Some of the offers on this page may have expired.
The information about the Alliant Cashback Visa® Signature Credit Card, Bank of America® Cash Rewards credit card, Capital One Savor Cash Rewards Credit Card, Discover it® Cash Back and Wells Fargo Cash Wise Visa® card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.
This page includes information about Discover products that are not currently available on bankrate.com and may be out of date.
Bankrate helps you cash in on cash back credit cards
Looking to earn cash back on credit card purchases? We can help you pick the right card for it. Before you make your decision, take a look at what you need to know about cash back credit cards.
Bankrate’s top picks for best cash back credit cards
A closer look at our top cash back card selections
Chase Freedom Unlimited®
Why it’s the best cash back card for sign-up bonus
- You’ll earn $200 when you spend $500 on your card within 3 months of account opening
- Earn 5% on travel purchased through Chase, 3% on dining at restaurants and drugstores, and 1.5% on all other purchases.
- Redeem for cash back, travel, gift cards or shop with points on Amazon.com
This card isn’t for you if: You’re a frequent international traveler hoping to use this card abroad. Outside of the U.S. or online with foreign merchants, you’ll be charged a 3% foreign transaction fee on every purchase.
Bottom line: The Freedom Unlimited is a solid no annual fee cash back card with a simple rewards structure and an easily-attainable sign-up bonus.
Read our full review and find out how to apply.
Blue Cash Everyday® Card from American Express
Why it’s the best no-annual-fee cash back card for families
- Earn 3 percent cash back at U.S. supermarkets on your first $6,000 in purchases per year, 1 percent back after that
- Unlimited 2 percent cash back at U.S. gas stations and select U.S. department stores
- 1 percent cash back on all other purchases
- Get a $150 statement credit when you spend $1,000 in the first three months
- No annual fee
- Terms apply
This card isn’t for you if: You plan to use it abroad. The card carries a foreign transaction fee (see rates and fees) of 2.7 percent, so it’s not the best choice if you regularly travel overseas or make online purchases from international vendors.
Bottom line: The Blue Cash Everyday Card offers impressive cash back rates at U.S. supermarkets, U.S. gas stations and select U.S. department stores, all without charging an annual fee. It’s a smart pick for budget-conscious families.
Read the full review and apply on the American Express secure website.
Citi® Double Cash Card
Why it’s the best cash back card for no annual fee
- 2 percent on every purchase – unlimited 1 percent cash back when you buy, plus an additional 1 percent as you pay for those purchases.
- 18-month 0% introductory APR offer on balance transfers (13.99% – 23.99% variable APR thereafter)
- The Lost Wallet® Service will replace your lost card within 24 hours
- No annual fee
This card isn’t for you if: you spend a lot in one or two particular categories, such as groceries or dining. If that sounds like you, you’re probably better off with a card that rewards spending in a category of your choice at a higher rate.
Bottom line: The Double Cash card is a great tool for practicing healthy card habits due to its 1 percent cash back incentive after paying off a purchase. Simple and lucrative, this card is great for those looking for an option that involves minimal upkeep.
Read our full review and find out how to apply.
American Express Cash Magnet® Card
Why it’s the best card for cash back with payment flexibility
- Earn unlimited 1.5% cash back on all eligible purchases
- The Plan It® feature lets you split up large purchases over time with a fixed monthly fee, while Pay It® lets you quickly pay off small purchase amounts while still earning rewards
- No annual fee
- Welcome offer is $150 statement credit after you spend $1,000 in the first 3 months
- Terms apply
This card isn’t for you if: You want higher cash back rates in specialized categories, such as gas or groceries.
Bottom line: This card gives you the opportunity to earn cash back at a steady rate and enjoy greater flexibility in managing your balance.
Read the full review and apply on the American Express secure website.
Capital One® Quicksilver® Cash Rewards Credit Card
Why it’s best for your first cash back card
- Earn 1.5% cash back on all purchases with no limit on how much cash back you can earn
- $150 sign-up bonus when you spend $500 in your first three months
- 15-month 0% introductory offer on purchases (15.49%-25.49% variable APR thereafter)
- No annual fee
This card isn’t for you if: You’re looking for a high-earning cash back card.
Bottom line: The Quicksilver from Capital One is a great starter cash back card for earning rewards on everyday purchases.
Read the full review and apply on Capital One’s secure website.
