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 six 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 hover near record lows and that means many banks, credit unions and other credit card issuers are offering ultra-low rates to entice new customers and keep existing clients.
But that’s not all.
Banks are also dangling juicy cash-back rewards and special cash signup bonuses to win over new customers.
>> Related content: Compare cash-back rewards credit cards side by side
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.
Stay away from cards that:
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 signup bonus or other cash incentive lately from your credit card issuer just for becoming or continuing as a customer?
Banks and other financial services 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.
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 cash-back credit cards is well worth carrying in your wallet. If you’re an average spender, they can all easily net you $300-$500 each year. Big spenders can earn a lot more.
American Express is a CardRatings advertiser
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 where everyone spends money – food.
With the Blue Cash Preferred® Card from American Express, you get a whopping 6 percent cash back at U.S. supermarkets on up to $6,000 in purchases each year (then 1 percent). And we all have to eat, right? In fact, the average U.S. household 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 the supermarket, you’ll earn cold, hard dollars just for doing spending you were going to do anyway.
Reach the $6,000 spending cap on groceries alone, and as an Blue Cash Preferred® Card from American Express cardholder, you’ll be rewarded with a cool $360. Terms apply. See Rates and Fees
You also earn a healthy 3 percent on your U.S. gas station purchases and at select U.S. department stores, making the times you fill up at the pump or buy new work clothes far less painful. All other spending – including your supermarket purchases in excess of $6,000 – nets you 1 percent cash back.
If you just can't see offsetting the $95 annual fee but are looking for bonus rewards at supermarkets, you might consider the Blue Cash Everyday® Card from American Express. The reward levels are slightly lower (3 percent at supermarkets (on up to $6,000 in purchases annually), 2 percent at U.S. gas stations and select U.S. department stores and 1 percent on other purchases), but you don't have to worry about paying an annual fee. Terms apply.
Read the full cardratings.com review of Blue Cash Preferred® Card from American Express
Why I like this card: There's a great opportunity to earn rewards with the 5 percent cash-back bonus categories, but even better is that Discover matches all the cash back you earn after your first year.
Explanation: Bonus category cash-back cards do require a bit of organization and planning, but they also offer perhaps the best opportunities to really rack up rewards.
Discover it® - Cashback Match™ cardholders earn 5 percent cash back in bonus categories up to the quarterly maximum each time you activate. Those categories have included everything from restaurants and gas stations to Amazon.com purchases and home improvement stores. Beyond those categories (and once you reach the quarterly cap), you'll earn an unlimited 1 percent cash back on your purchases.
This card is truly special, however, in that Discover matches all the cash back cardholders earn in their first year of card membership. This fantastic cash-back earning opportunity is available without an annual fee and without any foreign transaction fees, so don't be shy about using your card when you travel abroad.
Read the full cardratings.com review of Discover it® - Cashback Match™
(Citi is a Cardratings.com advertiser)
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. 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 his or her total credit card charges every single month. According to a 2016 survey from the FINRA Investor Education Foundation, nearly half of all Americans (47 percent) admit they carry a credit card balance at least occasionally. If that sounds familiar, don’t beat yourself up; you can still benefit from a good rewards card like the Citi® Double Cash Card - 18 month BT offer.
It gives you 1 percent upfront cash on all your purchases and then another 1 percent when you pay off your bill. If you pay in full each month, you’ll immediately accrue a full 2 percent 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.
Read the full cardratings.com review of Citi® Double Cash Card - 18 month BT offer
Why I like this card: Its versatility and low spending requirement make it a breeze to quickly and easily earn a variety of big cash payouts.
Explanation: The signup bonus for Chase Freedom Unlimited® is a very generous $150 once you spend just $500 on purchases in your first three months after opening an account – a spending threshold that’s easily attainable for most people.
You earn a flat 1.5 percent on all your purchases, and Chase offers something truly unique: four different ways to redeem your cash reward. 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, making your redemption more valuable. All Chase reward credit cards run on the same reward machine, Chase Ultimate Rewards®. 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 their cash rewards. Then they pay the balance off in full each month.
With Chase Freedom Unlimited®, assuming you charge $2,500 a month – say, on food, gas, travel, utilities, clothing and other purchases – your cash back for the year would total $450. Add that to the $150 signing bonus, and you’ve netted $600 on your regular spending during your first year of card membership. It’s that kind of return that makes Chase Freedom Unlimited® so hugely popular with a lot of consumers.
Just another thought, here. Since Chase Freedom Unlimited® doesn’t charge an annual fee, you aren’t losing anything by having it in your wallet. If you carry Chase Freedom Unlimited® AND Chase Freedom® (another annual-fee-free card), you have the opportunity to earn 5 percent cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate with Chase Freedom® and then use your Chase Freedom Unlimited® to earn 1.5 percent cash back in the non-bonus categories (Chase Freedom®offers just 1 percent back in non-bonus categories).
Read the full cardratings.com review of Chase Freedom Unlimited®
Why I like this card: This is another flat-rate card, so its simplicity is the biggest plus, but this one also offers the ultimate in convenience when it comes to redeeming your cash rewards.
