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How to choose a cash back credit card

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Tang Ming Tung/DigitalVision/Getty Images
Woman checking out at a supermarket
Tang Ming Tung/DigitalVision/Getty Images
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Cash back credit cards are a type of rewards credit card that will refund you a percentage of every eligible purchase you make. Compared to other credit card rewards systems, cash back is usually pretty straightforward. For instance, points and miles can vary in value depending on how they’re redeemed, but cash back is generally worth the same amount when redeemed for a statement credit, direct deposit or check.

However, there are different types of cash back credit cards to be aware of, such as flat-rate, fixed bonus category and rotating bonus category cards. Ultimately, the best cash back credit card for you is one you’ll be able to swipe regularly and that rewards you for the kind of spending you do the most.

Here’s everything you need to know about choosing a cash back credit card and some top picks to consider.

Which type of cash back card is right for you?

There is no one-size-fits-all cash back card winner, as the credit card that can deliver the most cash back for you will depend on your everyday spending habits. While flat-rate cards can be a good choice for those who prefer a hands-off approach to earning rewards, you may be able to boost your overall return with a card that provides a higher cash back rate in certain fixed or rotating bonus categories.

Cash back cards are organized according to three different types of cash back programs: flat-rate, fixed bonus categories and rotating bonus categories. Here’s how each form of cash back works:

Flat-rate cash back cards

Flat-rate cash back cards earn a fixed percentage—usually between 1 and 2 percent—on all purchases, whether you’re booking travel or buying groceries for your family. This simple rewards structure makes it easy to get cash back on your everyday expenses. Plus, a card with a higher flat cash back rate can be lucrative (if you qualify).

When picking a flat-rate cash back card, you should opt for one with at least 1.5 percent cash back on all purchases because most cards with fixed bonus categories offer 1 percent cash back on all purchases anyway. If you’re interested in a flat-rate card, ideally you should be looking at 2 percent cash back cards.

Fixed bonus category cards

A fixed bonus category card offers a higher cash back rate—usually anywhere from 2 to 5 percent—in specific categories and at least 1 percent cash back on all other purchases. Common fixed bonus categories include dining, groceries and gas station purchases.

However, it should be noted that bonus categories are often capped at a certain annual spend amount, after which the base cash back rate will apply to spending in that category.

Rotating bonus category cards

Rotating bonus category cards offer higher cash back percentages (typically 5 percent) in purchase categories that change every quarter. Some common bonus categories include home improvement stores, streaming services, drugstores, select retailers and wholesale clubs.

Many cards require you to activate the bonus categories to get the higher cash back rate, so it’s a good idea to schedule calendar reminders so that you don’t miss out. Card issuers also often impose quarterly spending caps on this type of cash back, after which the base cash back rate will apply for that category.

Is paying an annual fee worth it?

Although many of the best cash back credit cards have no annual fee, some issuers will charge you a fee for card membership. However, the cost of an annual fee can often be recouped by the cash back you’ll earn, statement credits or other card benefits. If the card you’re eyeing has an annual fee, take a look at the card’s rewards structure and benefits to determine if the fee will be worth paying for you.

Do you need to pay attention to APR?

Regardless of whether you intend to carry a balance, it’s important to be aware of your credit card’s interest rate, or APR. The current average credit card interest rate is over 16 percent, which will add up quickly if you find yourself unable to make more than the minimum payment for any reason.

Some cash back cards also come with a 0 percent intro APR on purchases or balance transfers for a limited time, so be sure to consider the ongoing interest rate when your intro APR period ends.

Are you looking for additional card benefits?

When looking for a card, you’ll also want to evaluate the other benefits a cash back card may offer, such as:

  • A welcome offer for new card members
  • Travel benefits like travel insurance, trip cancellation/interruption coverage or car rental loss and damage insurance
  • Purchase protections like extended warranty coverage or return coverage
  • Complimentary memberships or subscriptions
  • Discounts or reimbursements on select products or services

Not all cash back cards will offer these benefits, and you may not be interested in many of these benefits anyway. Ultimately, you should consider whether you’d actually take advantage of any of these perks and whether they’d be worth it for you.

How do you want to redeem cash back?

Cash back credit cards usually allow cardholders to redeem cash back in the form of a statement credit, direct deposit or check. In addition to that, some cards may allow you to redeem cash back for gift cards, charitable donations, purchases with select merchants, points toward travel purchases and more.

