A cashback credit card is a type of reward credit card. We will refund a percentage of all qualifying purchases. Cash back is usually very easy compared to other credit card reward systems. For example, the value of points and miles varies depending on the method of redemption, but cash back is generally the same amount as if it were redeemed as a statement credit, direct deposit, or check.
However, there are many different types of cashback credit cards, including fixed amount, fixed bonus category, and rotating bonus category cards. Ultimately, the best cashback credit card for you is the one that allows you to swipe regularly and rewards you for the types of spending you spend most often.
Think of it as a cashback credit card. A few top picks that should.
- 1 Choose the best cash back card type
- 2 Determine if you are willing to pay an annual fee
- 3 Beware of APR
- 4 Evaluate additional card benefits
- 5 Determine how cashback is redeemed
- 6 Consider Top Cash Back Cards
- 7 Conclusion
Choose the best cash back card type
Cashback cards are organized according to three types of cashback programs: fixed amount, fixed bonus category and rotating bonus category. There is no one-size-fits-all cash back card winner. The credit card that offers the most cash back depends on your daily spending habits. Flat rate cards are a good choice for those who prefer a no-interference approach to earning rewards, but using cards that offer higher cash back percentages in certain fixed or rotating bonus categories can increase overall returns. may be possible.
Fixed Amount Cash Back Card
A flat rate cash back card earns you a percentage (usually 1-2% cash back) on all purchases, whether you're booking a trip or not. Or buy groceries for your family. This simple reward structure makes it easy to cash back your daily spending. In addition, cards with higher fixed cashback percentages are advantageous (if eligible).
If you choose a flat rate cash back card, you must choose a card with at least 1.5% cash back on all purchases. If you are interested in a flat rate card, ideally you should consider a 2% cash back card.
Fixed Bonus Category Cards
Fixed Bonus Category Cards offer higher cash back percentages in certain categories (usually 2-5 percent) and all other We offer at least 1 percent cash back on purchases. Common fixed bonus categories include meals, groceries, and gas station purchases.
However, keep in mind that bonus categories are often limited to a certain annual spend amount. After that, the base cash back rate will be applied to your spend.
Rotating Bonus Category Cards
Rotating Bonus Category Cards offer higher cash back percentages (usually 5%) with purchase categories that change monthly or quarterly. Common bonus categories include home improvement stores, streaming services, drugstores, select retailers and wholesale clubs.
Many cards require bonus categories to be activated to get higher cash back percentages, so schedule a calendar reminder so you don't miss it. Card issuers also often impose quarterly spending caps on this type of cashback. A base cashback rate (usually 1%) is then applied to that category.
Consider getting multiple cash back cards
One of the best ways to maximize your cash back earnings is to have one or more bonus category cards (which reward your most frequent purchases) and a high-earning card that covers all your non-bonus spending. Combining flat rate cards. However, you should decide if you are open to tracking which credit cards you use at which stores in order to get the maximum cashback percentage for each purchase.
Determine if you are willing to pay an annual fee
Many of the best cash back credit cards have no annual fee, but some card issuers charge a card membership fee. However, annual fee costs are often recouped through the cash back, statement credits, or other card benefits you earn. If the card in question has an annual fee, research the card's reward structure and benefits to determine if the annual fee is worth it.
Beware of APR
Whether or not you intend to maintain a balance, it is important to keep an eye on your credit card's interest rate, or APR. The average interest rate on current credit cards is over 19%, and if for some reason you can't pay more than the minimum payment, it will quickly add up.
Some cash back cards offer 0% introductory APR for purchases or balance transfers for a limited time. Therefore, be sure to consider the ongoing interest rate when the introductory APR period ends.
