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Author: Bankrate Staff | Last Updated: September 19, 2018
Table of contents
- How we chose our favorite cash back credit cards
- Bankrate’s top picks for cash back credit cards of 2018
- What is a cash back credit card?
- How do cash back credit cards work?
- Why use a cash back credit card?
- Cash back rates
- Cash back cards vs. travel rewards cards
- How to chose the right cash back rewards card
- Ask the experts
- Pros and cons of cash back rewards
How we chose our favorite cash back credit cards
Cash back credit cards have become increasingly popular as banks and issuers continue to offer attractive cash back rates and sign-up bonuses. The experts at Bankrate analyzed 680 cash back credit cards against our unique review criteria to identify the best options for multiple scenarios. Each card has been given a Bankrate score out of 100, and our editors have identified what situation each card is best for. These objective scores paired with expert recommendations will help you find the cash back credit card that is right for you.
The scoring criteria created specifically for cash back credit cards evaluates each card on its cash back rate, sign-up bonus, and annual fee. We have done the heavy-lifting to transparently review the best cash back cards on the market and help you find the card that best suits your lifestyle!
- Cash back rate – Cardholders interested in cash back are looking to get the maximum return on their spending. We review the cash back rewards structure to find the best rates of return, identify the highest-value spending categories, and the easiest redemption system.
- Sign-up bonus – In order to attract new cardholders, many credit cards offer bonuses upon signing up for the card. As long as you hit a required spending limit within a set period of time you become eligible for extra cash back, points, or miles. Our experts at Bankrate analyze the value of the bonus and clearly outline what you need to do to earn it.
- Annual fee – Great cash rewards rates don’t mean much if a cards annual fee is too high. Many cards charge a fee to cardholders each year. The Bankrate score takes the annual fee into account. We also signal when there’s a promotional discount on the annual fee, where an annual fee is worth the expense, and explain how much you would need to spend on your card to cover the annual fee with your rewards.
Bankrate’s top picks for cash back credit cards of 2018
|Card Name||Bankrate Score||Best For|
|Capital One® Quicksilver® Card||93/100||Your first credit card|
|Chase Freedom Unlimited®||92/100||1.5% cash back on everything|
|Discover it® Cash Back||93/100||Rotating 5% cash back categories|
|Capital One® Savor® Cash Rewards Credit Card||97/100||Dining and entertainment|
|Citi®Double Cash Card||94/100||Flat-rate cash back|
|Chase Freedom®||90/100||Flexible cash back rewards redemption|
|Wells Fargo Cash Wise Visa® Card||90/100||Additional cash back rewards on mobile wallet purchases|
|Capital One® SavorOne℠ Cash Rewards Credit Card||91/100||No annual fee|
|HSBC Cash Rewards Mastercard® credit card||87/100||An annual cash bonus|
|Bank of America® Cash Rewards credit card||87/100||Banking relationship bonuses|
Capital One Quicksilver Card
For anyone who wants a cash-back card that’s a breeze to understand, the Capital One Quicksilver delivers. There are no changing categories to pay attention to or remembering to use this card over another for the maximum value. Every purchase made with this card will earn 1.5% cash back. It’s that simple.
Chase Freedom Unlimited
We believe this card is just as good as the Blue Cash Preferred® Card from American Express. It’s ideal for the busy cardholder who doesn’t have time to worry about spending on bonus categories.
Discover it® Cash Back
Compared with the other cash-back cards on the market that offer rotating bonus categories, no one even comes close to the Discover it® Cash Back first-year offer. At the end of the first year, Discover will match all of your accumulated earnings. Enroll every quarter to earn 5% cash back on up to $1,500 in purchases made in various categories throughout the year. That’s as good as it gets.
Capital One® Savor® Cash Rewards Credit Card
If you love food, whether it be high-end restaurant gourmet or late-night trips to the drive-thru, this card could be the one for you. The Capital One Savor Cash Rewards Credit Card offers an unlimited 4% back on dining and entertainment, 2% at grocery stores and 1% on everything else. Depending on your spending habits this could really supercharge your cashback returns. Better still, Capital One is offering a generous sign-up bonus of $500 cash back when you spend $3,000 within the first 3 months of opening the card, for average spenders that shouldn’t be a problem. Although this card has a $95 annual fee (waived for the first year), if you are already spending heavily in the dining and entertainment category you will have no trouble making back the expense.
Citi Double Cash Card
When it comes to rewards value, the Citi Double Cash Card ranks among the very best cash-back credit cards that charge no annual fee. We love this card for its simplicity. Citi Double Cash pays 1% cash back when you make a purchase and another 1% back as you pay for that purchase. There’s no cap on how much you can earn back, making this card a leader in the cash-back category.