Blue Cash Preferred® Card from American Express
Why it’s the best overall cash back card for families
- 6 percent cash back at U.S. supermarkets (on up to $6,000 annually and 1 percent after) and 3 percent cash back at U.S. gas stations
- 6 percent cash back on select U.S. streaming services, 3 percent cash back on transit and 1 percent cash back on everything else
- The welcome offer is a $250 statement credit after you spend $1,000 in the first 3 months
- A variety of travel, entertainment and shopping perks
- Terms apply
This card isn’t for you if: You don’t spend a lot at U.S. supermarkets and U.S. gas stations, or on select U.S. streaming services. These spending categories are the key to maximizing the card’s value and offsetting the $95 annual fee.
Bottom line: You can earn outstanding cash back rewards with this card for feeding your family members and filling up your family vehicles. The select U.S. streaming service category is also great for families who get their TV entertainment online.
Read our full review and find out how to apply.
Capital One® SavorOne® Cash Rewards Credit Card
Why it’s best for dining and entertainment with no annual fee
- Unlimited 3 percent cash back on dining and entertainment, 2 percent on grocery stores (excluding superstores like Walmart® and Target®) and 1 percent on everything else
- Earn $150 cash bonus when you spend $500 in your first three months
- 15-month 0% introductory APR offer on purchases(15.49% – 25.49% variable APR thereafter)
- No foreign transaction fees
- No annual fee
This card isn’t for you if: You don’t regularly spend on entertainment and dining out.
Bottom line: The SavorOne is a handy no-annual-fee card for earning unlimited cash back on entertainment and dining.
Read our full review and find out how to apply.
Chase Freedom Flex
Why it’s best for cash back in multiple categories
- 5 percent cash back on grocery store purchases in your first year (on up to $12,000), not including Walmart or Target
- 5 percent cash back on travel purchased through Chase Ultimate Rewards
- 3 percent cash back on drugstore purchases and at restaurants, including takeout and eligible delivery services
- Earn 5 percent in Chase rotating bonus categories on up to $1,500 in purchases per quarter (activation required)
- No annual fee
This card isn’t for you if: You already have a no-annual-fee cash back card geared toward food shopping, such as the Blue Cash Everyday Card from American Express, with permanent high rates in that category.
Bottom line: If your spending habits match up with the high-rate categories, the Chase Freedom Flex could be one of your top options for a cash back card.
Learn more and find out how to apply.
Credit One Bank® Platinum Rewards Visa with No Annual Fee
Why it’s the best cash back card for cellphone, internet and TV bills
- 2 percent cash back on mobile phone, internet, cable and satellite TV services
- 2 percent cash back on eligible gas and grocery purchases
- No annual fee
- Boost your cash back rewards earnings by as much as 10 percent at select merchants with the More Rewards program
This card isn’t for you if: You’ll carry a balance or sometimes pay late. With its high variable APR and late payment fee, you’ll rack up fees and expenses if you don’t use this card correctly.
Bottom line: With its ulta-practical rewards categories, this is a good cash back card if you’re determined to build your credit and spend responsibly.
Learn more and find out how to apply.
Capital One® QuicksilverOne® Cash Rewards Credit Card
Why it’s the best cash back card for fair credit
- The card earns 1.5 percent cash back unlimited on all eligible purchases.
- You can automatically be considered for a higher credit line in as little as 6 months.
- You can apply with a Fair to Good credit score (580-740 FICO)
This card isn’t for you if: You don’t commit to using it responsibly. You’ll need to pay your balance in full and on time or face 26.99 percent variable APR. Making unpaid balances a habit could also affect your eligibility for a higher credit line.
Bottom line: This card could help you move your credit score into the Good range and earn cash back rewards in the process, but responsible behavior on your part is essential.
Read our full review and find out how to apply.
Capital One® Spark® Cash for Business
Why it’s the best cash back card for small businesses
- Earn unlimited 2 percent cash back
- Free employee cards and customizable spending limits
- Free year-end spending summaries to simplify taxes
- No foreign transaction fee
This card isn’t for you if: You won’t pay your balance in full each month. The APR is high compared with other business cards, so you could easily end up paying far more in interest than you earn in rewards cash.
Bottom line: A rewards rate of 2 percent cash back on all purchases is pretty great, especially when applied to costly business expenses. Small business owners who use the Spark Cash as their primary payment method will easily find value in this card, both for the cash back and additional business perks.