Remember: Credit card rewards are only worth something when you redeem them. A 2021 Bankrate survey found that 31 percent of cardholders didn’t redeem any rewards in 2020. When evaluating a cash back credit card, focus on how usable a card will be for you. Keep an eye out for issues like minimum cash back redemption requirements, cash back expiration policies and any other restrictions on how you can redeem cash back.

Should you have more than one cash back card?

One of the best ways to maximize your cash back earnings is to pair one or more bonus category cards—which reward your most frequent purchases—with a high-earning, flat-rate card to cover all non-bonus spending. However, you’ll need to decide if you’re open to keeping track of which credit card to use at which store to get the maximum cash back rate on every purchase.

Cash back credit cards to consider in 2022

Here are a few of the best flat-rate, fixed bonus category and rotating bonus category cards to consider:

Citi Double Cash Card: Best for simple, flat-rate rewards

  • Welcome offer: Earn $200 cash back after spending $1,500 on purchases in the first 6 months of account opening.
  • Rewards rate: 2 percent—1 percent as you buy, plus another 1 percent when you pay for purchases
  • Annual fee: $0

A perennial favorite, the Citi® Double Cash Card has one of the highest overall rates of return you can find on a cash back card with no annual fee. It’s a great choice for those who don’t want to do anything extra to maximize their rewards earnings.

With this card, you can redeem cash back for statement credits, direct deposits, checks or Citi ThankYou points. The latter provides more redemption options, allowing you to redeem points for travel through Citi, gift cards, PayPal purchases or Amazon purchases.

Blue Cash Preferred Card from American Express: Best for fixed bonus categories

  • Welcome offer: Earn a $350 statement credit after you spend $3,000 within the first six months of card membership
  • Rewards rate: 6 percent cash back on U.S. supermarket purchases (on up to $6,000 per year, then 1 percent); 6 percent cash back on select U.S. streaming subscriptions; 3 percent cash back on U.S. gas station and transit purchases; 1 percent on all other purchases
  • Annual fee: $95

The Blue Cash Preferred® Card from American Express is one of the best fixed bonus category cards around due to its tiered rewards structure for common everyday expenses, such as a whopping 6 percent back at U.S. supermarkets (on up to $6,000 in spending per year, then 1 percent) and 3 percent on U.S. gas stations and transit purchases.

In addition to this rewards structure, the Blue Cash Preferred offers the chance to earn boosted rewards through Amex Offers. This program allows you to earn more cash back—sometimes 20 to 25 percent—on purchases from select merchants. The card also comes with a free ShopRunner membership (enrollment required), return and purchase protection, car rental loss and damage insurance, extended warranty coverage and a 0 percent intro APR on purchases and balance transfers for the first 12 months after account opening (16.24 percent to 27.24 percent variable APR thereafter).

Discover it Cash Back: Best for rotating cash back categories

  • Welcome offer: Automatic Cashback Match for the first year
  • Rewards rate: 5 percent cash back (after activation) on rotating categories each quarter (on up to $1,500, then 1 percent); 1 percent on all other purchases
  • Annual fee: $0

The Discover it® Cash Back stands out among cash back cards thanks to its rotating bonus categories and generous welcome offer that doubles all of the cash back you earn in your first year as a cardholder. Unlike Chase, Discover releases its annual cash back calendar in advance, which will help you to better plan out your spending and maximize cash back. Some common rotating categories for 5 percent cash back include grocery stores, gas stations, restaurants, Target and Amazon.

With this card, you’ll also score a 0 percent intro APR offer on both balance transfers and purchases for 15 months (14.24 percent to 25.24 percent variable APR thereafter), making this card a great choice if you need to pay off a large purchase over time or pay down credit card debt.

The bottom line

Cash back credit cards are a great way to get a little something back on your everyday spending. When choosing a card, carefully consider your spending habits and how involved you want to be to ensure you’ll get the right card for you. If you need more help choosing a cash back card, check out our credit card spender type tool to receive personalized credit card recommendations based on your credit score, spending habits and daily needs.

Regardless of the cash back card you choose, remember to pay your bill in full every month. With current APRs hovering above 16 percent, interest charges can quickly erase all of the cash back you earn.

Written by
Kelli Pate
Personal Finance Writer
Kelli Pate is a former contributor to Bankrate and a freelance writer and copy editor living in Kansas City, though she's a Jersey girl at heart. When she's not writing about personal finance and credit cards, she's immersing herself in the world of travel hacking.
Edited by
Associate Editor
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