Evaluate additional card benefits
When looking for a card, evaluate other benefits a cash back card may offer. For example,
- Welcome offers to new card members
- Travel benefits such as travel insurance, trip cancellation/interruption coverage, or loss and damage insurance for rental cars
- Protections such as purchase protection, extended warranty coverage, and return protection
- Free membership or subscription (for food delivery services)
- Some products or services discounts or refunds
Not all cashback cards offer these benefits. Ultimately, you should consider whether you actually want to take advantage of any of these perks and whether they are worth it for you.
Determine how cashback is redeemed
Cash back credit cards typically allow cardholders to redeem cash back in the form of statement credits, direct deposits, or checks. In addition, some cards allow cash back to be redeemed for gift cards, charitable donations, purchases at select merchants, points toward travel purchases, and more.
Remember: Credit card rewards are only worth it if: you redeem them. A survey conducted by Bankrate in 2021 found that 31% of his cardholders did not redeem their benefits in 2020. Be aware of issues such as minimum cashback redemption requirements, cashback expiration policies, and other restrictions on how cashback can be redeemed.
Consider Top Cash Back Cards
Some of the best fixed and rotating bonus category cards to consider:
Citi Double Cash Card: Best for Simple Fixed Rewards
- Welcome offer: N/A
- Reward rate: 2 percent — 1 percent on purchase, plus 1 percent on purchase
- Annual fee: $0
The longtime favorite Citi® Double Cash Card has the highest total return of any no annual fee fixed cash back card . For those who don't want to go the extra mile to maximize reward earnings, this is a great choice.
With this card, you can redeem cash back for statement credit, direct deposit, checks or basic Citi ThankYou points. The latter offers more redemption options, allowing you to redeem your points for Citi, gift cards, PayPal purchases, or Amazon purchases.
American Express Blue Cash Preferred Card: Best for Fixed Bonus Category
- Welcome Offer: Within First 6 Months of Card Membership $250 Statement Credit
- Reward Rate: 6% cashback on US supermarket purchases (up to $6,000 annually, then 1%). 6% cashback on select US streaming subscriptions. 3% cash back on US gas station and transit purchases. 1% cash back on all other purchases
- Annual fee: $95 ($0 introductory annual fee for first year)
American Express' Blue Cash Preferred® Card offers a tiered reward structure for common everyday spending, including an incredible 6% cashback at US supermarkets (on spending up to $6,000 annually). , is one of the best fixed bonus category cards. , then 1%), and 3% for US gas station and transit purchases.
In addition to this reward structure, Blue Cash Preferred offers the chance to earn boosted rewards through Amex offers. This program allows you to earn more cash back (up to 20-25% in some cases) on purchases from select merchants. This card includes complimentary ShopRunner membership (registration required), return and purchase protection, rental car loss and damage insurance, extended warranty, and first 12 months after account opening (18.24
Discover Cashback: Great for Cashback category on rotation
- Welcome Offer: Automatic Cashback Match — doubles all cashback earned in the first year
- Reward rate: 5% cashback in quarterly rotating categories (after activation) (up to $1,500, then 1%); 1% cash back on all other purchases
- Annual fee: $0
Discover it® Cash Back stands out among cash back cards thanks to its rotating bonus category and generous welcome offer that doubles all cash back you earn in your first year as a cardholder I'm here. Discover's cash back categories change quarterly, so be sure to check back when the quarterly categories are released. Common rotation categories for 5% cash back include grocery stores, gas stations, restaurants, Target, and Amazon.
With this card you can also get a 0% referral APR offer for 15 months on balance transfers. and purchases (15.74% to 26.74% variable APR since then), making this card a great choice if you need to pay off large purchases over time or pay off credit card debt .
Cash back credit cards are a great way to save a little money on your everyday expenses. When choosing a card, carefully consider your spending habits and how involved you want to be to ensure you get the right card for you. For more help choosing a cash back card, check out our Credit Card User Type Tool to receive personalized credit card recommendations based on your credit score, spending habits, and daily needs.
Don't forget to pay your bill in full every month if you choose regardless of the cash back card. With a current APR of over 19%, all cashback earned will quickly disappear when interest accrues.