Read our full review and find out how to apply.
Bank of America® Cash Rewards credit card
Why it’s the best cash back card for choice of rewards category
- Bank of America Preferred Rewards members can earn 25% – 75% more cash back on every purchase, adding value to an already robust rewards program.
- Having the choice of six categories for 3% cash back (travel, gas, online shopping, dining, drug stores and home improvement/furnishings on the first $2,500 in combined 2% and 3% category purchases each quarter) provides a ton of flexibility for earning rewards. You also get unlimited 1% cash back on all other purchases.
- 0% intro APR offers for 15 billing cycles for purchases, and for any balance transfers made in the first 60 days (15.49% – 25.49% variable APR after offers expire). A 3% fee (min $10) applies to all balance transfers.
- The sign-up bonus — $200 in online cash rewards after you make $1,000 in purchases during the first 90 days — is easily obtainable.
This card isn’t for you if: Your spending habits don’t align with the quarterly earning limits. The $2,500 cap on combined spending for your 3% choice category and the 2% grocery store and wholesale club category could limit the earning potential of big-time grocery shoppers.
Bottom line: The banking bonuses help make this card an attractive companion for BofA account holders who make a fair amount of household-oriented purchases.
Read the full review and apply on Bank of America’s secure website.
The information about the Bank of America Cash Rewards credit card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.
Wells Fargo Cash Wise Visa® card
Why it’s the best cash back card for digital wallet users
- The normal 1.5 percent cash rewards rate rises to 1.8 percent on qualified digital wallet purchases (including Google Pay™ and Apple Pay®) during the first 12 months you own the card.
- Pay your monthly cellular phone bill with the card and get up to $600 protection on your cellphone against covered damage or theft (a $25 deductible applies).
- Spend $500 in your first three months and earn a $150 cash rewards bonus.
- No annual fee
This card isn’t for you if: You’re not a frequent digital wallet user, or you want a cash back card with a higher rewards rate.
Bottom line: The first-year digital wallet bonus of 1.8% on qualified purchases and the cellphone protection offer make the Wells Fargo Cash Wise Visa card an interesting option for phone-first consumers looking to earn cash back rewards.
The information about the Wells Fargo Cash Wise Visa® card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.
Read the full review and apply on Wells Fargo’s secure website.
Discover it® Cash Back
Why it’s the best cash back card for a first-year bonus
- Discover will automatically match all of the cash back you’ve earned at the end of your first year.
- When you activate the bonus categories each quarter, you earn 5 percent cash back on rotating category purchases (up to $1,500 a quarter and 1 percent thereafter).
- Outside the bonus category purchases, you earn unlimited 1 percent cash back.
- You can plan your spending patterns for the entire year by checking Discover’s 5% Cash Back Calendar (bonus categories for the first quarter of 2020 are grocery stores, Walgreens and CVS).
This card isn’t for you if: You don’t commit to activating the bonus categories each quarter. For cash back that flies on autopilot, consider a flat-rate card.
Bottom line: The Discover it Cash Back has considerable earning potential, especially for your first year as a cardholder. Just remember to track the rotating categories and activate each quarter.
Read the full review and apply on Discover’s secure website.
The information about the Discover it Cash Back has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.
Capital One® Savor® Cash Rewards Credit Card
Why it’s best cash back card for dining and entertainment
- Get an unlimited 4% cash back on dining and entertainment, 2% at grocery stores and 1% on everything else
- $300 cash bonus when you spend $3,000 in your first three months
- No foreign transaction fees
This card isn’t for you if: You don’t get out often, for dining, movies, concerts, etc.
Bottom line: As the sibling to the SavorOne, the Savor card is a stellar way to earn a high level of cash back rewards on your dining and entertainment purchases.
Read the full review and apply on Capital One’s secure website.
What is a cash back credit card?
Just as the name says, cash back cards reward you for eligible purchases by giving you a percent of your purchase price back. For example, a 3 percent cash back rate means you earn 3 cents back for every dollar in eligible spending. For a cardholder with a $4,000 annual grocery bill, earning 3% at the supermarket could mean up to $120 in cash back rewards.
Cash back is essentially a discount on eligible purchases. You may not see it immediately at the register, but the payoff comes when you redeem your rewards.
