Key takeaways

  • Cash back credit cards offer a straightforward way to earn rewards on your spending.
  • Flat-rate cards offer a fixed percentage back on all purchases, while bonus category cards offer higher cash back rates in specific categories.
  • Bonus category cards may require activation and have spending caps, so it's important to understand your spending habits before choosing one.

The best cash back credit cards offer a convenient way to earn rewards on your everyday spending. But cash back credit cards aren’t all the same. You’ll find a lot of variety in terms of reward structures, welcome bonuses, card benefits and redemption options.

The best cash back card for your needs depends on your spending habits and what you expect to achieve with a cash back card. Below, we’ll go over two main types of cash back cards: flat-rate cash back cards and bonus category cash back cards (including both tiered rate and rotating bonus categories).

Flat-rate cash back credit cards

Flat-rate cash back cards offer a fixed percentage back on all your purchases, regardless of what you buy or where you buy it. Many flat-rate cards offer a cash back rate of 1 percent to 1.5 percent, but the best flat-rate cards give you 2 percent back, which means you’ll earn $2 in rewards for every $100 you spend on your card.

Pros of flat-rate cash back cards

  • Hassle-free approach to cash back. Flat-rate cash back credit cards are simple. You won’t have to prioritize these cards for certain purchases in order to maximize your cash back; you’ll receive the same amount of rewards on every purchase.
  • Every purchase is eligible for cash back. Think about that purchase you made last weekend at the flea market, the new tires you bought or the amusement park trip your kids have been begging for all summer. You earn cash back on every eligible purchase, no matter what.
  • No spending cap. Cards with bonus categories usually cap the rewards rate once you hit a certain spending threshold. Spending caps are much less common on flat-rate cards.

Cons of flat-rate cash back cards

  • Reward rates typically don’t exceed 2 percent. Most flat-rate credit cards offer 1 percent to 1.5 percent cash back on every purchase, but it’s becoming more common to come across a card that offers 2 percent cash back. Still, if you know you spend a lot in particular categories, you could earn more with a bonus card that rewards that spending at a higher rate.
  • You’ll receive a fixed amount of cash back on every purchase. While this may be a pro for consumers who prefer flexible spending, this isn’t for people who are trying to maximize their rewards. Regardless of the item purchased, cardholders will receive the same percentage back.
  • Often bare bones in terms of benefits. Flat-rate cash back cards aren’t usually loaded with extra perks and benefits. They usually don’t charge annual fees, either, but you sacrifice some of the extras other cards offer.

Who should get a flat-rate card?

Flat-rate cards are simple. They’re basically a set-it-and-forget-it rewards system since you won’t need to think about which card to use for different purchases. They’re a great companion for those who want one go-to card for all purchases.

Flat-rate cash back cards are best suited for those who don’t want to keep track of different rewards rate categories or remember to activate bonus categories. These cards are also a good choice for people who mostly use their cards to cover spending not typically covered by bonus categories, like bills and utility payments.

Bonus category cash back credit cards

Bonus category cash back cards offer higher cash back rates in specific purchase categories — such as purchases made at restaurants, at gas stations or on travel — and a lower, flat rate (usually 1 percent back) on any other purchases.

Some bonus cash back cards have rotating cash back categories that change each quarter, while others feature a tiered structure that offers boosted rewards in particular categories that don’t change. Some cards also allow you to choose your own bonus spending categories or automatically offer bonus cash back on your biggest eligible spending category for the month.

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Keep in mind: Bonus categories are usually capped, with the cash back rate dropping down to 1 percent after you hit the spending threshold quarterly or annually. There are often activation requirements for rotating cards in order to earn the higher rate, too.

For instance, the Discover it® Cash Back and Chase Freedom Flex℠* require you to activate your new bonus categories each quarter in order to earn the boosted rate. For reference, both the Discover it® Cash Back and Chase Freedom Flex offer 5 percent cash back (activation required) on up to $1,500 in purchases in rotating categories each quarter, then 1 percent back.

Pros of bonus category cash back cards

  • Earn a higher percentage of cash back. Bonus category cards offer a higher percentage of cash back in select categories. Sometimes, these categories change quarterly, often offering 5 percent back on eligible spending, which is significantly more than the average 1.5 percent offered by most flat-rate cards. If you maximize your bonus category rewards opportunities, you stand to earn substantial rewards.
  • Variety of cash back categories available. Bonus category cards allow you to earn an elevated rate in a variety of categories. With a bit of planning, you can really maximize your cash back across an array of categories.
  • Encourage a hands-on approach. Bonus category cards require a certain amount of attention to detail and strategy to truly maximize their rewards. That could be viewed as an added incentive to keep a close eye on your budget and spending.

Cons of bonus category cash back cards

  • Bonus categories might have a spending cap. This varies from card to card, but once you hit a certain spending threshold, your rewards rate might drop to 1 percent.
  • You’ll only earn a higher rewards rate in specified categories. If a card only offers 3 percent back on dining and gas station purchases, you’ll likely earn 1 percent back (typically) on all other types of purchases.
  • Rotating bonus categories can be hard to maximize. Since rewards categories typically change quarterly with these cards, it can be difficult to maximize rewards without planning your purchases in advance.
  • Quarterly activations are sometimes required. Rotating bonus category cards require you to activate your new bonus categories each quarter in order to earn the boosted rate. If you fail to activate the bonus, you will not get the increased rate.

Who should get a bonus category card?

Bonus (and rotating) category cash back cards offer much higher earning potential than flat-rate cash back cards, but they’re not for everyone. To make the most of these cards, you’ll need to understand your regular spending habits. If you’re the type of person who likes to keep track of your spending and enjoys optimizing which card to use for different purchases, then these types of cards could be a good fit.

If you’re considering a card that has rotating bonus categories, be honest with yourself. Will it be a burden to remember to activate your categories each quarter? The activation process is usually as simple as tapping a button, but some people might prefer a more hands-off rewards structure. Also think about whether you spend too much in the bonus categories. If the spending caps for earning top rewards are far below your regular spend, make sure you have a solid backup card option.

The bottom line

Choosing which cash back card is best for you comes down to what you expect to get out of your card. If you don’t care about earning as much cash back as possible — perhaps because it sounds like a hassle juggling several credit cards — then a single flat-rate card is probably your best choice.

Compared to other types of rewards cards that give you points or miles — which can have varying values depending on how you redeem rewards — cash back cards make it easy to know how much you’re getting every time you swipe your card.

However, if you want to maximize your cash back, a single credit card isn’t going to cut it. In this case, you’ll want to choose one or more bonus category cash back cards for your major spending and combine them with a good flat-rate card for everything else.

*Issuer-required disclosure statement
Information about the Chase Freedom Flex℠ has been collected independently by Bankrate. Card details have not been reviewed or approved by the card issuer.