Best Cash Back Credit Cards

Written by Robert Ferry on April 9, 2022
Best Cash Back Credit Cards

Cashback credit cards are a modern way of savings funds by earning cash back rewards on the purchases made. People have been using cashback cards to earn precious funds that have enabled them to buy various products and services. Different credit card companies offer various cashback schemes for their users, depending on their card.

Cashback cards can be used on several occasions, including buying groceries, paying utility bills, and even fuel. Some people use cashback cards for travel purposes and earn more dollars with each use. There are several cashback cards in the industry, each with its unique purpose on where they can be used, and so the percentage of cashback depends upon the purchase made.

People have a choice to use the cashback percentage to pay for bills like credit card debt or deposit that amount in the bank for later use. Since the credit card industry is enormous and each issuer offers several cashback cards, people should be aware of their habits and spending habits to assess which card would suit their needs and preference.

Cashback credit cards are unique in the schemes they have to offer. For instance, some cashback cards offer a flat rate of 1% to 2% on all transactions. In contrast, other cards offer a specific cashback rate from 2% to 6% on certain categories like fuel, grocery, and restaurants.

The article is going got cover the basics of cashback credit cards. We will look at the different types of cashback credit cards. We will also discuss the research methodology a person should implement before deciding on the cashback credit card. We will further discuss the benefits and drawbacks of cashback cards. The article will discuss the best cashback credit cards in the industry. Let us look at the fundamental of cashback credit cards.

What is a Cash Back Credit Card?

Cashback credit cards enable a person to earn rewards in cash, which is convenient and requires no complexity. Cashback rewards are straightforward and are based on the purchases a person makes using them. Cashback credit card users can earn money on every dollar they spend making purchases from retailers linked to the credit card company.

People earn cashback in various amounts as it is subjected to the percentage they are entitled to by spending on purchases. For instance, the cashback at restaurants for a particular card might be higher than cashback at fuel stations for gas. A cashback credit card is a reward card that allows a discount on everything bought using the card, and the discount accumulates, which could be used to pay for certain purchases or bills. People also save this amount in their bank accounts for the future.

Cashback credit card users make purchases on travel, groceries, and other day-to-day expenses and earn cashback rewards. Although they cannot see the discount they are earning on the transaction, they will be able to enjoy the benefits once they redeem it at some purchase. For instance, if a person uses the cashback rewards card to pay for groceries worth $3000 every month at 3% cashback, they will earn an annual cashback payoff worth $1080, which can be adjusted as savings or could be used to pay for liabilities like insurance.

Some credit card companies have established business connections with specific retailers who accept the cashback credit card and grant cashback on the overall purchase amount. For instance, some card issuers have made a pact with Walmart, Costco, etc. They accept payment through a cashback rewards card. However, if the card is used at another retailer like Home Depot, which does not accept cashback cards from a specific card issuer, the person would not earn cashback on their purchases.

Let us look at the various cashback credit cards the banking industry offers.

What are the Different Types of Cash Back Credit Cards?

In the previous section, we discussed the fundamentals of cashback credit cards. Here, we will highlight the different types of cashback reward cards. Let us dive into it!

Several cashback credit cards offer rewards schemes as set by the card issuer for the specific card. We will discuss the four significant types of cashback credit cards. They are as follows:

Flat-Rate

The flat-rate cashback cards offer the same percentage on all the purchases made regardless of the product and service type. Each purchase's rewards rate remains static, so such cards do not factor in the product type. Hence, flat rate cashback cards are more suitable for users who do not want to consider the products or services where the card is most beneficial. Such people are not looking to keep track of the bonus categories of goods.

Consider a 1.5% cashback on all the purchases made using the flat rate cashback card. Some other cards might offer a greater constant cashback of 2%. People who prefer flat-rate cashback cards can redeem the rewards under three categories. They include statement credits, issuing cheques, or making a bank deposit for future use.

Therefore, the flat-rate cashback card is suitable for everyday spending like gas, groceries, etc. However, some people still prefer to use this card for travel purposes and dining at restaurants as they do not have a mindset to juggle between bonus categories.

Tiered

Tiered cashback cards offer extra rewards on certain purchases, including gas, grocery, dining, and travel. The cashback card offers a relatively higher cashback rate in these four categories, and all the other products earn a 1% cashback. Certain card issuers give you a choice to select those categories that the person would most likely use the card for to earn higher cashback rewards on them only.

