When it comes to finding a cash back credit card that suits your needs, you’ll find almost too many options. Not only will you find cards with different earning structures, but welcome bonuses and cardholder benefits also vary significantly. From there, you’ll notice that all the major card issuers have at least one cash back credit card on offer, and that some issuers, such as Chase and American Express, feature several different cash back credit cards.
With all this being said, one major difference in the top cash back credit cards comes in the way you earn rewards. Are you better off earning a flat rate of cash back, or would you prefer a card with cash back categories that give you more than the regular rewards rate?
You’ll have to do the research to figure out which type of card might give you the most benefits.
Flat-rate cash back vs. bonus categories: The basics
How does cash back work? It depends.
Cash back credit cards run the gamut, but some prefer to keep their rewards rates simple. With a flat-rate cash back credit card, you’ll earn the exact same amount of cash back on every purchase you make regardless of what you charge. Generally speaking, flat-rate cards dole out between 1 percent and 2 percent back on all your purchases depending on the card you sign up for.
Conversely, you’ll find cash back credit cards with bonus categories that let you earn more rewards on specific purchases. Some cash back categories can remain the same for as long as you have your card, while others might rotate every quarter. Cash back categories tend to fall in areas where consumers spend a lot of money, such as dining, groceries, travel or transportation.
Pros and cons of flat-rate cash back cards
Cash back cards that offer a flat rate of rewards for every dollar you spend come with advantages and disadvantages to be aware of. The factors below are worth keeping in mind as you decide between the top cards.
- You don’t have to keep track of which credit card to use for each purchase. With a flat rate of rewards for each dollar you spend, you never have to juggle cards or worry if you’re maximizing your cash back rewards.
- Flat-rate rewards credit cards often offer a higher rate of rewards for regular spending. Where most cards with bonus categories only offer 1 percent back on regular non-bonus spending, flat-rate credit cards frequently offer as much as 1.5 percent back or 2 percent back on regular purchases.
- You won’t be able to maximize rewards with bonus category spending. With no cash back categories to take advantage of, you’ll only be able to earn more rewards by spending more with your credit card.
Pros and cons of bonus category cash back cards
Cash back credit cards with bonus categories can be a good choice, yet there are still some considerations to keep in mind before you sign up for one. Here are the main advantages and disadvantages.
- You get the chance to maximize your cash back rewards on specific purchases. Credit card rotating categories can help you earn more rewards over the course of a year.
- You can pair different cards and earn more rewards in each one’s bonus category. If you have a few different cards with bonus categories, you can use them strategically to earn more rewards on different types of purchases.
- Some rewards cards with cash back categories set caps on the amount of bonus rewards you can earn. Many cash back credit cards with bonus categories only offer more points up to a specific amount of spending, often $1,500 in a quarter. These caps can dramatically limit the benefit of bonus rewards categories.
- You’ll probably only earn 1 percent back on non-bonus spending. Cash back credit cards with bonus categories tend to offer lower than the market rate in rewards on regular purchases.
Which type of cash back card is right for you?
If you’re struggling to decide on the type of cash back card to sign up for, it can help to take a look at your regular spending habits. If you spend a lot of money in a few different categories like groceries or gas, then it’s possible a card with bonus rewards categories could leave you better off. However, a flat-rate cash back card may be a better deal if you tend to spend in a lot of different categories and not just in a few.
Either way, make sure to compare the top cash back credit cards with different types of rewards rates before you decide.
Flat-rate cash back cards to consider in 2020
Citi® Double Cash Card
The Citi® Double Cash Card offers a flat 2 percent back for each dollar you spend—1 percent when you make a purchase and another 1 percent when you pay it off. You can also qualify for an introductory 0 percent APR on balance transfers for 18 months, followed by a variable APR of 13.99 percent to 23.99 percent. There’s no annual fee, and you can redeem your rewards for a check, a statement credit or a credit to a linked account once your rewards balance reaches $25 or more.
American Express Cash Magnet® Card
The American Express Cash Magnet® Card lets you earn a flat 1.5 percent back for each dollar you spend. You can also qualify for a $150 statement credit when you spend $1,000 within three months of account opening, as well as an introductory 0 percent APR on purchases for 15 months, followed by a variable APR of 13.99 percent to 23.99 percent. There’s no annual fee, either.
Wells Fargo Cash Wise Visa® card
The Wells Fargo Cash Wise Visa® card provides an unlimited 1.5 percent cash back on all purchases you make, but you can also get 1.8 percent cash back on digital wallet purchases (including Google Pay or Apple Pay) during the first 12 months from account opening. You’ll also get an introductory offer of $150 in cash rewards if you spend $500 with your card during the first three months of opening your account.
Bonus category cash back cards to consider in 2020
Chase Freedom Flex℠
The Chase Freedom Flex℠ starts you off with a $200 cash bonus when you spend $500 within three months of account opening. You’ll also earn 5 percent back on activated bonus category purchases each quarter (up to $1,500, then 1 percent), 5 percent back on travel booked through Chase Ultimate Rewards, 5 percent cash back on Lyft rides (through March 2022), 3 percent back on dining and drugstore purchases and at least 1 percent back on everything else. There’s no annual fee to worry about, either.
Blue Cash Preferred® Card from American Express
The Blue Cash Preferred® Card from American Express offers 20% back on Amazon.com purchases on the Card within the first 6 months of Card Membership, up to $200 back. Plus, earn $150 back after you spend $3,000 in purchases on the Card within the first 6 months of Card Membership. You will receive cash back in the form of statement credits. You will also earn 6 percent back on the first $6,000 spent at U.S. supermarkets each year (then 1 percent), 6 percent back on select U.S. streaming services, 3 percent back on U.S. gas station purchases and transit and 1 percent back on other purchases.
The card also comes with an introductory 0 percent APR on purchases for 12 months, before flipping to a variable APR of 13.99 percent to 23.99 percent. There is a $95 annual fee ($0 introductory annual fee for the first year).
Bank of America® Customized Cash Rewards credit card
The Bank of America® Customized Cash Rewards credit card earns you 3 percent cash back in the category of your choice and 2 percent cash back at grocery stores and wholesale clubs (up to $2,500 in combined 3 and 2 percent category purchases each quarter, then 1 percent). You’ll also earn 1 percent cash back on all other purchases.
The 3 percent categories you can choose from are gas, online shopping, dining, travel, drug stores or home improvement/furnishings. For a welcome bonus, you’ll earn a $200 online cash rewards bonus after making at least $1,000 in purchases during the first 90 days after opening your account. The card also comes with an introductory 0 percent APR on both purchases and balance transfers for the first 15 billing cycles (balance transfers, in particular, must be made in the first 60 days). After that, the APR adjusts to 13.99 percent to 23.99 percent.
Bank of America® Customized Cash Rewards credit card last updated on 05.03.21
The bottom line
Cash back credit cards are worth signing up for if you want to earn rewards on your spending and don’t plan to carry a balance. However, the fact there are different types of cash back credit cards means you’ll need to do some research.
The cards on this list are a good place to start, but make sure to compare other rewards credit cards to see what’s out there.
The information about the Wells Fargo Cash Wise Visa® card, American Express Cash Magnet® Card has been collected independently by Bankrate.com. The card details have not been reviewed or approved by the card issuer.