Cash back cards are different from other types of rewards cards, like those that offer points or miles for travel purchases. Instead of complicated redemption programs, a cash back card typically offers a few simple ways to redeem your rewards, including:
- Statement credits
- Checks payable to you
- Direct deposits into one of your bank accounts
- Gift cards
Pros of owning a cash back card:
- Most cash back cards offer an unlimited 1% cash back on purchases outside of bonus categories.
- Many offer cash back bonuses for hitting certain spending requirements within a time period.
- You can normally redeem your cash back for things like merchandise, airfare, hotel stays, statement credits and more.
Cons of owning a cash back card:
- Some cards require enrollment to receive higher cash back rates in bonus categories each quarter.
- It’s not unusual for issuers to put a cap on how much you can earn within higher rewards categories.
- You may have trouble maxing out your bonus categories if they aren’t relevant to your lifestyle.
How popular are cash back rewards?
Thirty-one percent of consumers surveyed in a 2019 CreditCards.com poll said their favorite credit card feature is 3 percent cash back on all purchases. The cash back feature was nearly twice as popular as the poll’s second-place finisher, a sign-up bonus worth $500 in cash.
Favorite credit card features
| 3% cash back on all purchases |
31% |
| $500 sign-up bonus |
17% |
| 0% interest on new purchases for 18 months or billing cycles |
14% |
| 0% interest on balance transfers for 21 months |
12% |
| Sign-up bonus worth $1,200 toward airline ticket or hotel stay |
11% |
Source: CreditCards.com
Other research points to the popularity of cash back rewards. A 2018 study by credit card service company TSYS (Total System Services) has found that cash back is the most popular type of credit card reward. Of the consumers surveyed by TSYS who had a credit card with a rewards program, 80% had redeemed for cash back.
How the different types of rewards structures work
Cash back cards come in a variety of forms. Flat-rate cash back cards, for example, give you the same rewards rate on every purchase. Cards with rotating categories or tiered cash back cards have categories that offer more cash back within certain spending groups (such as restaurants and gas stations).
Cards like the Discover it® Cash Back have rotating bonus categories that take a bit of effort to navigate in part because of the required quarterly sign-up. But with these cards, you’ll have the chance to earn a high level of rewards in a variety of categories throughout the year. With tiered rewards, you earn a set amount year-round for specific categories, such as 6% at U.S. supermarkets (on up to $6,000 annually, then 1%) with the Blue Cash Preferred® Card from American Express.
When deciding which type of cash back card is best for you, it’s important to know all of the options available to you.
Flat-rate
Flat-rate cash back cards offer the same rewards rate for each eligible purchase. These cards are great for those who aren’t keen on activating and tracking bonus categories each quarter. The Citi® Double Cash Card is a prime example of a flat-rate cash back card, as it offers 2% on every purchase — unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.
Tiered
Tiered cash back cards earn you more cash back the more you spend — or in some cases, the more money you have available in your associated account. For example, the Bank of America® Premium Rewards® Visa®credit card offers higher rewards rates based on your Bank of America checking, savings or investment account value. If your account is worth $20,000-$49,999, you’ll get 2.5X points back on travel and dining and 1.875X on everything else, compared to the normal 2X on travel and dining and 1.5X on everything else. And it only goes up from there — you’ll earn 3.5X on travel and dining and 2.625X on everything else with an account value of $100,000 or more.
The information about the Bank of America® Premium Rewards Visa® credit card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.
Rotating bonus categories
With rotating categories, you’ll often get higher rewards rates, but a majority of these cards require enrollment in order to receive cash back in the category. This can be a problem for forgetful cardholders. Normally, if you forget to enroll, the issuer defaults your earnings in that category to 1% cash back.
Also, take category caps into consideration. Cards with rotating bonus categories tend to set caps on how much you can earn in high rewards categories. For example, the Discover it® Cash Back offers 5% cash back on rotating categories when you activate and enroll, but it caps the bonus rate earnings at $1,500 in purchases per quarter. After that, you’ll earn an unlimited 1%.
What is the highest-paying cash back card?
Consumers can choose from hundreds of cash back credit cards that reward purchases ranging from the general (1 percent back on all eligible purchases) to the specific (6 percent back on select U.S. streaming services). Each one puts money back in your wallet, but which credit card pays you the most cash back?
