Best Cards Summary
Chase Freedom Flex℠
Why this is one of the best cash back credit cards: Chase Freedom Flex delivers 5% cash back in rotating categories each quarter you activate. You’ll also earn 5% back on travel purchased through Chase, 3% back at drugstores and restaurants, including takeout and delivery, and 1% back on other purchases year-round.
Chase Sapphire Preferred® Card
Why this is one of the best cash back credit cards: The Chase Sapphire Preferred Card is appealing for cash back on dining and traveling. Those purchases earn two points per dollar, while other purchases earn one point per dollar. You can redeem points for cash back, travel, gift cards and more.
Chase Freedom Unlimited®
Why this is one of the best cash back credit cards: Chase Freedom Unlimited charges no annual fee. It earns 5% cash back on grocery store purchases (excluding Target and Walmart purchases) on up to $12,000 spent in the first year, 5% cash back on travel purchased through Chase Ultimate Rewards, 3% cash back on dining and drugstore purchases and 1.5% cash back on all other purchases. If you get this card and spend $500 within three months of opening it, you can earn a $200 bonus.
Discover it® Cash Back
Why this is one of the best cash back credit cards: The Discover it Cash Back offers 5% cash back each quarter in rotating categories, such as Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate. All other purchases earn unlimited 1% cash back. There is no annual fee. At the end of your first year as a cardmember, Discover will match all the cash back you earned.
Blue Cash Preferred® Card from American Express
Why this is one of the best cash back credit cards: The Blue Cash Preferred Card from American Express offers cash back on everyday purchases. Cardholders earn 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases and then 1% back. Select U.S. streaming subscriptions earn 6% cash back; transit and U.S. gas stations earn 3% cash back; and other purchases earn 1% cash back.
Blue Cash Everyday® Card from American Express
Why this is one of the best cash back credit cards: The Blue Cash Everyday Card from American Express rewards you with cash back on day-to-day purchases. You’ll earn 3% cash back at U.S. supermarkets on up to the first $6,000 per year in purchases, then 1% back. Purchases at U.S. gas stations and select U.S. department stores earn unlimited 2% cash back. Plus, you’ll get unlimited 1% back on other purchases with no annual fee. New cardholders earn $100 back after you make $1,000 in purchases on your card within the first six months. You’ll also earn 20% back on Amazon.com purchases made within the first six months (up to $200 back).
Capital One SavorOne Cash Rewards Credit Card
Why this is one of the best cash back credit cards: Capital One SavorOne earns solid cash back on dining and entertainment. You’ll earn unlimited 3% cash back on dining and entertainment, 2% at grocery stores, and 1% on all other purchases.
Discover it® chrome
Why this is one of the best cash back credit cards: This card caters to consumers who want to earn cash back on gas and dining purchases. You’ll earn 2% cash back at gas stations and restaurants on up to the first $1,000 in combined purchases quarterly. After that, you’ll earn 1% back, along with unlimited 1% cash back on all other purchases. There’s no annual fee and rewards never expire.
American Express Cash Magnet® Card
Why this is one of the best cash back credit cards: This card might catch your eye if you want to earn unlimited cash back with an uncomplicated rewards structure. All purchases earn 1.5% cash back that you can redeem for statement credit, gift cards and merchandise.
Amazon Rewards Visa Signature Card
Why this is one of the best cash back credit cards: The Amazon Rewards Visa Signature Card is a cash back rewards credit card designed for frequent shoppers of Amazon.com and Whole Foods Market. The card earns 3% cash back at Amazon.com and Whole Foods Market, 2% at drugstores, gas stations and restaurants and 1% on all other purchases. When the card is paired with an eligible Amazon Prime membership, cash back earnings at Amazon.com and Whole Foods Market increase to 5%. This card does not charge an annual fee.
U.S. Bank Cash+™ Visa Signature® Card
Why this is one of the best cash back credit cards: The U.S. Bank Cash+ Visa Signature Card has no annual fee and offers cardholders a three-tiered cash back rewards program. You’ll earn 5% cash back on the first $2,000 in combined eligible net purchases each quarter in two categories of your choice and 2% cash back on your choice of one everyday category. All other eligible net purchases earn 1% cash back. When you make $500 in eligible purchases within 90 days of opening an account, you’ll earn $200.
