subscriptions. All other spending – including your U.S. supermarket purchases in excess of $6,000 – nets you 1% cash back.
CardName
Why I like this card: It’s a great cash-back option for those who sometimes carry a balance on their credit cards.
Explanation: If you’re going to use a cash-back card, it’s always best to pay your credit card bill in full each month. That’s because cash-back cards generally have higher interest rates than do standard credit cards that don’t offer rewards. And you don’t want to pay unnecessary finance charges – those will quickly eat up any rewards you may earn.
But the truth is that not everyone can pay their total credit card charges every single month. According to data from the Federal Reserve Bank of New York, household debt rose to $17.29 trillion in the third quarter of 2023, with credit card balances accounting for $1.08 trillion of that. If you’re carrying credit card debt, don’t beat yourself up; you can still benefit from a good rewards card, like the CardName.
It gives you 1% upfront cash on all your purchases, and then another 1% when you pay your bill, in full and on time. So if you pay in full each month, you’ll immediately accrue a full 2% cash back on your spending. For those times when you may need to carry a balance, however, you’ll still get some initial cash rewards. It’s just that the additional cash back you can earn will be awarded to you after you’ve paid off your charges.
CardName
Why I like this card: Its versatility makes it a breeze to quickly and easily get a variety of big cash payouts.
Explanation: The welcome bonus for CardName is easy to earn and has the potential to be very generous. Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year) — worth up to $300 cash back. That’s 6.5% on travel purchased through Chase Travel℠, 4.5% on dining and drugstores, and 3% on all other purchases! After your first year or $20,000 spent, enjoy 5% cash back on Chase travel; 3% cash back on drugstore purchases and dining; and unlimited 1.5% cash back on all other purchases.
Additionally, you earn a flat 1.5% on all purchases outside of the bonus categories, and Chase offers something truly unique: four different ways to redeem your cash award. You can receive a check in the mail, get a statement credit, use your cash earned toward travel that you book through Chase, or transfer your cash reward to other Chase cards, potentially making your redemption more valuable. All Chase reward credit cards run on the same reward machine, Chase Travel, so it makes all of these redemption options possible – and simple – to enjoy.
Since Chase cards require good to excellent credit, the bank tends to attract high-spenders with very good incomes. Many of these consumers routinely charge nearly everything on their cards in order to maximize the value of their cash rewards. Then they pay the balance off in full each month.
As you can see, there’s a lot of reward potential with this card. It’s that kind of return that makes this card so hugely popular with a lot of consumers.
CardName
Why I like this card: It powers your cash back with financial perks from your preferred warehouse store.
Explanation: If you shop at Costco Wholesale, as my husband and I have often done, you’re probably used to scoring nice deals on everything from fresh produce and family-sized packages of meat to household supplies, toiletries and condiments sold in bulk.
You probably also know that even what is supposed to be a “quick run” to Costco can wind up with you leaving the store pushing a huge shopping cart full of goods.
Thankfully, the CardName makes your Costco shopping excursions – and all your other routine spending – a lot easier on your wallet.
This card not only gives you 4% on eligible gas and EVC purchases for the first $7,000 per year (then 1%), and 3% on eligible travel and dining, but you also get 2% cash back on your Costco purchases. All other purchases earn you 1% cash back. This cash-back deal is a no-brainer – especially if you’re no stranger to spending a Saturday afternoon walking the aisles of Costco.
CardName
Why I like this card: Cardholders have the power here with the ability to choose which category they earn bonus cash-back rewards in.
Explanation: This card is an excellent choice for anyone to consider because you get cash back for everyday purchases, including grocery stores and wholesale clubs. What’s really great, however, is that you can also earn rewards in a category of your choice. Cardholders earn 3% cash back in one of the following categories: gas/EVC stations, online shopping (including cable, steaming, internet and phone services), travel, dining, drug stores, and home improvement/furnishings. You can choose which category depending on where you spend the most money.
Additionally, cardholders can earn 2% at grocery stores and wholesale clubs (up to $2,500 in combined choice category/grocery store/wholesale club quarterly purchases) and 1% on all other purchases.
And finally, for the cherry on top, if you’re a Bank of America Premier Rewards member you can earn 25%-75% more cash back on every purchase made. That means the 3% choice category rewards could be worth as much as 5.25% and the 2% categories worth as much as 3.5% back!
➤ SEE MORE:Best credit cards for cash back of April 2024
Drawbacks to consider
In case you’re wondering, cash-back credit cards do have a few disadvantages of which you should be aware.
One downside is that while certain cards can boast a higher rewards rate – sometimes as much as 5-6% of your spending – you’d be hard-pressed to find an across-the-board cash-back card offering unlimited cash back at those levels. Instead, you’ll have to use your card for specific spending categories or with rotating categories.
Additionally, cash-back credit cards can sometimes impose limits on the amount of cash you can earn in a given time period, so, that’s something to keep in mind when calculating your potential cash reward in any given year.
Still, the vast majority of cardholders ultimately find that the main attraction of a cash-back card – the opportunity to put big bucks back into your wallet – far outweighs any drawbacks.
CardName (See Rates and Fees)