Bank of America Cash Rewards credit card
If you’re like most American households and are caught up in an endless spending loop of buy groceries, buy gas and repeat, there’s a lot to like about the Bank of America Cash Rewards credit card. The card pays 3% cash back on gas purchases and 2% at grocery stores and wholesale clubs up to $2,500 in combined spending per quarter. You’ll earn 1% on all other purchases.
For those who enjoy the thrill of tracking rotating bonus categories to earn maximum rewards, the Chase Freedom will deliver. The card offers categories that change every three months and pay 5% back, up to a quarterly maximum of $1,500. If you max out the bonus possibilities, you’ll earn at least $300 cash-back annually, plus all of your other spending will earn 1% cash back.
Wells Fargo Cash Wise Visa® Card
If you rarely take out your wallet anymore and rely mostly on Apple Pay® or Google Pay™ this card offers 1.8% cash rewards on qualified mobile purchases with these platforms in the first 12 months of opening the account. On all other purchases, you earn a flat-rate 1.5% cash back, which means you don’t have to juggle category restrictions or sign-up requirements. Wells Fargo also offers cell phone protection (terms apply) if you use your Wells Fargo Cash Wise Visa® Card to pay your monthly phone bill.
Capital One® SavorOne℠ Cash Rewards Credit Card
Foodies who don’t want to pay the annual fee of the Capital One Savor card should consider the SavorOne. The rewards rate is slightly lower than the Savor card but it still offers a competitive (and unlimited) 3% cash back on dining and entertainment, 2% at the grocery store, and 1% on everything else. Those cash back rewards will stack up fast for above-average spenders on the dining and entertainment bonus category.
HSBC Cash Rewards Mastercard® credit card
In addition to the unlimited 1.5% flat-rate cash back this card offers a once-per-year 10% anniversary bonus on all of the cash rewards you have accrued during the last 12 months. If you regularly use this card for your daily spending, that 10% bonus could add up to a substantial sum.
Bank of America® Cash Rewards credit card
If you’re an existing Bank of America customer and are enrolled in its Preferred Rewards program this card could be right for you. You get at least an additional 10% cash back when you deposit your rewards into your Bank of America eligible account. Additionally, if you spend heavily on gas and at grocery stores and wholesale clubs the Bank of America® Cash Rewards credit card offers higher-than-average returns on up to $2,500 in combined purchases each quarter.
What is a cash back credit card?
Cash back credit cards, simply put, give you a rebate on the money you spend every day. For example, if you spend around $4,000 a year on groceries and charge your grocery purchases to a cash back rewards card offering a 2% flat-rate cash back, you would receive $80 in cash back on those purchases. Cash back cards are often simpler than rewards cards which may have a more complicated points redemption structure.
There are many different types of cash back cards. Some offer a standard flat-rate of cash back on every purchase, some have bonus categories that will offer high returns on certain spend groups — like dining and entertainment. Others have bonus categories with high-rates of cash back returns (as much as 5%) that rotate every few months.
This means there’s a card out there to suit everyone. If you want to put in a bit of effort to track and sign up for rotating bonus categories to get higher returns, a rotating category card like the Discover it Cash Back card could be right for you. If you’re looking for a set-it-and-forget-it card that gives you cash back on every purchase then a card like the Citi Double Cash card might be a good choice.
How do cash back credit cards work?
Credit card companies can afford to offer cash back because they make money by charging an interchange fee on every purchase you make. This means that if you made a purchase for $100, the merchant — the seller you are buying the item from — may only receive $97 because they (the merchant) pays the interchange fee. Credit card companies want to encourage cardholders to use their cards as much as possible because the more often you use your card, the more money they make in interchange fees. For instance, a card offering 2% cash back would give you $20 back on a $1,000 purchase, but the merchant (seller) would have paid the issuer $30. Although it’s not quite that cut-and-dry that’s basically how credit card companies can afford to offer generous cash back incentives.
The biggest types of cash back cards earn rewards differently: A flat-rate cash back card gives you the same percentage cash back on every purchase you make, with a category bonus card or tiered bonus cash back card spending on certain categories (like gas, dining, entertainment) will earn you different amounts of cash back. Banks can keep track of where you’re spending your dollars through merchant four-digit category codes which indicate what type of business you’re spending at. It’s important to have the right cash back card to compliment your everyday spending, as experts can attest:
I have several cash back cards. I try and use the card that has the best rewards for the type of spending I am doing. Some cards give extra points for dining or travel.
