Best Cash Back Credit Cards of 2013

In 2013, the average American credit card user had four credit cards. No surprises there. After all, our addiction to plastic is hardly headline news. What is surprising is that, on average, only two of those four credit cards are earning rewards. Sorry, but there is simply no excuse for such waste.

Credit Card Overload

Granted, not everyone has the credit to qualify for the higher-end credit cards. But if you can choose between a card that gives you rewards and one that doesn’t, the right choice seems pretty duh! What’s not to like about free money. However, many consumers are overwhelmed by the sheer number of credit card offers that land on their doorstep and struggle to make sense from the frequent-flyer miles and points rewards programs touted by many credit cards.

This leads to indecisiveness, analysis paralysis, and a hasty decision that is typically not based on facts. This is unnecessary. Please look through the credit cards in your purse or wallet and make sure each card is pulling its weight.

Cash Back Credit Cards

Cash-back cards are a great place to start for anybody looking for a credit card, They are the easiest to understand and are probably the best deal around for those who don’t travel all that much.

The principle is simple. Cash-back credit cards give you a percentage commission on the money you spend. So if you have a 1% cash-back card, you will get 1 cent on every dollar you charge on the card. That may not sound like much, but over a year it could add up to hundreds of dollars.

There are three terms you must understand and consider carefully before making an intelligent decision about choosing a cash-back credit card: annual fees, cash-back ratio and cash-back limits.

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Annual fees. Certain cards, usually those with the juiciest rewards, require customers to pay a yearly fee, typically $75 to $100. Make sure the cash-back from the card will cover this fee.
Cash-Back Ratios. Some cards offer a higher percentage cash-back on certain categories throughout the year, such as gas or groceries, while others offer a high cash-back rate on rotating categories that change every three months. Make sure you understand how the cash-back ratio is calculated before making your choice.
Cash-Back Limits. Finally, some cash-back cards, particularly those with high cash-back ratios, set yearly or quarterly limits on how much you can earn in cash-back. Once you reach the limit you can continue buying but your cash-back ratio will drop to whatever is the card’s base rate.

Without further ado, here are – in no particular order – three of the best cash-back credit cards available, as of the fall of 2013.

Capital One Quicksilver Cash Rewards

Capital One’s Quicksilver is a refreshing change for people tired of the complicated rewards programs used by frequent-flyer miles and point-based credit cards. There isn’t an annual fee to worry about and it gives you 1.5% cash-back on all your purchases. To top it off, you can earn a $100 sign-up bonus if you spend $500 within the first 90 days.

American Express Blue Cash Preferred

Despite having a $75 annual fee, American Express’ Blue Cash Preferred card is one the most generous cash-back cards available. The card gives you a basic cash-back ratio of 1% for all purchases, 6% on groceries (up to $6,000 a year) and 3% on gas and certain department stores (no limit). This means that even if you only use the card for groceries and spend $6,000 a year on groceries – the equivalent of $115 a week – you will get $360 back every year. Also, you get a $150 welcome bonus when you spend $1,000 within the first three months, which takes care of two years of annual fees.

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Chase Freedom 

The Freedom cash-back card offers the maximum rewards for people who don’t want to pay an annual fee on their credit card. It gives 1% on all purchases and 5% on rotating categories such as gas, department store shopping and dining, up to a maximum of $1,500 in purchases for each quarter. For example, if the category of the first quarter of the year is gas and you spend $2,000 at gas stations, you would get 5% back on the first $1,500 and 1% on the remaining balance (a total of $80 cash-back). Not only does the card not have an annual fee, you can also earn a $100 bonus if you spend $500 within the first three months.

This article was written by staff writer Andrew Latham. His mission is to help fight your evil debt blob and get your personal finances in tip top shape.
Photo: Tax Credits