The answer depends on a lot of factors, but two cards that definitely belong in the conversation are the Blue Cash Preferred Card from American Express and the Alliant Cashback Visa® Signature Credit Card . Ultimately, your spending habits determine which card is going to work hardest for you.
A closer look at the Blue Cash Preferred
Here’s a breakdown of the card’s cash back potential.
Rewards rates and categories
- 6% cash back at U.S. supermarkets (up to $6,000 annually, then 1%)
- 6% cash back on select U.S. streaming services
- 3% cash back on transit (including rideshares, tolls, taxis and buses)
- 3% cash back at U.S. gas stations
- 1% on everything else
- Terms apply
Spending limit
- $6,000 at U.S. supermarkets per year, then 1%
Definitions and exceptions
American Express defines “supermarkets” quite narrowly. Merchants not included in the category include superstores (such as Target), warehouse clubs (such as Sam’s Club) specialty stores (such as wine shops) and convenience stores. Eligible purchases at non-supermarket establishments earn 1 percent cash back, not 6 percent.
Offsetting costs
How much could you earn with Blue Cash Preferred?
If you max out the U.S. supermarkets category, you’ll earn $360 per year (6 percent of $6,000). However, bear in mind that you’ll continue to earn for U.S. supermarket purchases, at 1 percent unlimited, after you hit the $6,000 limit.
You’ll also earn unlimited cash back in four other categories: 6 percent on select U.S. streaming services, 3 percent on transit, 3 percent at U.S. gas stations and 1 percent on other eligible purchases.
The $360 per year from maxing out the U.S. supermarkets category could be just the beginning, given the earning potential in the remaining categories. Families that spend a lot at supermarkets and gas stations could easily see several hundred dollars in cash back every year.
A closer look at the Alliant Cashback Visa
While most flat-rate cash back cards earn 1, 1.5 or 2 percent, the Alliant Visa Signature card rewards a whopping 2.5 percent on all purchases (on up to $10,000 in purchases per billing cycle). Plus, your first year of membership has an especially high earning potential since the $99 annual fee is waived.
Rewards rates and categories
- 2.5% cash back on all purchases (on up to $10,000 in qualifying purchases per billing cycle)
Spending limit
- $10,000 (equal to $250 in cash back) per billing cycle
Definitions and exceptions
In order to qualify for the Alliant Visa Signature, you have to either live in one of the Illinois communities Alliant serves, be a relative of an existing Alliant member, or have a membership in select organizations you can find on their site. However, if none of the requirements apply to you, a $10 minimum donation to Foster Care to Success will also qualify you for membership.
Offsetting costs
- $99 annual fee (waived first year)
How much could you earn with the Alliant Cashback Visa?
The rewards rate is 25 percent higher than a typical 2 percent cash back card, so big spenders can see substantial cash back earnings. One potential problem is the annual fee, which is waived for the first year. If you don’t spend at least $3,960 annually on this card, you’ll actually lose money by owning it. That is, your cash back earnings won’t make up the cost of the annual fee until you spend $3,960 ($3960 x 2.5% = $99). Plenty of people spend well over that amount annually on credit cards, so it’s just a matter of taking a good look at your budget to get an estimate of your earnings with this card, rather than a cash back card with no annual fee.
The information related to the Alliant Cashback Visa® Signature Credit Card has been collected by Bankrate.com and has not been reviewed or provided by the issuer or provider of this product or service.
Honorable mention: Discover’s first-year phenoms
No discussion of high-earning cash back cards would be complete without mentioning Discover. The discussion just needs to include an asterisk with the notation “year one.”
Discover offers several cash back cards with the Cashback Match™ feature. You can see your initial earnings effectively double when Discover matches all the cash back you’ve earned at the end of your first year.
Take the Discover it Cash Back as an example. If you activate and max out your spending in the rotating bonus categories (5 percent up to $1,500 each quarter, then 1 percent), your yearly earnings in those categories alone would reach $300. Add the Cashback Match and you’d have $600 cash back in bonus categories at the end of your first year.
Bear in mind, that $600 figure doesn’t include the 1 percent you would continue to earn after hitting the $1,500 quarterly limit or the unlimited 1 percent for non-category purchases. One catch: the Cashback Match applies only to your first year as a cardholder.
The other catch is that to continue earning at least $300 per year in the bonus categories afterward, you’d need to keep adjusting your spending patterns to align with the rotating categories and keep remembering to activate each quarter. In other words, the discipline required to maximize your rewards with any rotating category card gives “earning cash back” a double meaning.