— David Rae, President of DRM Wealth Management
Pick a card that’s aligned with how you spend money. Some cards give you 2% cash back on all purchases while other may provide 5% cash back in rotating categories (like restaurants or travel) and 1% on everything else. Find the card that will give you the maximum benefit based on which categories you tend to spend the most amount of money in each month.
— Priya Malani, Founding Partner Stash Wealth
The best cards make redemption very easy. Often you can receive cash back as statement credit, gift cards, merchandise, a donation or as a deposit into a bank account. Sometimes your cash back is worth more when used to make purchases through the issuer’s own shopping portal. How you can redeem your cash back is an important factor in deciding which cash back card is right for you.
Why use a cash back card?
If you have a good credit score you should definitely consider a cash back credit card. Using a debit card for your everyday spending is essentially leaving money on the table. With bank interest rates still less than 1 percent, your rate of return on your spending with a good cash back card will actually beat interest accrued in a typical savings account. Also, cash back earned on your credit card is not taxed, unlike interest earned in a savings account.
Credit card rewards can come in other forms like travel rewards points and miles but sometimes cardholders find cash back cards to be the easiest way to earn on their everyday spending. With a cash back card, the amount you accrue is simple and easy to follow, it’s essentially a rebate on everything you spend. So, with a 2% flat-rate cash back card, if you spend $4,000 a month you would get $80 back per month. The alternative points and miles rewards involve keeping track and working out the respective values of these rewards. Some people find that too onerous and not rewarding enough:
I have always chosen cash back credit cards over travel rewards cards for the one reason of simplicity. It is so much easier to know that for every $1,000 I spend I am getting $20 cash back (2%) rather than accumulating miles that have to be used to purchase a flight based on credit card companies’ conversion factors. If I want to travel, I can spend my cash back rewards on flight purchases, it’s so much simpler this way.
— Phillip Christenson, CFA, Portfolio Manager & Financial Advisor at Phillip James Financial
One word of warning: The APR — interest you will incur — on an outstanding balance on a cash back card will far and away outweigh any benefit you receive from the cashback rate. A rolling balance is the biggest way to spoil your cash back rewards. For example, if you charged $500 on your cash-back card, which earns a 1 percent flat-rate and has a 16 percent APR, and then you only paid $100 off your balance, you will have paid $5.33 in interest for $5 cash back. This just keeps getting worse if you repeatedly roll over your balance. However, if you always clear your balance you can keep earning great cash back rewards and never pay a penny in interest. That’s why it’s important to find a card that will work for your existing spending habits. Take a look at what you spent and where you spent it over the last few months to help inform you on what type of card will offer the best rewards rates for your high-spend categories.
Cautionary Note: Don’t spend just to get points. Meaning, If you don’t dine often, don’t start spending excessively on dining to get 1-2% back. You won’t come out ahead with that kind of thinking.
— Christopher Grande, MSIM, CFP®, RMA®, Principal at Walnut Hill Advisors, LLC
Cash back rates
One percent back on all purchases used to be routine, but now several issuers offer a flat 1.5 percent or even 2 percent back on all purchases. There are also bonus category cash-back cards which reward you with higher percentages when you spend within certain parameters. For example, the Capital One Savor card offers unlimited 4 percent cash back on dining and entertainment, 2 percent at the grocery store and 1 percent on everything else. It’s about finding the card that rewards you the highest rate for categories you already spend heavily in. It pays to review your spending and see where you allocate most of your monthly budget.
Other types of cards such as the Discover it Cash Back credit card offer a whopping 5% cash back on up to $1,500 in rotating categories that change every quarter, for example, these categories have included grocery store spending and for the fourth-quarter of 2018 will include purchases made on Amazon.com.
Put all of your recurring bills on your cash back card so you can maximize the cash back you receive each year. It also makes paying and tracking your spending a bit easier when everything is clearly listed on one monthly bill. You may be surprised at how quickly the cash back adds up.
— David Rae, President of DRM Wealth Management
Cash back cards vs. travel rewards cards
Think of cash-back cards as a basic type of rewards card. Although the amount of cash-back and ways to earn bonus cash back can vary greatly from each card, they all give one reward back: cash.
But with travel rewards cards, there are usually multiple ways to use those rewards. Some travel rewards cards give you the option to redeem point or miles for travel or take cash-back. However, travel-specific credit cards will most often give you the maximum value on your rewards if you redeem for travel.
Co-branded travel cards are when issuers partner with airlines or hotel chains to offer loyal customers additional benefits on their spending with the brand. For instance, an airline co-branded card will often earn higher rates of miles on purchases made with the airline but they also sometimes feature additional perks like automatic status and a free checked bag. Some premium rewards cards will give you a greater redemption value if you use the accrued rewards to book travel through their portal.