What You Can Expect From Cash Back Credit Cards
Here’s what you need to know about cash back credit cards:
Rewards earning: Nearly three-quarters of cash back cards offer at least 2% cash back on bonus categories.
Sign-up bonus value: Few cash back cards have a sign-up bonus worth more than $300; about 74% offer a sign-up bonus of $50 to $300. There are only a few cash back credit cards that don’t offer a sign-up bonus at all.
Annual fee: Cash back cards usually don’t charge an annual fee; about 74% of the cards surveyed don’t. But among those that do, the rewards are generous and the fee is no more than $100.
APR: About 13% of cash back cards have a minimum annual percentage rate of 14.99% or lower; about 78% have a minimum APR of 15% to 18.99%; and a few have APRs of more than 26%.
Benefits: Cash back cards typically offer consumer benefits, including extended warranty and purchase protection. Many provide travel coverage, such as trip cancellation and interruption insurance, or auto rental collision waivers.
Some cash back cards give you a flat rate of return on every purchase. Others offer bonus rates in specific categories, such as gas, restaurants, grocery stores or Amazon.com. These bonus categories can be financially rewarding if your goal is to maximize your rewards and earn money.
But to rack up cash back rewards and save money on your everyday expenses, you have to pick the right card. So, before choosing a new card, learn about the different types of cash back rewards programs, additional cardholder benefits and how to find the best cash back card.
U.S. News Survey: As You Earn Cash Back, Beware Card Costs
Are you using your cash back credit card the same way others do? U.S. News has the answers for you after asking cash back cardholders recently how they choose and use their cards.
Many cash back credit card users carry a balance on a card at least once each year. Cardholders often earn at least $300 annually in cash back rewards, but interest charges on card balances can easily wipe out the value of these rewards.
Among the key U.S. News survey findings are:
- Cardholders usually prefer cash back credit cards with rewards for everyday spending.
- Cash back rewards rate is the top factor that affects card choice.
- Groceries and gas earn cash back cardholders the most rewards.
- About half of cash back card users earn $300 or more in rewards annually.
- Cash back cardholders often don’t like interest charges or annual fees, and most will avoid cards with annual fees.
- Many cash back card users aren’t earning sign-up bonuses.
Cash back cards with rewards for everyday spending are the most popular in this category.
Most cash back cardholders polled by U.S. News have an everyday cash back credit card. This type of card earns cash back rewards for everyday purchases such as groceries and gas.
Travel, store, secured and business are other popular types of cash back credit cards.
Nearly half of cash back cardholders earn a flat rate of cash back on all purchases.
Close to 47% of cash back cardholders said their rewards program provides a flat rate of rewards, meaning the cash back rate stays the same for all purchases.
About a third of cardholders surveyed earn a flat rate of cash back and a higher rate on bonus categories, such as restaurant or travel purchases. Nearly 20% have flat-rate cash back cards with bonus categories that rotate each quarter, such as pharmacies and wholesale clubs.
Cash back rewards rate is the top factor for consumers choosing a cash back credit card.
In fact, more than a quarter of cash back cardholders said cash back rewards rate was the most important factor when choosing a card. Whether a card charges an annual fee, provides enticing benefits and offers a 0% introductory APR are other top factors that affect card choice.
Groceries and gas earn cash back card users the most rewards.
Everyday grocery and gas purchases are the top two spending categories that earn rewards for cash back cardholders.
These categories are followed by travel, restaurant and online marketplace purchases, respectively.
About half of cash back card users earn at least $300 in rewards each year.
Close to 27% of cardholders earned $299 or less in cash back rewards in the last 12 months.
But about 49% earned $300 or more, and 11% received $1,500 or more.
More than half of cash back cardholders carry a balance.
Among cash back card users, 47% said they haven’t carried a balance in the last 12 months. About 21% carried a balance between one and three times.
But 16% of cash back cardholders said they carried a balance habitually: 10 to 12 times in the last 12 months.
Is a cash back credit card worth it if you’re carrying a balance? Probably not.
Interest charges from carrying a balance can easily void the value of your cash back earnings. The average minimum APR for cash back cards is about 16% – far higher than any cash back rate you could earn.
