Best Cash Back Credit Card
There are hundreds of credit cards out there and many of them offer their own unique perks and rewards programs. However, when you don't care to earn travel miles and you would rather not deal with a complicated points program there is still one type of program that is as simple as it is useful. Cash back credit cards cut through the complexity of rewards programs and give you what everyone can use: cold hard cash. In some cases, the cash you don't use can even earn interest. This is a quality you probably won't find with airline miles and points programs. Another great aspect of qualified cash back credit cards is the fact that the cash does not need to be declared on in your tax return because it is technically a discount on a purchase, not taxable income.
Cash Back Credit Cards: What to Consider
There are plenty of reputable cash back credit cards on the market to choose from and some are better than others. Several variables come together to make a good card and if you know what to look for the choice is easier to make. Here are some key points to look for:
- Before you look at a card's cash back features, make sure it is a good card in general. Are there fees involved, and if so does the card's other features make them worth paying. What are the interest rates? Are there penalty fees? Don't get a bad credit card just for the cash back.
- What is the cash back return rate? The majority of cards offer 1% cash back, but others offer as much as much as 5%. Many cards offer 5% on specific purchases and 1% on everything else.
- Choose a trusted cash back credit card that offers cash back on purchases that you actually make. Sometimes cards are geared towards specific people. For instance, you don't need a card that offers excellent returns on college related purchases if you are not in school, no matter how good the rate is. Make sure the program matches your spending style.
- Check for restrictions. Are there limits to the amount of cash you can earn? Can your earnings ever expire?
Look for these qualities and choose a rewards card that works for you. Not every good card will work for every person. Don't sign up for anything that will end up doing more harm than good.
- 5% Cash back on quarterly rotating categories
- Up to 20% on Discover's Online Shopping Mall
- Double the cash back on certificates from certain retailers
- No annual fee, foreign transaction fee, or foreign transaction fee
- 0% APR on balance transfers for 1
- Not as universally accepted
Discover's Discover it card offers 5% cash back on rotating quarterly categories. That means you get a 5% return rate on specific purchases that change each quarter. Typically, the categories that rotate each quarter are practical purchases. They will be things like gas, hotels, restaurants and any other things a typical person might spend money on. If you shop with Discover's online shopping mall, a collection of online retail affiliates, you can earn up to an astonishing 20% cash back. Finally, you can receive double the cash back when you redeem it for certificates at participating retailers.
Besides the excellent cash back features, this card has several other attractive qualities. If you want to switch to the card before you pay off your current one, Discover it offers 0% APR during their 14 month introductory period. That means you don't have to pay any interest on your outstanding debt for that period of time. There are also no annual fees, no foreign transaction fees, and no penalty APR.
Verdict - Superb
This card has an excellent cash back rewards program and on top of that its balance transfer feature makes it the number one choice. The only obvious drawback is that Discover cards are not as universally accepted as other cards. Take a look at the quarterly cash back categories to see if Discover it is right for you.
Citi Dividend Platinum Select
- No annual fee
- No over-limit fee
- No late payment penalties
- No foreign transaction fee
- 24/7 customer service & cash back concierge
- $300 annual limit
- Dividends only come after earning $50
Citi's Dividend Platinum Select card offers a cash back program that's similar to the Discover it card. You can get 5% cash back on rotating categories each quarter and 1% cash back on everything else. Plus, the card has a $100 signing bonus if you spend $500 in the first three months. If this would be your main card, and you routinely spend that much on a credit card, this is a great offer.
Like Discover it, this card has several other good qualities, including a 0% APR introductory period. That means you don't have to pay interest on a balance transferred from another card or on new purchases up to 12 months. The card also has no annual fee. Their helpful Retail Purchase Protection gives you 90 days of protection against theft or damage.
Another excellent feature is Citi's Price Rewind. If you've ever bought something only to see it on sale somewhere else, this feature has you covered. It tracks your credit card purchases and if you buy something that is at least $25 less somewhere else Citi will reimburse you.
There is an annual $300 cash limit, which means you can't earn more than $300 in any given year from cash back rewards. Also, cash back dividends are only sent once you reach $50, which may not be as attractive as a program where you get what you earn right away.
Verdict - Great
Citi's Dividend Platinum Select Visa Card has several excellent features not the least of which is the cash back rewards. The $300 cash back limit and the $50 dividends are slight drawbacks but overall this card's perks make it great.
Capital One Quicksilver
- 1.5% cash back on everything
- $100 signing bonus (if you spend $500 in first three months)
- No earning limits
- 0% APR until April 2015
- Redeem cash anytime
- No high return rotating categories
The Capital One Quicksilver Cash Rewards Credit Card is great for anyone who doesn't like the idea of rotating cash back categories. This card simply offers 1.5% cash back on everything. This return rate is slightly higher than the return rate on non-rotating items on other top cards. However, it isn't as high as the 5% returns that are typical for rotating programs. Plus, there is no limit to how much you can earn in rewards. You have the choice of having your rewards credited to your account, by check or by gift cards. There is also a $100 bonus if you spend $500 in the first three months. Your cash rewards never expire and you can redeem any amount whenever you want.
