Cash is king when it comes to credit card rewards. Most rewards credit cardholders (55 percent) made a cash back redemption between Feb. 2022 and Feb. 2023, according to a Bankrate survey. That compares with just 16 percent who redeemed for a free hotel stay and 13 percent who secured a free flight.

I’m a big proponent of cash back credit cards myself. I appreciate the ability to get money back on purchases I would have made anyway. Unlike many travel cards, cash back cards tend to be very straightforward. There’s also universal appeal — who couldn’t use more cash, right? And most cash back cards don’t charge annual fees.

Especially considering the high cost of living these days, getting a rebate on everything you buy can add up. In 2023, my family racked up more than $2,300 in cash back using cash back cards.

Of course, if you carry a balance, you should prioritize your interest rate, since the average credit card rate is over 20 percent. Focus on paying off your debt at the lowest possible cost (perhaps via a top balance transfer card). Once that’s done, then you can go after rewards more aggressively.

What’s the best credit card to have?

The high end of the mass-market cash back space is 2 percent back on every purchase. Examples include the Wells Fargo Active CashⓇ Card (2 percent cash rewards on purchases) and the Citi Double CashⓇ Card (which technically gives 1 percent back when you buy something and another 1 percent when you pay it off). The PayPal Cashback Mastercard* is another intriguing option; it gives 3 percent cash back when you check out with PayPal and 2 percent cash back on other purchases.

If you can avoid interest by paying your credit card bills in full, it’s hard to top a simple no-annual-fee card that gives you at least 2 percent cash back on every purchase. I used to be afraid to give that answer. It’s a little boring, right? I used to name flashier cards like the Chase Sapphire ReserveⓇ and The Platinum CardⓇ from American Express. People would always nod when I mentioned perks such as airport lounge access and first-class upgrades. And those are great cards — for some people.

But even with all of their various credits and benefits, the fact is, they’re expensive cards to hold. Most people can’t (or won’t) spend that much on an annual fee ($550 or $695 per year, respectively) for a credit card. Honestly, most of us don’t travel enough to maximize the benefits anyway.

Niche options with even higher cash back rewards

There are some under-the-radar options that give even more than 2 percent back on every purchase. For example, the Farmers Insurance Federal Credit Union Crystal VisaⓇ* gives 3 percent cash back on every purchase made in a cardholder’s first 12 months with the card (up to $10,000 in purchases per monthly billing cycle). That drops to a still-strong 2.5 percent cash back on everything (up to the $10,000 monthly spending cap) in year two and beyond. There’s a $99 annual fee which is waived the first year. Anyone can join Farmers Insurance Federal Credit Union by becoming a free member of the American Consumer Council, though a bigger obstacle is that prospective cardholders need to have a checking or savings account with the credit union, too.

The Alliant Cashback VisaⓇ Signature Credit Card* also gives 2.5 percent cash back on everything up to a $10,000 monthly spending limit. But whereas the Farmers Insurance card doesn’t offer any rewards beyond the $10,000 monthly limit, the Alliant card still gives a respectable 1.5 percent back. The Alliant Cashback Visa Signature doesn’t assess an annual fee, but cardholders are required to have an Alliant High-Rate Checking account with e-statements, at least one monthly electronic deposit and an average daily balance of $1,000 or more.

Savings

Money tip: Some users love these cards, while others find the various requirements too onerous. If you spend close to $10,000 per month and enjoy cash back, they’re enticing options to consider.

If you want to avoid annual fees

The Discover itⓇ Miles card provides 1.5X miles on all purchases and, as a welcome offer, it matches all miles earned during the first year, at the end of the first year. This card could essentially be used as a 3 percent cash back card in the first year (dropping to 1.5 percent after that). Miles can be redeemed for statement credits and bank account deposits (basically cash back) and also used to offset travel purchases.

If you’re only going to use one card over the long haul, then I’d vote for a card like the Wells Fargo Active Cash, Citi Double Cash or PayPal Cashback Mastercard that essentially gives 2 percent cash back on most (or all) purchases without an annual fee. Frequent PayPal users could push their blended return well over 2 percent since PayPal purchases earn 3 percent back.

If you’re willing to put up with some extra restrictions, such as redeeming into a separate account held with a particular financial institution, then the FidelityⓇ Rewards Visa SignatureⓇ Credit Card*, TD Double UpSM Credit Card* and SoFi Credit Card* fit the bill, too.

Or, like I said, the aforementioned Farmers Insurance and Alliant options might be even better if you’re willing to pay the annual fee and jump through those additional hoops.

The multi-card strategy

If you’re a maximizer who’s willing to juggle different cards for different purchases, you can earn 3, 4, 5, sometimes even 6 percent cash back on certain purchases.

For instance, I’m a huge fan of the Blue Cash PreferredⓇ Card from American Express. It gives 6 percent cash back at U.S. supermarkets (on up to $6,000 in annual spending, then 1 percent after that). Cardholders also get 6 percent cash back on select U.S. streaming subscriptions and 3 percent cash back on U.S. gas station purchases and public transit. But since other eligible purchases earn just 1 percent cash back, that’s where having a 2 percent card comes into play.

To start, figure out where you spend the most money and lean into those categories (groceries, dining, travel, gas or something else). Whatever it is, maximize it. But since most cards with lucrative bonus categories only give 1 percent cash back on “everything else,” your 2 percent cash back card is an excellent supplement.

Star Alt

Keep in mind: In 2023, about 60 percent of my family’s spending fell into an “everything else” category, which is surprisingly high considering we have cards that maximize popular types of spending such as groceries, gas, dining and more.

The bottom line

There’s a good place for a no-annual-fee 2 percent cash back card in every wallet, whether it’s the card you pull out for every purchase or part of a mix-and-match strategy.

Have a question about credit cards? E-mail me at ted.rossman@bankrate.com and I’d be happy to help.

*The information about the PayPal Cashback Mastercard®, Farmers Insurance Federal Credit Union Crystal Visa, Alliant Cashback Visa Signature Credit Card, Fidelity® Rewards Visa Signature® Credit Card, SoFi Credit Card and TD Double Up℠ Credit Card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.