If you can’t pay off your balance each statement period, then scale back your spending, use a balance transfer card or all of the above.
Card costs are a negative for cash back cardholders.
The top cash back card dislikes are interest charges and annual fees. Other top dislikes include cash back earnings rate, scanty cardholder perks, and scarce or irrelevant bonus categories.
But about 38% of cardholders don’t identify with any common cash back card dislikes.
Most cash back cardholders aren’t earning their sign-up bonuses.
Just 35% of cash back cardholders who took the U.S. News survey said they earned their full sign-up bonus. A quarter of card users said they didn’t earn the bonus, and 40% said their card didn’t have one.
Most cash back cardholders prefer cash back cards with no annual fee.
Among cash back cardholders surveyed by U.S. News, 69% said they wouldn’t consider a cash back card with an annual fee.
Just 31% said they would consider getting a card with an annual fee if it had enough value.
Cash back rewards programs are easy to use for most cardholders.
About 78% of cash back cardholders said their rewards program is easy to use, and 22% said theirs is not.
- U.S. News ran a nationwide survey through Google Surveys in December 2019.
- The survey sample came from the general American population, and the survey was configured to be representative of this sample.
- The survey asked 10 questions related to cash back credit cards.
How Do Cash Back Credit Cards Work?
Cash back credit cards come in a variety of flavors. Here’s a quick rundown of the types of cash back you might see:
Flat rate. These are the easiest cash back cards to use. You earn cash back rewards as a flat percent (or points) of your purchases. Example: 1.5% on all purchases.
There are also cash back credit cards that want to encourage you to pay your bill on time and in full. For instance, you get 1% when you buy an item and another 1% when you pay your bill. Some cards offer “bonus” cash back when you make a certain number of purchases during a billing period.
With flat-rate cards, you can redeem cash back as a statement credit, check or bank deposit. Some cash back cards also have other redemption options, such as travel, gift cards or merchandise.
Tiered categories. Most of these cash back cards let you earn 1% to 6% back on eligible purchases. For example, you might get 3% on groceries, 2% on gas purchases and 1% on other purchases. Each category usually has a dollar limit and often other limitations, so read the fine print carefully.
Most tiered cash back credit cards have a base cash back rate, such as 1% on all other purchases. If you choose this type of cash back card, you can earn a lot of rewards if you maximize each category.
Rotating categories. These cash back cards offer 5% bonus categories that rotate quarterly. Common categories include groceries, gas, home improvement store, Amazon.com and Uber.
You have to sign up online every quarter or you won’t earn the bonus rewards. And note that the 5% bonus categories have dollar limits, so be aware of how much you’ve earned in a quarter.
As you can see, the rewards programs for cash back credit cards vary quite a bit. Before you apply for a card, you have to read the fine print of the rewards program so you understand how to maximize your earnings.
The program details are often online and you can see what purchases are eligible. Noneligible purchases generally include balance transfers, wire transfers and cash advances. Fraudulent purchases, such as when someone steals your card and uses it to buy something, also may be disqualified. In addition, if you return an item purchased with your card, the issuer may remove the associated rewards.
What Are Some Pros and Cons of Cash Back Credit Cards?
Easy to understand. Tracking how much you’ve earned in rewards and what those rewards are worth is pretty easy. Generally, 1% equals 1 cent.
Some cards track earnings as points, but the conversion is easy. Usually, one point equals 1 cent. But read the disclosure statements so you know exactly how much you can earn.
Easy to redeem cash back. Although you sometimes need to accrue a specific amount of cash back to redeem a reward, it’s easy to cash out once you have. It’s a good feeling to get a statement credit for simply using your card on everyday purchases you had to buy anyway.
A wide range of bonus categories. Some cards offer bonus cash back rates when you make certain purchases, such as 2% cash back on travel or 6% cash back at U.S. supermarkets.
With some cards, bonus categories change throughout the year, giving you different opportunities to earn extra rewards. Many of these categories do have dollar limits, so keep that in mind.
Many cards have sign-up bonuses. Is there anything better than earning free cash just for using your credit card? Sign-up bonuses appeal to everyone for that reason.