Aside from the flexible cash back rewards you also get a 0% APR introductory period until April 2015 and there is no annual fee.
Verdict - Very Good
Though the return rates aren't as good as some other cards with rotating categories, the flexibility and ease of use is something to be admired.
Blue Cash Preferred
- 3% to 1% on purchases in everyday categories
- 0% APR for the first 15 months
- $100 signing bonus (for spending $1,000 in first three months)
- No annual fee
- $6,000 earning limits at supermarkets
American Express' Blue Cash Everyday Card is named for the fact that it offers cash back in practical, everyday categories. You can earn 3% cash back on groceries, 2% cash back on gas and at some department stores and 1% on everything else. These are moderate return rates but the fact that they are in categories that most people spend a lot of their money is excellent. There is no annual fee but there are earning limits. You can't earn more than $6,000 per year at supermarkets.
There is a $100 signing bonus if you spend $1,000 in the first three months. Also, balance transfers and new purchases have 0% APR for the first 15 months.
Verdict - Good
The cash back in practical categories is great but the spending limit puts a damper on that feature, although it is relatively high. Also, the $100 signing bonus is a nice perk but you need to spend $1,000 in the first three months to get it, which is higher than other similar bonuses.
Upromise World MasterCard
- 5% to 1% cash back on a variety of categories
- $25 signing bonus
- No earning limits
- No annual fee
- 0% APR on balance transfers for 12 months
- 3% balance transfer fee
- Many rewards exclusive to businesses
Where Capital One's Quicksilver Cash Rewards Credit Card was simple, the Upromise World MasterCard is thorough. You can get anywhere between 5% and 1% on separate categories in descending order. You can get 5% cash back when you shop through their online store portal. You get 4% cash back at certain restaurants that participate in the Upromise Dining Restaurants program. You can earn 3% cash back on gas when you get it from eligible Exxon or Mobile stations. Then you earn 2% at the movie theater. Finally, you earn 1% on everything else. There are no earning limits. A cash back program like this will show you exactly how you earn cash back based on your spending, unlike rotating quarterly programs that always change. However, if you don't spend much in those categories you won't be able to get much out of this card.
You can redeem your earned cash by putting it into a Upromise college savings plan, a Sallie Mae savings account or by simply receiving a check. This card also has a 0% APR introductory period for the first 12 months and a $25 signing bonus.
Verdict - Good
This card's variety and clarity when it comes to how you earn cash back is refreshing. It is easy to look at your own spending to see if you would earn enough to make it worthwhile before you sign up for the card.
Cash back credit cards are a simple and practical type of rewards program to choose. If you pay your credit cards on time they can really be worth your while. However, if you routinely miss due dates you can forfeit your earnings according to the terms of most cards. Spend wisely, pay your bills and find a cash back card that works for you.
Cash Back Credit Cards FAQs
How do cash back rewards programs work?
Cash back credit card programs reward your continued use of a card with cashback incentives and perks. The incentive is to spend using that particular card in order to accumulate larger rewards. Typically a percentage of the amount that is spent is given back to the card holder. As opposed to other types of rewards like air miles or a point system, cashback programs state the monetary amount that you can use for almost anything.
Most cards offer between 0.5% and 2% cash back on net eligible purchase. This means the purchases you make minus any refunds you get back. Typically the percentage is taken from each purchase and calculated monthly, quarterly or annually. Then the amount you get back is credited to your account.
Should I choose a cash back over other rewards card?
Whichever cash back credit rewards card you select should be indicative of the purchases you generally make. Of course, cash back is the simplest form of reward because you can use it for just about anything but things like airline miles can be just as valuable as cash for frequent travelers. You may also find a credit card with a better mile or point accumulation rate than the ones that offer cash back. But if you don't travel don't opt for a singular miles card. Don't choose a rewards program thinking that you might use it someday, choose it based on what you definitely can use.
What should I look for in a cashback card?
Cash back credit cards are enticing because they basically offer free money for your regular credit card spending. Some cards even offer signing bonuses that give you money just for signing up. However, when you are shopping for a cash back card, make sure to read the fine print. Here are some things to look for in a cashback card:
- Pay attention to time limits and other caveats. Great offers for a limited amount of time might not be as lucrative as one with a longer life span.
- Pay attention to the percentage you get back. Most cards offer 1% but some can offer as little as 0.5% or as much as 2%. Some cards even offer as much as 5% on specific types of purchases.
- Look for signing bonuses. Some cards might offer cash for signing up. But be careful. Some of these offers only apply if you spend a certain amount in the first few months.
- If you do find cards that offer higher percentages for certain types of spending, make sure the spending is right for you. Go with a card that offers extras for things you actually buy.