If you don’t travel very often, or just want a more straightforward earnings structure and flexible redemption, a cash back rewards card can make a lot more sense than travel rewards points.
I used to use a travel rewards card and ended up with over 250,000 points, which was enough for multiple trips to Australia, or so I thought. When I went to use the points, taking into account the blackout dates and the fees, it was really only good for a couple of trips to Florida. With cash back, you know for sure that you’re getting 2% back on everything you spend. It’s a lot easier to see the value.
— Eric Arnold, Co-founder and CEO of Planswell
Just as there is no one best cash-back credit card for everyone, the same is true of travel rewards cards. Someone who only travels once a year by car will benefit more from a different type of card than a globetrotting wanderer.
Someone who is trying to stick to a budget, save more, spend less or pay down debt should consider a cash back card over a travel rewards card because they’ll be able to put more cash towards these specific goals. A travel rewards card might incentivize more spending even though you may get a free flight.
— Levi Sanchez, CFP®, BFA, Financial Planner Millenial Wealth
How to choose the right cash back card
Finding the right card for you is simple. Review your spending for the past few months and see what categories you spend the most on. Check your credit score to see what cards you are likely to be approved for.
Decide on the features that are most important to you and research the best cash back cards. Apply for a cash back credit card that offers the best rewards for your highest-spend groups. For instance, if you notice that a considerable portion of your monthly budget goes on eating out at restaurants then focus on cards that offer high cash-back rates on dining. If you can’t pinpoint an area where you spend the most, it’s hard to go wrong with a general purpose cash-back card — it’s like getting a discount every time you spend on the card.
A busy suburban family, for example, will likely benefit more from a card that offers greater rewards on gas and groceries than a single urban dweller who frequently dines out and doesn’t own a car.
Frequent warehouse shoppers may find that a co-branded card to their favorite location will give them the most bang for the buck.
Match your rewards to your lifestyle needs. If you want to enjoy flexible benefits with extra cash rather than have a plan to travel, cashback may be a better fit compared to other types of rewards like travel, airline or hotel cards.
— Aris Jerahian, AVP Card Services
Although it’s important to find the cashback rate that best suits your lifestyle you should also compare cards on things like annual fees. Some cards charge cardholders a fee every year and even if the rewards are very generous, this fee can eat into the overall value of the card. Consider the cards interest rates if you’re worried you might occasionally carry a balance. Another important point of comparison is sign-up bonuses. Some cards offer very generous sign-up bonuses after you spend a certain amount over a given time period (usually the first three months after you open the account). These welcome offers can be hundreds of dollars in cash back but make sure not to be seduced by the sign-up bonus if it would require you to overspend and carry a balance.
Cash-back cards are best for disciplined spenders who consistently pay off their credit card balance each month. Doing so can maximize the benefits of this type of card, boosting savings on budgeted expenses. Otherwise, interest charges incurred on a balance can eat into the rewards earned on your spending habits.
Do your research! If you already have a debit card through your bank, check out what cash back cards they offer and what additional benefits you may get for being an existing customer. Then, research other options to be sure you’re picking the best option for you. Choose a card that will give you cash back on the things you regularly purchase.
— Lauren Stansell, CFP®, Financial Planner Yebu.com
Ask the experts
What are some tips for beginners using a cash back card?
Make sure you understand what the terms are for receiving cash back, like which purchases are eligible and if you’re going to be paying an annual fee for the card. Don’t let attractive offers lead you into opening a credit card unnecessarily. It’s not worth damaging your credit simply to chase down rewards. Find what works best for you, be disciplined and stick with it.
— Douglas A. Boneparth, CFP®, President of Bone Fide Wealth, LLC
How do you like to use your cash back rewards?
I use them to cut costs. I leverage the cash back to increase personal cash flow. I encourage my private clients and corporate employees to do the same. Don’t waste the cash back benefit on unwanted spending. Use the cash back to grow net worth.
— Mark Struthers, CFA CFP®, Founder and Financial Advisor at Sona Financial
Pros and cons of cash back cards
- These cards typically don’t charge an annual fee.
- Flat rate cash-back cards are an effortless way to earn money back for spending the way you would normally.
- If you’re highly organized and up for the challenge, combining a flat-rate cash-back card with one that offers rotating bonus categories, can net you some serious savings.
- You can redeem the savings as a statement credit on your card.
- Using one of these cards can cut back the bill for your regular monthly spending, helping to make extra room in your budget.
- There may be caps on how much cash back you can earn.
- Cash-back cards typically have meager or no sign-up bonuses.
- There are different levels of complexity with different types of cards.
- If you don’t pick the right type of card for your spending habits, you won’t maximize the value.
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