Cash back credit cards offer sign-up bonuses ranging from $100 to several hundreds of dollars. Depending on the card, you might also be able to get extra cash back by adding an authorized user to your account or referring new cardholders.
Cardholder benefits. While they aren’t exclusive to cash back cards, benefits often include special access to events, zero liability protection, extended warranties on purchases, purchase protection on lost or stolen items, rental car insurance, roadside dispatch service, and lost luggage reimbursement.
Sign-up bonus requirements. To earn a sign-up bonus, you’ll have to meet a minimum spending requirement. The spending requirement varies by card, but it ranges from about $500 to a few thousand dollars. And usually, you’ll have to accomplish this within three months of opening an account.
Whatever you do, don’t increase your spending to get the bonus. If you can’t meet the requirements within the bounds of your normal spending habits, then maybe it isn’t the right cash back card for you.
Tracking bonus categories. If the card has rotating categories, keeping track of a card’s cash back rates and categories can take time and effort.
Potentially less-valuable rewards. Cash back cards may have a locked-in valuation. While this means your point value will not dip below a certain level it also means you won’t receive more value. This differs from co-branded airline and hotel cards, which sometimes might allow you to redeem your points at a higher rate.
Fewer perks. Other types of rewards credit cards could offer more cardholder perks, especially the elite travel cards. If free checked bags and discounted travel appeals to you, then maybe a travel credit card is a better fit.
Fees. Depending on how you use a card, you might find that you’re spending more on annual fees than you earn in cash back rewards. By the way, if you think you might carry a balance, you could be better off with a plain lower-interest credit card. Carrying a balance with a rewards can lead straight to credit card debt. Don’t go there.
Is a Cash Back Rewards Card Right for You?
Check your credit. You need a good to excellent credit score to qualify for the best cash back credit cards. Applying for a credit card, even if you’re denied, could slightly lower your credit score.
You can often get your credit score for free from your bank, credit union, credit card issuers or, for a fee, from FICO. Some providers of free credit scores supply an educational credit score.
These scores rely on similar factors, including your payment history, use of available credit, public records and collections. But they are not FICO scores.
Review your regular monthly purchases. If you don’t already keep a budget, you can upload your purchase history from debit or credit card accounts into budgeting software and categorize the purchases. Some of these programs have snazzy graphics to show your expenses.
Use the information to see where your dollars go. For example, if you spend the most on groceries, then a cash back card that offers a generous bonus on grocery stores might be a good fit for you.
Make sure you can pay the balance in full. Rewards credit cards have higher APRs, so it’s important to pay the balance in full every month. If you think you might carry a balance, then don’t get a rewards card. You’re better off getting a low-APR credit card to minimize the interest expense.
How Can You Choose a Cash Back Card?
If you know you want a cash back credit card, but you feel overwhelmed, you’re in the right place. Here’s a list of steps you should take to choose the right card.
- Pick the right rewards program for you.
- Calculate earning potential.
- Factor in sign-up bonuses.
- Subtract annual fees.
- Understand cardholder benefits.
Pick the Right Rewards Program for You
Straight cash back. Many types of cash back cards, including flat rate, bonus category and rotating category cards, give cardholders straight cash back as a reward. You should keep track of the amount you’ve accrued, so you can plan on how you want to redeem the rewards. With some cards, you can sign up for automatic redemption if you want to use your rewards for a statement credit or receive a check.
When choosing how to redeem your cash back, you may be able to opt for a statement credit, check or gift card, or transfer the money into a bank or brokerage account.
Every credit card has different rules for redemption, so be sure you understand your card’s rewards program. Some card issuers have expiration dates on rewards; minimum redemption amounts, such as $25; and limits on the bank accounts that you can use for depositing your rewards.
Calculate Earning Potential
Cash back credit cards earn rewards at different rates depending on which card you use, where you make purchases and whether a category bonus applies.
Flat-rate cards. Flat-rate cards give you the same cash back rate for all purchases. Generally, the rate is between 1% and 2%, although you may be able to find a card promotion that offers a higher flat cash back rate.
A flat-rate card can be valuable if your spending is pretty evenly spread across multiple categories or if you don’t want to track which credit card will earn you the most on specific purchases. But remember, the cards still vary when it comes to the details, so review the program carefully.
