How to choose a cash back credit card

Written by
Jennifer Doss
Terms apply; see the online credit card application for full terms and conditions of offers and rewards

Choosing a cash back credit card will be a decision based on how much you put on your credit cards each month and where you typically spend your money. Really look through the pros and cons of each type of cash back card as well as the type of cardholder who should possibly consider these cards. Once you've decided which category of cash rewards card is best for you, you'll want to take a look at a few other things that should, in fact, be part of the decision to apply for any card – cash-back or otherwise.

What to consider when choosing a cash back credit card

Read the fine print. Apart from judging your spending categories and which card will earn you the most points or cash back, it's also important to pay attention to the fine print. If you earn a higher rewards rate with one card but the APR is sky high, will you end up earning more or paying more in the long run? The fine print will also lay out things like whether you'll pay foreign transaction fees when using the card abroad and if you'll enjoy certain privileges like rental car insurance, concierge service, price protection and so much more. It's tedious to read, but the fine print contains critical information that will both help you get the most out of your cash back cards, or any cards, and keep you from paying fees you don't need to pay.

Compare the annual fee to your earning potential. Some credit cards require a cardholder to pay an annual fee, but don't let that be an instant turn-off if you otherwise like what the card has to offer. Some cards even waive the annual fee during the first year and, within that first year you should be able to assess whether you'll earn enough cash back or points to offset the fee once it kicks in.

As an example, Blue Cash Preferred® Card from American Express charges a $0 introductory annual fee for the first year, then $95, but the cash-back earning opportunities are incredibly high. (American Express is a CardRatings advertiser; See Rates and Fees; terms apply) Cardholders can earn 6% cash back at U.S. supermarkets (on up to $6,000 spent annually, then 1%) and on select U.S. streaming subscriptions and 3% cash back at U.S. gas stations and on transit like bus fare, parking, tolls and more; all other purchases are worth 1% cash back. So if you spend $1,000 a month at the supermarket and pay your balance off each month you'll earn $60 back for six months out of each year, or $360. That more than covers the annual and we haven't even discussed what you can earn in the other cash-back categories. If you are going to spend that money anyway, why not earn some money back when you do it?

Know your credit tier. It can seriously damage your credit to apply for multiple credit cards at once and receive rejections. Credit scoring companies such as FICO may assume you are in an emergency situation and are about to binge on credit. Apply only for cards for which you are reasonably certain you will be approved. For each card reviewed on CardRatings, we strive to provide details about the credit tier most likely to be approved for the card. If you know your credit score is only in the average range, you're unlikely to be approved for a card designed for people with good to excellent credit. That said, situations do vary from person to person. Unsure of your credit score? You are entitled by federal law to a copy of your credit report from each of the three major credit reporting bureaus once every 12 months. You can request the reports online.

Who should get a cash back credit card?

Cash back credit cards are best for those who want a simple way to earn and redeem rewards. The nice thing about cash back is that it's something everyone can use. However, that doesn't mean everyone should get a cash back card.

Cash back credit cards are best for the people who have the following:

  • Good or excellent credit, although some cards are available to those with fair credit scores
  • Self-discipline to pay off a balance before interest accrues

Applying for a cash back credit card

After assessing which card fits within your spending wheelhouse and financial profile, applying is an easy process. Most credit cards these days offer online applications that take only a few minutes to complete. You will need to enter some personal information, so make sure that when you do apply you're online with a secure connection in a private area. Be prepared to enter information including the following:

  • Name
  • Address
  • Social security number
  • Housing costs
  • Employment status
  • Annual income

Usually after you've entered in all of the requested info, the inquiry will automatically be submitted to the lender. Sometimes you'll see approval immediately and other times you'll receive mail and/or a phone call to verify your approval or denial. The process usually happens within a week at the most (unless you're applying for a secured card or a card for bad credit in which cases the process can take up to four weeks).

Are cash back credit cards worth it?

You are the best person to accurately assess whether cash back credit cards fit seamlessly into your lifestyle, but yes, these cards can be an excellent addition to your wallet. 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 card and not reaping maximum rewards. Instead, do your research and take the time to know what you need.

With that said, however, if you're someone who wants an easy way to earn rewards, without having to think about redemption options too much, cash back credit cards may be the way to go. Because they earn money back on each purchase made, these cards are a simple way to put more money in your pocket. Plus, they're a safe way to make purchases, and usually come with a plethora of other benefits, like warranty protection and certain travel perks. So in short, our editors give a collective "yes" — cash back credit cards are generally worth it.

Blue Cash Preferred® Card from American Express: See Rates and Fees; terms apply

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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.

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