Still, the overall quality of Discover’s cash back cards makes each one an attractive option even after the Cashback Match is a distant memory.
Figuring out which card is right for you
Review your spending for the past few months to see which categories you purchased the most in, and make sure to have your credit score handy to know which cards you have a chance at being approved for.
A busy family of four would most likely benefit more from a card that offers greater rewards on gas and groceries, such as the 6% cash back at U.S. supermarkets (on up to $6,000 annually, then 1%) and 3% at U.S. gas stations offered by the Blue Cash Preferred® Card from American Express, than a cash back card focused on travel.
If you can’t pinpoint an area where you spend the most in, go with a general-purpose cash back card that will get you earn rewards on most any kind of eligible purchase.
Pros of owning a cash back card:
- Most cash back cards offer an unlimited 1% cash back on purchases outside of bonus categories.
- Many offer cash back bonuses for hitting certain spending requirements within a time period.
- You can normally redeem your cash back for things like merchandise, airfare, hotel stays, statement credits and more.
Cons of owning a cash back card:
- Some cards require enrollment to receive a high level of cash back each quarter.
- It’s not unusual for issuers to put a cap on how much you can earn within higher rewards categories.
- You may have trouble maxing out your bonus categories if they aren’t relevant to your lifestyle.
Pick a card that’s aligned with how you spend money. Some cards give you 2% cash back on all purchases while others 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
Things to watch out for with cash back cards
With a cash back card, the amount you accrue is simple and easy to follow — it’s essentially a rebate on everything you spend. However, owning any kind of credit card means being aware of some potential pitfalls.
Cash Back rewards terminology
Like any type of credit card, cash back cards play by a certain set of rules. To know how much they pay, you’ll first need to figure out how they pay.
- Rewards rate. The percentage of cash back returned to you for every $1 spent on qualifying purchases
- Categories: The types of purchases that qualify for cash back rewards
- Spending limit. The point where the cardholder maxes out his or her cash back earnings
- Definitions and exceptions. Terms that spell out which purchases qualify for cash back, which applies in part to bonus categories
- Offsetting costs. Usually an annual fee or a foreign transaction fee
APR that cancels out rewards
When you run a large balance on your credit card, APR (annual percentage rate) could cancel out the rewards you’ve earned.
As long as you consistently pay off your balance each month, you can avoid paying these interest charges. But if you tend to carry a balance, your top priority when researching cash back cards should be looking for cards that offer lower APR or a pass on your first late payment.
Overspending for a bonus
Many cards offer sign-up bonuses that require you to spend a specific amount of money within a specific time-frame. You might feel tempted to sign up for a card just for the welcome offer, but be careful. By acting impulsively, you could overspend to qualify for the offer and end up carrying a balance.
Make sure the spending requirement is in line with how much you normally spend with a credit card. Running up a balance you can’t pay off in time could subject you to high APR, potentially making the sign-up bonus a net loss.
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
Survey: Many cash back cardholders leave money on the table
Every time you pay by cash or debit instead of reaching for your cash back credit card, you could be missing out on an opportunity to literally put money in your pocket.
Bankrate.com conducted a survey about the preferred payment methods of rewards credit cardholders, including cash back cards, who pay their bills in full each month. The results found that 55 percent of this group are missing out on rewards due to paying with cash or a debit card when they could be using their rewards credit card instead.
Taking advantage of your cash back rewards is not as complicated as you may think, and the benefit of extra cash means that using your cash back card every time you swipe, tap or buy online might be well worth it.
Cash back rewards you could be earning
The survey looked at consumers’ preferred payment methods for purchases in four major categories: groceries, dining, gas and travel. Using the Citi® Double Cash Card as an example, the researchers estimated how much cash back you could earn in a year if you made these purchases with that card exclusively rather than cash or a debit card.
The Citi Double Cash earns 2 percent cash back on every purchase — 1 percent when you buy and 1 percent as you make payments for those purchases. Based on that earning rate, a cardholder who pays their balance on time and in full every month could expect these earnings if they spent the national average* in those four categories:
|
Groceries |
Dining |
Gas |
Travel |
TOTAL |
| Citi Double Cash Card |
$89 |
$69 |
$42 |
$33 |
$233 |
*As determined by the U.S. Bureau of Labor Statistics, 2018
The study also finds that many rewards cardholders who don’t carry a monthly balance fail to use their cards to pay for purchases that could be earning rewards.