Consider a 3% cashback rate on restaurant purchases that include takeaway and dine-in and a 1% cashback rate on all the other categories. Some people prefer to keep several tiered cashback cards to enjoy the benefits of higher cashback rates on the category set that would yield the greatest cashback. In this way, a person can maximize their earnings through various highly rated tiered cashback rewards cards.

Each tiered cashback card has a cashback rate of 1% to 6%. Within this scale, the cashback rate is segregated into various categories. For instance, a person can earn 2% cashback on gas, 3% cashback on groceries, and 1% cashback on any other purchase, including travel or restaurants. These cards come with a cap on the maximum spending a person can make and other restrictions that vary from one card issuer to another.

Dynamic Bonus Categories

Some cashback card issuers have specialized categories, which they call Dynamic Bonus. Under this category, the cashback cards can change their functionality depending upon the user's preference. The preference is subjected to the user's spending habits that fluctuate as time passes. People who prefer to buy cashback cards under this category are extremely prone to changes in their spending habits and can not commit to the same card as they wish to enjoy the benefits of bonus categories.

The following consists of the most used cashback cards in the dynamic bonus categories:

Rotating Bonus Categories

These cards offer higher cashback rewards, but the card user must enroll every quarter to qualify for the card, as the categories that yield greater cashback rates change every quarter. There is a cap on the spending limit, and a person who uses this card cannot cross the set limit. The spending limit is directly related to the cashback rates that a person can earn as rewards every quarter.

These cards offer 5% cashback rates for three months, and then the category changes along with the cashback rate. Some common categories include groceries, gas, home improvement stores, and transactions at Amazon or uber. For other categories, people will be able to earn cashback at the standard rate of 1%. Every quarter, people need to activate the bonus categories card to yield benefits under the set category.

Choose-Your-Categories

As the name suggests, some card issuers provide a monopoly for card users to select their cashback category for the month. This category is prone to changes every month as their spending habit changes. The card is perfect for those who love to plan their spending and can change the category every month according to their plan for the year, keeping in mind the cashback category and the cashback rates for each category.

People who prefer to go on a holiday to a foreign country can plan by choosing the summer months for a cashback category that will yield greater rewards. This category is subject to change for every individual and can include online purchases or purchases at department stores.

Membership-Only

Several cashback credit cards require a person to have a card member before using it to make purchases and relevant transactions. These cards are quite lucrative in terms of the benefits and rewards they offer to the users, which are limited only to members, and not everyone can enjoy them. These cards are c-branded with various businesses, allowing you to earn high cashback rates at such stores and other rewards.

These cards do not come with an annual fee as they charge you for a membership fee to use them. These cards have membership requirements that may differ from one card issuer to another. Due to their exclusivity, these cards have relatively lower interest rates, and banking fees, penalty charges, and other fees are also favorable.

Let us look at the different factors a person should look at before deciding on a cashback credit card.

What Factors to Consider before Choosing a Cash-Back Credit Card?

In the previous section, we discussed the different types of cashback credit cards. Here, we will study the research methodology that a person should implement before choosing a cashback credit card.

The factors include the following:

Annual Fee

Several cashback credit cards have no or lower annual fees because they are rewards cards, and as an incentive, they don't charge their users an annual fee. However, such cards have less cashback rate and a limited spending cap, making them less attractive than other cards. These other cards have a relatively larger annual fee, so they are exclusive to those who can pay for them. Such cards have higher cashback rates in different categories.

People need to evaluate their spending habits and which card would suit their needs most. If they are satisfied with a card that provides a flat cashback rate, they should select the best cards in that category. However, if their spending habits are prone to change every month, they should evaluate the costs on that card against the benefits they will receive. People should consider the annual Fee to decrease their total cashback value and then decide.

Sign-Up Bonus

A sign-up bonus is when a person can spend a certain amount of money within the first few months of having the card. Usually, card issuers ask you to spend about $550 to $1000 in the first 90 days of getting the card. If that goal is achieved, a person will get a sign-up bonus from the everyday spending they have carried out in the first few months. The sign-up bonus can be deposited for future use or compensate for the card issuers' annual Fee.

It is advisable not to ignore cashback cards as bonuses are not common in standard cashback cards, and only the exclusive cards offer such rewards. Hence, if a card issuer is offering a bonus, a person should evaluate the cost with the benefit.

