Among the growing abundance of rewards credit cards available today, the best credit cards with cash back stand out for their simplicity. When you use a cash-back card, the rewards you generate don't need to be transferred, converted or strategically redeemed to maximize value - you simply get bonus cash as a statement credit on your monthly bill or as a deposit into a designated bank account.
The benefit of cash-back cards is that they make it simple to earn rewards with less effort by getting a percentage of cash back when you spend in different categories, such as restaurants, groceries or gasoline. But some offer fewer rewards than certain reward credit cards, including those made specifically for travel.
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Hassle-free, cash-back rewards usually get automatically applied to your balance by credit card issuers after one or two billing cycles and - depending on your spending - can put a lot of money back in your wallet. Most consumers can earn anywhere from 2% to 5% overall using one of the best cards. So, if you spend $15,000 annually, that would translate to between $300 and $600 a year of cash-back rewards.
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To figure out which cards make sense for you, I've chosen eight high-value options from the crowded market. Some are no-fee, flat-rate credit cards that earn the same amount on all purchases. Some offer a sign-up bonus reward as well as cash back. Some are limited to specific spending categories (such as groceries, dining, gas, transit or travel) but have a higher rewards rate, while others charge an annual fee. I've also outlined important information for each card, including whether it has a transfer fee, bonus redemption thresholds and introductory APR. I also mention general credit requirements for eligibility.
I've organized the list by group, starting with the most straightforward cluster and ending with the ones with the most complicated reward structures.
To approximate the value of each card for an individual and assess which spending situations make sense for each, I used data from the Bureau of Labor Statistics' Consumer Expenditure Survey.
The simplest: No-fee, flat-rate cards
Getting strategic: No-fee 'category' cards
From this point on, we're getting into the strategic territory, so I'll be evaluating cards based on how and when you use them. All of the remaining cards have different cash-back percentages based on the type of purchase, so different spending habits will net different results. While there may be a card or two that makes sense as your only card, most of these will be best when paired with other cash-back cards so you're not making too many purchases outside of a bonus category.
Tech cards
While Netflix doesn't have a credit card (yet), most of the other FAANG group members have made significant efforts in recent years to channel payments through their systems. Facebook is going the cryptocurrency route, Google Pay is a thing and now both Amazon and Apple have their own cash back credit cards. Even Verizon is getting into the credit card game.
High-yield, annual fee 'category' cards
Ah, now we're getting deep into each cash-back credit card. These two cards will rarely be your one-and-only cards, unless your overall spending is heavily tilted toward one category. However, they can get you 2% to 4% extra on certain categories, making them worth the annual fee if you hit certain spending thresholds in those categories.
With a $95 annual fee for each card, you need to be a little more circumspect when deciding if a card is worth it. Usually, having extra cards in your wallet carries little downside (unless you're not paying them off each month) and even helps your credit score by increasing your total available credit. But with these fee cards, you're charged the $95 every year regardless of how much you use it, so take a beat to ensure it makes sense before applying.
I recommend two in this category: The Capital One Savor card, which is great for dining and entertainment and the Blue Cash Preferred card from American Express for groceries. Both offer a decent sign-on bonus ($250 and $300, respectively), but the Blue Cash Preferred threshold is much easier to hit ($1,000 in spending in the first three months, vs. $3,000 in spending in the first three months for the Savor).
How we picked the best cash-back credit cards
To determine the best cash-back credit cards, we researched 18 popular cards and looked for those that offer the best overall financial value. This means we look at net overall value for each rewards credit card, rather than prioritizing perks or offers that quickly lose value after the initial sign-up. In the end, the rewards credit card with the largest sign-on offer will not always be deemed the best card.
We prioritized the cash-back credit cards that reward broad spending categories where Americans tend to spend significant amounts of money (like dining, travel and grocery shopping), instead of narrow categories like streaming services or "home improvement." Then we compared reward offerings with potential returns based on hypothetical spending budgets. Those hypothetical budgets are based primarily on the Bureau of Labor Statistics' Consumer Expenditure Survey, with several members of the CNET staff's subjective input, as well. These evaluations are visualized in the form of graphs throughout our list.
How do cash-back credit cards work?
Cash-back credit cards offer cardholders rewards on their spending in the form of statement credits or cash. A statement credit is a reduction in the amount due to the credit card company on your monthly bill. Note that rewards are not always available the month you earn them - they are usually applied to your balance by credit card issuers after one or two billing cycles.
The redemption process for cash-back credit cards is either automatic or very simple. Some cards, like the Bank of America Cash Rewards card, automatically apply cash rewards to your statement balance each month. Others, like the Wells Fargo Propel card, require you to log in and redeem available Go Far Rewards points for statement credits. Most points don't expire, but you will lose them if you close the account before redeeming them. Some, like Citi, expire only after one year of account inactivity.
Cash-back credit cards generally fall into four primary categories: flat-rate, tiered, rotating or choose your own.
Flat-rate cards offer the same rate for every purchase. Those are cards like the Citi Double Cash, which offers 2% back on every purchase or the Chase Freedom Unlimited, which offers 1.5% back on every purchase.
Tiered cards offer different rewards rates for different categories of spending. One example is the Amazon Prime Rewards credit card, which offers 5% back on Amazon and Whole Foods purchases, 2% at restaurants, drug stores and gas stations, and 1% on everything else.
Rotating category cards offer different rewards each quarter, determined by the card issuer. Choose-your-own category cards allow you to choose your rewards category, like the Bank of America Cash Rewards card, which offers 3% back on the category of your choice, 2% back on groceries and 1% on everything else.
Should you get a cash-back credit card?