According to the data compiled by Bankrate, 44 percent of rewards cardholders who don’t carry a balance from month to month pay for their groceries with cash or a debit card. A consumer in that group who owns a Citi Double Cash Card could be missing out on $89 — possibly more or possibly less, depending on their spending habits — in cash back on groceries alone each year.
| Rewards category |
Paid with debit card/cash |
| Groceries |
44% |
| Restaurants |
43% |
| Gas stations |
37% |
| Airfare |
15% |
| Hotel |
16% |
How to maximize cash back
Let’s break down how you can get the most out of your cash back credit cards.
Enroll/activate your bonus categories each quarter
Rotating category cards typically require you to enroll or activate (the language varies) the bonus categories for the upcoming quarter to earn the higher bonus rate. If you don’t, you’ll earn the standard rate.
Target your spending
In order to get the most out of a bonus category, try to max out the spending limit for the quarter. Depending on the card, it could be in the neighborhood of $3,000. After you reach the limit, the rewards rate typically returns to the standard percentage.
Be aware that it may be difficult to maximize your rewards if the bonus category covers the kind of purchases you don’t normally spend a lot of money on.
For example, Discover’s bonus categories for July-September 2020 are restaurants and PayPal. By maxing out all four of the Discover it Cash Back bonus categories throughout the year (capped at $1,500 in spending each quarter), you’ll earn $300 in cash back — not including spending you’d do in the 1 percent cash back category; activation required. Say you spend an additional $500 each quarter on non-category spending; that’s an extra $20 in cash back for the year.
Consider combining cards
A combination of cards will probably serve you best. Some rewards credit cards offered by the same issuer let you use different cards to suit your needs and combine points.
Consider the Chase Freedom®, Chase Sapphire Reserve and Ink Business Preferred Credit Card. Consumers who spend across a wide variety of categories can pick up this combination of cards and combine Chase Ultimate Rewards® points when they’re ready to redeem. By having all three cards, consumers can utilize bonus categories efficiently to maximize rewards for the year.
You can try the same kind of strategy with cards from different issuers. The key is to make sure your major spending categories are covered so that you’re always earning the maximum amount of rewards on purchases. In addition to credit cards that offer boosted rewards in a few categories, it’s a good idea to have a flat-rate card in your arsenal as a catchall.
Explore the card’s ‘online mall’
Some card issuers feature online shopping portals that offer cash back incentives, discounts or both. Examples include Chase Ultimate Rewards® and Barclaycard RewardsBoost.
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
Frequently asked questions about cash back credit cards
Is it better to get cash back or points?
The answer depends on personal preference. Cash back is the crowd-pleaser, while points usually appeal to a more niche audience. Typically, you earn points with travel credit cards, so points may be for you if you travel often and want to put your rewards toward airline miles or hotel stays. However, this option may require a bit more legwork. Since the value of a point varies greatly between credit cards, understanding a loyalty program is like learning to use a new currency. Plus, if you want to maximize your earnings, you’ll need to spend time comparing various redemption options such as redeeming points through the credit card issuer’s travel portal or transferring your points to a partner airline.
On the other hand, cash back is a more direct way of receiving your rewards. Most cash back credit cards allow you to pocket your rewards as a direct deposit to your bank account or use them to reduce your credit card account balance. There are plenty of great cash back cards with no annual fee, whereas travel cards typically do charge an annual fee. For the everyday rewards-seeker, cash back is a simple and effective way to watch your rewards stack up.
Does cash back expire?
Many cards offer rewards that never expire, including cash back rewards, as long as your account remains open and in good standing. However, don’t assume that every issuer has this sort of policy. Check the terms and conditions before you apply for a cash back card to see whether the issuer allows unredeemed cash back to expire.
If you do have a card with rewards that expire, keep track of the expiration dates. Look for those dates on your billing statements or the online dashboard and redeem your cash back with time to spare.
Which purchases are valid for cash back?
Most everyday purchases will earn cash back with a cash back credit card, depending on the credit card and the issuer. However, most cards do not earn cash back for certain purchases or non-purchase transactions. Examples of eligible and ineligible purchases include:
Likely eligible for cash back rewards
- Grocery store purchases
- Gas station purchases
- Department store purchases
- Dining and entertainment
- General merchandise
Likely ineligible for cash back rewards
- Gambling purchases, including lottery tickets
- Balance transfers
- Cash advances
- Returns
- Convenience checks
Read the terms and conditions to find out exactly how your credit card issuer defines valid rewards-earning purchases.
