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Best Cashback Credit Cards

May 2024

If you’re the type of consumer who uses a credit card frequently and always pays off your bill on time, you could be making money off the purchases you make every day. There are myriad of reward programs and options on the market, but often, nothing beats cold, hard cash.
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Cash back is the most versatile type of credit card reward. Instead of points that can be a bit more clumsy to redeem (or may not be redeemable for something you want), cash back cards earn you cash that you can used for anything. These rewards typically range from 1% to 6% of the dollar value of your transactions, depending on the card you use and where you use it. Some of these cards offer very generous reward structures that can generate meaningful earnings.
There is no perfect cash back card. The best card really depends on how you spend your money. So be sure to compare your options carefully.
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Types of cash-back credit cards

There are three types of cashback credit cards: flat-rate, rotating category and tiered. They each have some key distinctions related to how you accumulate cash rewards.

Flat rate

Flat-rate cards are pretty simple, they pay the same flat rate on all purchases. Flat-rate cards typically offer 1.5% on all purchases but some do offer 2% or even more. For example, the Citi® Double Cash Card gives you 2% cash back on all purchases: 1% for every dollar you spend and another 1% for every dollar you pay off.

Rotating categories

Rotating category cards pay a higher rate in bonus categories that change from time to time, usually every three months, and typically 1 percent in all other categories. You have to sign up for the categories each quarter and you have to pay attention to when and where you make purchases. For example, the Discover It Cashback Card offers 5% cash back on the first $1,500 in bonus category spending per quarter.

Tiered

Tiered cards pay higher rates for specific categories of transactions, such as gas or restaurants or grocery stores, and typically 1% for everything else. These cards might also cap the maximum eligible purchases at these higher tiers. For example, the Blue Cash Preferred earns you 6% at U.S. supermarkets, although there is a maximum of $6,000 a year (then it’s 1% after that).
There is no perfect cashback card. The best card really depends on how you spend your money. So be sure to compare your options carefully.

Best Cashback Credit Cards: Advantages of cashback cards

  • What you see is what you get. With points-based reward programs, you often have several different ways to cash in your rewards. Choosing one option over another can highly affect the value of your rewards. With a cash-back card, 2% cash back means just that.
  • There is less complicated redemption. Generic rewards cards may have you go through a rewards center to turn your points into rewards. However, with a cash-back card, you can often get the money as a statement credit, or as a check.
  • More everyday categories are included. While free international flights and hotel nights are nice, cash-back cards are more focused on everyday categories such as groceries, gas and specific retail categories to meet generic consumer needs.

What to look for in a cashback card

  • No or low annual fee.If you’re paying a $100 annual fee on a card that gives 2% cash back, you’ll need to spend $5,000 per year (and pay the bill on time) just to break even.
  • A low introductory annual percentage rate (APR). There are several cash-back cards, such as the Chase Freedom Card, which offer a 0% APR for the first few months of a card. This can help with a big upcoming purchase, by helping to get rewards without piling up interest. Be aware that for many of these cards you still need to pay the minimum monthly balance to keep the introductory APR.
  • Cash back from the places you shop most. It may seem obvious, but if you live in a big city and mostly use public transit, the card with the best gas perks doesn’t make a lot of sense. Likewise, if you rarely eat out, focus on a card that gives you cash back for groceries, not restaurants.

FAQs on Cashback Credit Card

What does cash back mean on a credit card?

Cash back is a perk offered by many credit card companies that offers you a percentage of your purchases back in the form of cash. There is often a limit or cap on how much cash back you can earn on purchases through promotions or quarterly rewards programs.

How do cashback credit cards work?

Cashback credit cards pay back a certain percentage of what you spend (similar to a rebate). The typical rate is between 1% and 2% for purchases, although some cards offer cashback rates up to 6%. The cashback may be paid on an annual, monthly, or even daily basis, depending on the card provider. You can then cash out your money in various ways, which also depends on the card issuer's program.

Are travel points better than cash back?

Both travel points and cash back have their respective advantages. Cash back is flexible, straightforward, and easy to redeem. Points or miles present the possibility of a paid-for vacation, airline seat upgrade, and, sometimes, a higher reward value per dollar spent. The best card will depend on your lifestyle, spending habits, and preferences. If you travel frequently and greatly benefit from travel rewards, travel points could be a better fit for you. The only way to know is to run the numbers for both types of cards and compare them side by side.

How do you redeem cashback rewards?

The way you receive your cash from your reward card will depend on the company issuing the card. Typically, you have to contact the issuer online or by phone and request a check, a direct deposit into a bank account, or a statement credit. However, some providers have online portals where you can also use your cash to shop.

Which cashback categories are most common?

While categories can vary from one provider to the next, there are some that are more common than others. You will find no shortage of cards that offer higher cashback rates when you spend on one or more of the following: travel, dining, gas, groceries, department stores, and restaurants.

How can a cashback card help me?

A cashback card has many advantages. It is easy to understand, as in most cases, 1% equals 1 cent. Then, you can use the cash for whatever you want. Further, there are a wide range of cards on the market with varying bonus categories so you can choose the one which earns you the most for the purchases you are already making. Plus, many of the cards come with sign-up bonuses and cardholder benefits.

Are there drawbacks to cashback cards I should know?

There are some potential drawbacks to cashback cards. For one, be aware that most cashback cards with competitive offerings require a good-to-excellent credit score (at least 670). This can prohibit some people from qualifying.
Additionally, if you choose a card with bonus categories, you'll have to keep track of the card's rates for each category and align your spending accordingly. Further, some cards require you to register for a category each quarter which can be tedious.
It's also important to be aware of the fees and interest costs. These can easily eat into the rewards you earn so it's important to estimate your earnings and ensure the costs aren't negating them.

How do I make the most of a cashback card?

To make the most of a cashback card, find one with no annual fee, a good welcome bonus, an intro APR offer, and high reward rates for your spending. Plus, don't forget to ensure the earning caps aren't too limiting. Then, use the card to earn the welcome bonus, save on interest, and max out your cashback earnings. Additionally, look over the card program's redemption options to see if there is a way to earn more. For example, earning 1.25% if you redeem your rewards through the card's partners or redemption portal.

Who are cashback cards good for?

Cashback cards a good for people with good or better credit who don't want to mess with the complications of points or miles. You can earn straight cash for purchases at the places you already spend most– whether it's at grocery stores and gas stations or restaurants and airports. These cards can appeal to a wide audience because of the various earning models and categories on offer. Just be sure to shop around so you can find the best overall value for your spending habits.

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