Flexibility

Cashback credit cards have different ways for a card user to use the cashback amount. Some cards have a cap on them, which means a person needs to earn a specific cashback before redeeming it. Cashback cards give the users the freedom to utilize the cashback amount in any way they perceive. For instance, some users wish to take the cashback amount as a statement credit, decreasing their credit card bill by depositing funds and paying back the card issuer.

Other card issuers may allow redeeming the cashback amount directly into the bank account to be kept as savings and used. But there remain, some other card issuers would send a paper cheque for the cashback amount every month. People also choose to use the cashback to buy gifts or merchandise from the card issuer. For example, card issuers have rewards schemes which may include electronics, mobile phones, plane tickets, etc., that a person can utilize with their cashback.

0% Introductory APR Period

Choosing those cashback cards with lower interest is essential to incur less interest payment on the card's purchases. People usually carry credit balances for months before they pay them off. So if they have a cashback card that charges a higher interest, it would become very costly for them to use the card and pay their dues every month.

Several cashback cards offer a 0% introductory APR period on new purchases or balance transfers, meaning a person can make transactions and not pay any interest payment on them for a specified time. Going with a cashback card that charges lower or no interest on payments is crucial otherwise, the rewards would decrease due to accrued interest payments.

People also need to consider that whatever they buy will have to be paid back to the card issuer. Even in the 0% introductory APR period, cashback card users are advised not to overspend beyond what they need. So a person should review their spending habits and consider that whatever they buy using the card has an expiration date by which the amount needs to be paid off to avoid inconvenience.

Miscellaneous

Before selecting the cashback card, a person should look at the benefits and costs incurred on that card and compare them according to their preference and needs. For instance, a person should check the earning rates and the rates' categories to earn the cashback amount. Similarly, you should evaluate if a specific card would yield you the maximum profits by asking about its relevant costs and fees.

Other card features should also be looked at, including any foreign transaction fee. It is better if the cashback card has no foreign transaction fee. Similarly, a person should look at additional perks such as fraud protection and coverage on purchases and travel expenses. These perks are essential for any cashback card as it increases the card's value and attracts people.

Let us look at the benefits and drawbacks of cashback credit cards.

What Are the Pros and Cons of Cash Back Credit Cards?

The previous section covered essential factors before selecting the cashback credit card. And so every person should consider those factors before making a decision. Here, we will discuss the benefits and drawbacks a person would yield from using cashback credit cards. They include the following:

Pros of Cashback Credit Cards

Earn Rewards

A cashback credit card user can earn rewards by using the card to pay for the purchases. If the card picked is suitable for your spending habits, you can yield great rewards like cashback on every transaction. Having cashback on purchases means that a person can earn a little extra every month by using the card, and that amount can be used in whatever way the person feels like using it.

Build Credit

If the cashback card is used responsibly and all dues are paid on time, then a person will see an upsurge in their credit score, and the card issuer will report it to the major credit bureaus. Improving the credit rating would mean a person would be better positioned to buy the exclusive cashback credit cards.

Many Cashback Cards Have No Annual Fee

Several cashback credit cards have the feature of no annual fee. An example of this would be the membership cashback cards that require a membership fee instead of an annual fee. However, there are less lucrative cards with little or no interest, and the users can use the card on multiple purchases and retailers.

People should only concern themselves with paying back their dues timely regardless of how much they spend on transactions using the card. Until all dues are cleared, users need not worry about anything.

Sign-Up Bonuses

Card users can earn sign-up bonuses b spending a fixed amount of money in the allotted time using the card. In doing so, they qualify for a sign-up bonus, and that amount can aid in paying for annual fees or savings for the future.

Easy to Understand Your Earnings

Cashback cards are relatively easy to understand as compared to some other cards. For instance, a 1% cashback would mean the person can earn 1 cent on every dollar they spend on products. Hence, a person can track their rewards and cashback amount much more effectively than some other card's rewards.

Cons of Cashback Credit Cards

Higher APRs

Cashback credits cards have higher interest rates, which means that a person would need to make a relatively higher interest payment than other cards. So an average user has no choice but to select a less lucrative cashback card with a lower interest rate.

Value-Limiting Restrictions

Some cards require card users to enroll in the cashback category every quarter manually. If they do not do that, they will not be able to earn cashback on their purchases.

Need Excellent Credit Requirements

Cashback credit cards come with strict credit requirements, including having a good or excellent credit rating of 670 or above on the FICO scoring model. Anyone who does not fulfill this requirement will not qualify for the cashback card. Though some users accept people with low credit scores, that would incur unfavorable terms and conditions on the card.