What’s the best way to earn cash back online shopping?
Depending on how much you want to manage your rewards, how versatile you want your card to be and your preferred earning rate vs. reward consistency, the best credit card for online shopping may differ. The best strategies for earning cash back may also differ.
Flat-rate and tiered cards
With a card that earns flat-rate cash back on everything, including online purchases, the process is simple. One example is the Citi® Double Cash Card, which earns unlimited 1 percent when you buy and an additional 1 percent when you pay. With flat-rate cards, you don’t have to keep track of rotating bonus categories or activate the categories to earn a higher rate.
Tiered category cards
Certain cards with tiered or specialty categories may offer consistent year-round rewards on online shopping at a higher rate than flat-rate cards. For example, the Bank of America® Cash Rewards credit card (currently not available) features online shopping as one of six 3-percent choice categories (on up to $2,500 in combined choice category/grocery store/wholesale club purchases each quarter, then 1 percent).
Rotating bonus category cards
Cards that offer rotating bonus categories can earn cash back at higher rates, although online shopping categories might not be available year-round and you’ll need to activate or enroll each quarter.
For instance, eligible online purchases made with Discover it® Cash Back earn 5 percent cash back on rotating categories (up to $1,500 per quarter and then 1 percent, activation required) across the final two quarters of Discover’s 2020 cash back bonus categories. From July through September, cardholders earn rewards on PayPal (available for most online purchases), as well as restaurants. The bonus categories rotate to Amazon.com, Target.com and Walmart.com in time for the holidays from October through December.
Which online sellers qualify?
In some cases, online purchases eligible for cash back are limited to a short list of big-name merchants. One exception is the Bank of America Cash Rewards card (currently not available), which earns cash back at a wide variety of online retailers, including specialty merchants such as Etsy.com, in addition to Amazon.com and other superstore websites.
Check your cards terms and conditions carefully and look for a list of qualifying merchants on the card issuer’s website.
Can I earn cash back grocery shopping from home?
With the growing prevalence of curbside grocery pickup and grocery delivery, the best credit cards for groceries generally allow you to earn rewards from orders placed at home.
Perhaps the highest consistent cash back you can earn at a U.S. supermarket comes courtesy of the Blue Cash Preferred® Card from American Express. You can earn a whopping 6 percent cash back at U.S. supermarkets (up to $6,000 per year, then 1 percent) and on select U.S. streaming services, plus unlimited 3 percent on transit (including ride shares and parking) and at U.S. gas stations along with 1 percent back on everything else.
If the $95 annual fee is a deal breaker, then the Blue Cash Everyday® Card from American Express is definitely worth considering. The cash back rate at U.S. supermarkets is lower by half (3 percent on up to $6,000 per year, then 1 percent), but it doesn’t charge an annual fee. The Blue Cash Everyday card also earns 2 percent at U.S. gas stations and select U.S. department stores and 1 percent on everything else.
When a trip to the store just isn’t feasible, some doorstep delivery services like InstaCart and FreshDirect might fall under Amex’s U.S. supermarkets category. This means that you could earn 6 percent cash back with Blue Cash Preferred or 3 percent with Blue Cash Everyday on eligible delivery service orders from superstores and wholesale clubs like Target or Costco, businesses whose merchant category codes mean you typically won’t earn supermarket rewards. Please note that these arrangements are subject to change, so when in doubt check with the issuer.
Unless you’re looking for a retail credit card or one of the best wholesale club cards, frequent superstore and wholesale shoppers should consider a card like Bank of America Cash Rewards (currently not available) for its ongoing wholesale club and online shopping (usable at big box stores) rewards.
Additional reviews and research
Find out more about cash back credit cards with these resources from Bankrate:
Senior Editor Barry Bridges has been writing about credit cards, loans, mortgages and other personal finance products for Bankrate since 2018. His work has also appeared on websites including Nasdaq.com, Zillow.com and The Simple Dollar. He was previously an award-winning newspaper journalist in his native North Carolina. Send your questions about credit cards (and fantasy baseball) to bbridges@bankrate.com.
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