Explanation: The Wells Fargo Cash Wise Visa® Card offers a flat and unlimited 1.5 percent cash back on all your purchases, so it's a nice fit if your spending is diverse and spread out among multiple categories; there are no rotating categories or even tiered levels to keep up with. Furthermore, those rewards never expire, which is just another way this card makes earning and redeeming cash back simple.
But what really sets this cash-back credit card apart is the ability to redeem your rewards for cash back directly from a Wells Fargo ATM. You can also redeem the rewards to a Wells Fargo checking or savings account or as a statement credit, but that instant gratification of an ATM withdrawal is certainly appealing.
With no annual fee to offset, this is an easy card to keep around.
Read the full cardratings.com review of Wells Fargo Cash Wise Visa® Card
Why I like this card: It gives customers, especially well-heeled bank clients, a way to turbo-charge their cash-back rewards.
Explanation: This card is an excellent choice for anyone to consider because you get cash back for everyday purchases, including grocery store and gas spending.
But the card is particularly enticing if you’re already a Bank of America or Merrill Lynch customer or are willing to open an account with those institutions. Furthermore, high-income clients of the bank stand to benefit the most.
With the Bank of America® Cash Rewards Credit Card, you’ll earn a $150 online cash bonus after you spend $500 within the first 90 days of opening this credit card account.
Although there are no rotating categories with this card, cash earnings accrue at different rates. You get 3 percent cash back on gas purchases and 2 percent cash back at wholesale clubs and grocery stores on up to $2,500 worth of combined spending each quarter. All other purchases earn 1 percent cash back.
You can redeem your cash-back reward in the form of a check, statement credit or a cash deposit if you have a Bank of America or Merrill Lynch account. The good thing about taking the latter option is that customers who deposit their cash reward into eligible accounts get a 10 percent bonus for doing so. The bank’s Preferred Rewards customers get far bigger cash bonuses – anywhere from 25 percent to 75 percent of cash earnings.
So let’s say your quarterly spending makes you eligible for a $100 cash reward. If you deposit that cash into a Bank of America checking or savings account or an eligible Merrill Lynch account, you automatically get $10 extra in cash. Preferred Rewards clients get a minimum of $25 more and a maximum of $75 more.
What does it take to be a Preferred Rewards client? You need to have hefty balances on deposit accounts with Bank of America for at least 90 days. Here’s a brief summary:
NOTE: Because Bank of America acquired Merrill Lynch way back in 2009, your funds from a Merrill Lynch Cash Management Account or a Merrill Edge investment account can be counted toward your total combined balance.
Most people won't be able to meet those high balance requirements, but for those who can, the Bank of America® Cash Rewards Credit Card offers unbeatable cash bonuses on top of the attractive cash-back rewards that all cardholders earn.
Bank of America also offers a version of its cash rewards card that supports the Susan G. Komen Foundation. For every Susan G. Komen® Credit Card that remains open and is used within the first 90 days of account opening, Bank of America donates $3 to the Susan G. Komen Foundation. After that, Bank of America gives $.08 for every dollar spent on the card. Cardholders still earn 3 percent back at gas stations, 2 percent at wholesale clubs and grocery stores and 1 percent back on all other purchases.
Why I like this card: It offers great simplicity and ease of use.
Explanation: Unlike many cash-back cards that require you to alternate your spending (usually on a quarterly basis) for maximum cash benefits, you don’t have to worry about doing that with this Citizens Bank cash-back card. In fact, there’s no keeping track of categories or enrollments at all. You just use the card and get an across-the-board cash back benefit of 1.5 percent on all your purchases. It’s as easy and simple as it gets.
As a cardholder, you have an opportunity to bump up your 1.5 percent cash reward to 1.65 percent by making at least one purchase every month for six or more consecutive months. Do that and Citizens Bank will tack an extra 10 percent Purchase Bonus on your cash reward.
Want more? If you’re a client of Citizens Bank, you can earn another 10 percent via a Relationship Bonus when you deposit your cash-back rewards directly into your Citizens Bank personal checking, savings or money market account.
Earn both the Purchase Bonus as well as the Relationship Bonus and those extras effectively bring your total cash reward for this card to 1.8 percent – a really good deal, especially for a card with no annual fee and a 0 percent introductory APR for balance transfers in the first 15 months.
As you can see, each of the six cash-back credit cards recommended above offers a little something different in terms of accrued benefits and special perks. It’s up to you to hone in on the one that will provide the optimal cash reward based on your unique circumstances.
Check out more details of the Citizens Bank Cash Back Plus™ World MasterCard®
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 Costco Anywhere Visa® Card by Citi makes your Costco shopping excursions – and all your other routine spending – a lot easier on your wallet.
This card not only gives you 4 percent cash back on gas and 3 percent on travel and dining, you also get 2 percent cash back on your Costco purchases. Do you have a Costco Executive Membership? With this card, you’ll get an extra 2 percent back on your Costco spending. All other purchases earn you 1 percent 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.
Check out more details of the Costco Anywhere Visa® Card by Citi
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 boast a higher rewards rate – sometimes as much as 5-6 percent 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.
Want to learn more about cash-back credit cards? You can compare cash-back rewards credit cards side by side.