Let us look at the best cashback credit cards that the banking industry offers to people.

Best Cash Back Credit Cards

The previous section covered the benefits and drawbacks of cashback credit cards. Here, we will discuss the best cashback cards in the industry. Let us dive into it!

The best cashback credit cards include the following

Chase Freedom Unlimited

The Chase Freedom Unlimited cashback card is considered the best overall card after catering to the features it has to offer. The card comes with an Intro offer under which a person can get 1.5% cashback on every purchase provided that the user spends $20,000 in the first year. The cashback amount accumulates to $300.

The card has the following features:

  • APR: Variable rate in the range of 14.99% to 23.74%
  • Credit Score: 670 and above
  • Annual Fee:  None
  • Intro Purchase APR: The first 15 months will have 0% APR on all purchases
  • Intro Balance Transfer APR: The first 15 months will have 0% APR on all balance transfers
  • Balance Transfer Fee: Either $5 or 5% of the overall transaction value, whichever is the highest
  • Balance Transfer APR: Variable rate in the range of 14.99% to 23.74%
  • Foreign Transaction Fees: 3% of each transaction amount
  • Penalty APR: Up to 29.99%
  • 5% cashback on travel 
  • 3% cashback on drugstore purchases and dining at restaurants
  • 1.5% on all other purchases

Bank of America Customized Cash Rewards Credit Card

The Customized Cash Rewards Credit Card is ideal for people who prefer to shop online and make purchases using the cash rewards card. This way, they will earn cashback from their purchases at e-commerce stores. The card comes with an Intro offer under which a person can get $200 cash rewards after spending $1000 on every kind of purchase made online in the first three months.

The card has the following features:

  • APR: Variable rate in the range of 14.24% to 24.24% on purchases and balance transfers
  • Credit Score: 670 and above
  • Annual Fee:  None
  • Intro Purchase APR: The first 15 billing cycles will have 0% APR on all purchases
  • Intro Balance Transfer APR: The first 15 billing cycles will have 0% APR on all balance transfers made in the first two months
  • Balance Transfer Fee: Either $10 or 3% of the overall transaction value, whichever is the highest
  • Balance Transfer APR: Variable rate in the range of 14.24% to 24.24% for purchases and balance transfer
  • Foreign Transaction Fees: 3% of each transaction amount
  • Penalty APR: Up to 29.99%
  • 3% cashback on the category of your choice having a cap of $2500
  • 2% cashback at grocery stores and wholesale clubs having a cap of $2500
  • 1% cashback on all other purchases

Blue Cash Preferred Card

The Blue Cash Preferred Card by American Express is considered ideal for everyday expenses like gas and transportation. So if a person has a job and has to travel a lot or use transportation like Uber, this card is suitable for them. The card comes with an Intro offer under which a person can get $300 cashback in statement credit if they can spend $3000 on purchases in the first six months of getting the card.

The card has the following features:

  • APR: Variable rate in the range of 14.24% to 24.24% on purchases and balance transfers
  • Credit Score: 670 and above
  • Annual Fee:  No introductory fee in the first year, and then the years after will have a fee of $95
  • Intro Purchase APR: The first 12 months will have 0% APR on all purchases
  • Balance Transfer Fee: Not Applicable
  • Late Payment Fee: Up to $40
  • Foreign Transaction Fees: 2.7% of each transaction amount
  • Penalty APR: Variable rate at 29.99%
  • Earn 6% cashback on purchases at supermarkets with a cap of $6000 per year
  • Earn 6% cashback on selective streaming services
  • Earn 3% cashback on taxis, rides, tolls, parking, and other forms of transportation
  • Earn 3% cashback at fuel stations
  • Earn 1% cashback on all other purchases

Savor Cash Rewards Credit Card

The Savor Cash Rewards Credit Card by Capital One is considered ideal for those fond of dining out at the restaurant or going for takeaway and other entertainment forms. The card comes with an Intro offer under which a person can get $300 cashback in purchases if they can spend $3000 on purchases in the first three months of getting the card.