Bonus category cards. Bonus category credit cards offer different cash back rates on certain categories. For instance, If you spend thousands of dollars at the grocery store each year, a card that offers a higher rewards rate at grocery stores could be a good match.
- You get 6% cash back on up to $6,000 spent annually at U.S. supermarkets; after that, you get 1% on grocery stores.
- Plus, you get 6% cash back on select U.S. streaming subscriptions and 3% cash back on transit and at U.S. gas stations.
- And you get 1% cash back on other purchases.
Note that this card refers to cash back as “Reward Dollars.” Issuers have a variety of ways to refer to cash back, so don’t let it confuse you.
Common bonus categories for other cash back credit cards include:
- Gas stations
- Grocery stores
- Department stores
Rotating bonus category cards. Rotating bonus category cards typically have a 1% cash back base rate, along with bonus categories that change throughout the year, often quarterly.
The rotating categories typically offer 5% cash back, one of the highest rates you’ll get on cash back cards. But there’s almost always a limit to how much you can earn each quarter.
That’s still an extra $75 each quarter to put in your pocket. You do have to make an effort to keep track of the changing categories, but if your everyday expenses are creating a hole in your budget, these cards are worth it.
There’s a catch, though, that impacts most bonus rewards cards. You won’t receive cash back on your purchase unless the business uses the correct merchant category code. Merchants may be able to choose their code, or they might be assigned a code by a payment processor.
Often, each merchant will have one code, but sometimes large stores have several. Similarly, different card issuers or networks may not categorize businesses the same way.
Always check your statement to see if you’ve earned the rewards. It’s not a situation you can most likely remedy, but it’s good to know which stores don’t categorize your purchases according to the issuer’s requirements.
Factor in Sign-up Bonus and Welcome Offers
Many cards attract new applicants by offering a sign-up bonus. A cash back card with a large sign-up bonus can certainly help boost your earnings, but it’s also important to know the minimum spending requirement and whether you’ll have to spend more than you normally would, which is a big mistake. If you can’t earn the bonus without overspending, then the cash back card probably isn’t a good match for your wallet, anyway.
Some cash back cards charge an annual fee for being a cardholder, though most don’t. The average cash back card’s annual fee is less than $100, but it may be higher on some cards.
Consider whether the earnings or benefits of using a card will more than offset an annual fee. If they don’t, you likely will be better off with a no-fee card.
When the fee is waived the first year, you may be able to cancel the card or downgrade to a no-fee version at the end of the first year and avoid paying the annual fee. You can also call the issuer and ask if it can give you a credit card retention offer, such as a statement credit or rewards to offset the fee.
Understand Cardholder Benefits
Many credit card issuers and card networks offer benefits beyond a rewards program. The benefits could include extended warranties, concierge services, travel accident insurance, theft and fraud protections, low-price guarantees, guaranteed returns, and access to your credit score.
Chase Sapphire Preferred Card users, for example, can get trip cancellation and interruption insurance, baggage delay insurance, and an auto rental collision damage waiver, among other benefits.
What Are Some Strategies to Maximize Cash Back Rewards?
Avoid carrying a balance. This is the No. 1 rule with rewards credit cards.
The No. 2 rule? If you start carrying a balance, then step away from your cash back credit card.
Revolving balances can lead to paying more in interest than you earn in cash back. But the worst part? You could end up with credit card debt.
Choose a card that matches your spending. A rewards card with bonus categories that aligns with your normal spending can help boost your cash back earning rate.
Look for a sign-up bonus you can achieve. Sign-up bonuses can be a great way to earn a lot of cash back fast. However, don’t spend money that you wouldn’t have otherwise.
Earn extra cash back. Some cards have a referral program and offer a bonus or extra cash back for referring new cardholders. You might also get extra cash back for adding authorized users.
Don’t forget about the card’s other benefits. Use your cash back credit card for purchases and you might qualify for purchase protection, extended warranties or other perks, depending on what’s offered by your credit card.
Get a retention offer. Otherwise known as good old-fashioned negotiating. If your cash back card waives the first year’s annual fee, call the issuer near the one-year anniversary and ask if there are any retention offers.
You might get your second year’s annual fee waived, too. The higher your credit score, the better your chances for success.