We recommend cash-back credit cards for everyone. Given that even the best cards don't charge an annual fee, most of them offer a sign-up bonus and the redemption process is very simple, there are essentially no downsides to holding a cash-back credit card.
The principal drawbacks are paying interest on a statement balance (which we strongly advise against) and being compelled to increase your spending due to the rewards structure. Studies have shown that when paying with a credit card, consumers tend to spend substantially more than when paying with cash, up to 83% more in some cases. This is why it's important to carefully monitor whether or not you're spending more when you use a credit card. If you spend 50% more on dining after getting 4% cash back on a dining credit card, you're ultimately not doing yourself any good.
Cash-back credit cards are also ideal for those who want just one type of rewards card versus many. For instance, one of the flat-rate credit cards, like the Citi Double Cash card or the Chase Freedom Unlimited, would serve you well as the only credit card in your wallet. On the contrary, if you're OK with paying multiple bills and using different cards for different purchases, cash-back cards are complementary to other types of rewards cards. Say you have a travel rewards credit card, for example, that gives you 5x points on flights. You can use that card for your flight reservations, and your flat-rate cash-back card for everything else.
How to choose a cash-back credit card
To choose the right cash-back credit card, the most important thing is to have a clear idea of how you're already spending money each month. We recommend you chart your spending over the past three to six months and break out expenditures into categories, such as dining, groceries and gas. (Budgeting sites like Mint - or even your current bank - do this tracking automatically). Once you identify the categories in which you have the highest, most consistent spending, use the charts in our list to determine which card will net you the highest return. Then, after signing up for a credit card, compare your spending across the same time period with the period before having the credit card. If you notice discrepancies, especially large ones, consider using cash for those purchases or simply take note of how you used to spend and match it up.
Only after you determine which card has the best reward rate for your categories should you take a look at the additional perks and offers, like sign-on bonuses, foreign transaction fees or rental car coverage, and determine which - if any - of them apply to you and how important they are. Some might seem valuable but not actually save you any money, like a card that doesn't charge foreign transaction fees when you never travel abroad.
Annual percentage rates determine the amount of interest you'll pay over the course of the year on any balance you keep on your credit card. Given that our advice is to use your rewards credit card in place of cash and to never carry a balance, APRs are the least influential factor. Most credit cards offer a variable APR in the 15% to 25% range depending on the card and your particular credit score. Compared to reward rates, those numbers are high. Like 5 to 10 times higher than average rewards rates. If you maintain a balance on your credit card statement, you're erasing those rewards and then some, which is why we recommend paying off your balance in full each month.
However, 55% of Americans don't pay off the balance of their credit card every month. If you have any trouble paying off your credit card bill each month, prioritize that before all else. Only after you've relieved yourself of debt and no longer pay interest fees should you consider a rewards card.
Your credit card choice may also be affected by your credit score. Most of the cards we recommend require a good or excellent credit score, which is typically around 650 or higher. If you don't meet the credit criteria required, there are credit cards available that are specifically for those trying to rebuild credit, like secured credit cards.
How to maximize cash-back rewards
The most important strategy for maximizing cash-back rewards might be surprising: don't overspend. Once you start earning points and bonuses and rewards for spending, you may be tempted to try to rack up your rewards, but that will get you further away from your financial goals, not closer. Cash back rewards are a great way to earn a little money back on current spending, but as soon as you spend more than you normally would just to get rewards, the net value will be negative. One way to avoid overspending is by using a budgeting app that keeps you honest, like You Need A Budget.
The second tip is to never miss a payment. If you have to pay a late payment fee or an interest payment for an outstanding balance, your losses will eclipse your rewards very quickly. We recommend paying off your credit card bill twice a month to be safe, or opting into automatic payments.
Finally, to maximize cash-back rewards, consider adding two or three different credit card offers to your wallet. Cards often target just one or two categories, so you may need to enlist several cards to maximize the returns on your spending. That being said, you also need to factor in the time and energy you spend on credit card rewards. At a certain point, the perfect strategy may be too time-consuming and stressful.
Different types of credit cards to consider
Cash-back credit cards are good for the majority of consumers, but there are also other types of rewards credit cards to consider. Travel rewards credit cards, for example, are great for those who travel often or who want to upgrade their travel experience with perks like airline lounge access or upgrades. Travel credit cards reward cardholders with points or miles, like Chase's Ultimate Rewards points or American Express' Membership Rewards points, that can be redeemed for travel purchases.
For those who need to build or rebuild their credit score, secured credit cards and student credit cards are the best options. While many cash back and travel rewards cards require good to excellent credit, these other types of cards help those with lower scores build your credit over time. Secured credit cards require an up-front deposit in the amount of the credit line, so you're basically making a loan to the bank in exchange for credit history. Student cards are designed to help young people without a credit history build credit for the first time. Both usually come with a low credit limit and higher likelihood of approval.
There are also "club" credit cards that are only available to people who are members of a credit union, brokerage, or other type of membership club. Those include credit union credit cards like the Alliant CU Visa, retail cards like the Costco credit card, the Target RedCard and the Sam's Club MasterCard, or the Fidelity cash-back credit cards for Fidelity account holders.
Finally, business credit cards, like the Chase Ink Business line of cards or the Business Platinum Card from American Express, are for small businesses and even contractors and freelancers and geared toward logging business expenses. A business credit card will usually offer rewards for categories such as internet and phone bill expenses, office supplies and other business-related purchases.
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Disclaimer:The comments on this article are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved, or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.The information included in this article, including program features, program fees and credits available through credit cards to apply to such programs, may change from time to time and are presented without warranty. When evaluating offers, please check the credit card provider's website and review its terms and conditions for the most current offers and information. Opinions expressed here are author's alone, not those of any bank, credit card issuer, hotel, airline or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