The card has the following features:

  • APR: Variable rate in the range of 16.24% to 24.24% on purchases
  • Credit Score: 670 and above
  • Annual Fee:  $95
  • Intro Purchase APR: Not Applicable
  • Intro Balance Transfer: Not Applicable
  • Balance Transfer Fee: None
  • Balance Transfer APR: Variable rate in the range of 16.24% to 24.24% on balance transfers
  • Late Payment Fee: Up to $40
  • Foreign Transaction Fees: None
  • Penalty APR: None
  • Earn 4% cashback on dining, restaurant take-outs, entertainment, and streaming subscriptions
  • Earn 3% cashback on grocery shopping
  • Earn 1% cashback on all other purchases

Wells Fargo Active Cash Card

The Wells Fargo Active Cash Card offers the highest flat-rate card that could be used across all categories and purchases. The card comes with an Intro offer under which a person can get a $200 cash rewards bonus after purchasing $1000 in the first 90 days. 

The card has the following features:

  • APR: Variable rate in the range of 15.24% to 25.24% on purchases
  • Credit Score: 670 and above
  • Annual Fee:  None
  • Intro Purchase APR: 0% in the first 15 billing cycles of the account opening
  • Intro Balance Transfer APR: 0% in the first 15 months from the account opening
  • Balance Transfer Fee: Up to 5% of the transfer amount, with the minimum Fee being $5
  • Balance Transfer APR: Variable rate in the range of 15.24% to 25.24% on balance transfers
  • Foreign Transaction Fees: 3% of the transaction amount
  • Penalty APR: None

Capital One Quicksilver Cash Rewards Credit Card

The Quicksilver Cash Rewards Credit Card is another card that is well known for its flat rates on all purchases made using the card. The card comes with an Intro offer under which a person can get a $200 cash rewards bonus after purchasing $500 in the first 90 days. 

The card has the following features:

  • APR: Variable rate in the range of 15.24% to 25.24% on purchases
  • Credit Score: 670 and above
  • Annual Fee:  None
  • Intro Purchase APR: 0% in the first 15 billing cycles of the account opening
  • Intro Balance Transfer APR: 0% in the first 15 months from the account opening
  • Foreign Transaction Fees: None
  • Earn 1.5% cashback on every purchase

Citi Double Cash Card

The Citi Double Cash Card is one of the well-known cashback credit cards in the market because they are considered ideal for balance transfers.

The card has the following features:

  • APR: Variable rate in the range of 15.24% to 25.24% on purchases
  • Credit Score: 670 and above
  • Annual Fee:  None
  • Intro Balance Transfer APR: 0% in the first 1.5 years of the account opening, and after that stand APR will be applied
  • Intro Balance Transfer Fee: 3% at every transfer with a cap of $5 for the first four months, and after that 5% transfer fee will be applied
  • Earn 2% cashback on every purchase, with 1% earned at the transaction time and the other 1% earned when the dues are paid.

Spark Cash Plus Card

The Spark Cash Plus Card by Capital One is a well-known cashback card for businesses that offer a flat rate on all the purchases made using the card. The card comes with an Intro offer under which a person can get a $1000 cash rewards bonus. The person can get one half of $1000, which is about $500, by purchasing $5000 in the first 90 days and then $500 once the card has made transactions worth $50,000 in the first six months.

The card has the following features:

  • APR= None, as the balance is needed to be paid in full each month
  • Credit Score: 670 and above
  • Annual Fee:  $150
  • Annual cash Bonus: $200 by making purchases worth $200,000 or more annually
  • Earn 2% cashback on each purchase for goods and services by using the card

Conclusion

This article will discuss the various cashback credit cards and discuss the different types of cards that people should know about before deciding on the card to go with. We also covered the pros and cons of cashback cards to enable you to learn about their specific benefits and drawbacks relative to other cards. 

Cashback cards are a smart way to earn money by making purchases through the cards for goods and services that may range from everyday expenses to travel and others. People use cashback cards in paying bills at groceries, restaurants, fuel stations, and even for medicine. As a result of cashback credit cards, they can save money and have different options for utilizing that money.

Some people prefer to use the cashback amount on statement credits, while others wish to deposit it in the bank account as savings.

Cashback cards are of different types, and therefore people should look into their spending habits before deciding on the card. Several card issuers are offering other cashback cards, so it is imperative to consider the terms and conditions before deciding on the card. While some people are cautious about the categories and would use a cashback card that would yield the greatest cashback amount on the purchases, others opine that they can have a flat rate cashback card to avoid the hassle. Read more about the best credit cards in general.

Although cashback cards are very tempting as they would enable a person to spend more and earn more, financial experts advise it only to buy what is necessary and can be afforded. People sometimes make a purchase they cannot pay back with interest. While some people can afford a cashback card with a lower or no annual fee, some would like exclusive cashback cards to maximize their cashback amount and enjoy the benefits.

Article written by Robert Ferry
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