Using a credit card with cash back can be a great way to stretch your budget and be rewarded for your purchases. As long as you pay your balance in full each billing cycle, the card issuers are essentially paying you to use their card. Plus, cash back rewards are usually easier to understand than rewards programs involving points and miles.
Which Cash Back Credit Card is Right for You?
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We think you'll agree with us when we say:
It's REALLY hard to figure out which cashback credit card to apply for.
Or is it?
Well, it turns out, there's 2 questions to answer to help you get started...
Here's the deal: if you always pay in full each billing cycle, a cash rewards credit card is worth owning. The Barclaycard CashForward is easy to use, and its rewards structure is much easier to grasp (1.5% on every purchase) than the points and miles systems of other rewards cards. As long as you are a responsible credit card user, you can rack up some cash on the side for purchases you would be making anyway.
Bigger Bang for the Buck
Don't settle for just 1% when you can be smart with what credit card you use.
Which category is most important to you?:
For More Cashback on Gas Purchases
Look for a card that offers a higher percentage back on purchases at gas stations. See if the rewards it offers match your spending habits.
Here are the two cards we like in particular, both from American Express (a CreditDonkey advertiser).
Blue Cash Preferred: Earn 3% cash back at U.S. gas stations (such as Shell, Mobil, and Exxon). This card has a $95 annual fee, so we recommend you consider this card if you spend at least $9,500/year ($791.67/month) at U.S. gas stations.
Look at this way: Spending $9,500 at U.S. gas stations with the Blue Cash Preferred would earn you $285 cash back vs $190 cash back with the Blue Cash Everyday, which has no annual fee.
If you don't spend $9,500 a year at U.S. gas stations, you may still want to consider the Blue Cash Preferred if you spend a lot on groceries (read the section below on cashback cards for groceries for more information).
Otherwise, consider the Blue Cash Everyday, which offers 2% cash back at U.S. gas stations and has no annual fee.
Get More Cashback on Groceries
When charges at the supermarket make up a big part of your budget, you could see some big savings with a groceries-focused credit card. You'll need to weigh the pros and cons of getting more rewards in exchange for an annual fee vs. fewer rewards and no annual fee.
Blue Cash Preferred: Earn 6% cash back at U.S. supermarkets (on up to $6k/year in purchases, then 1%). This card has a $95 annual fee, so we recommend you consider this card if you tend to spend at least $3,167/year (about $263.92/month) at U.S. supermarkets (such as Vons, Winn-Dixie, and Whole Foods). Spending $3,167 at U.S. supermarkets with the Blue Cash Preferred would earn you $190.02 cash back vs $95.01 cash back with the Blue Cash Everyday.
Blue Cash Everyday: If you don't spend at least $3,167/year at U.S. supermarkets, consider the Blue Cash Everyday, which has no annual fee. The Blue Cash Everyday earns 3% cash back at U.S. supermarkets (on up to $6k/year in purchases, then 1%).
Tip: Your definition of a supermarket may not match your credit card companies. Check out the American Express Supermarket List before you go ahead with one of these cards to make sure the place you buy groceries is included. Even though warehouse clubs like Costco sell groceries, they are not supermarkets.
Restaurants: Rewards for Dining Out
Spend more time in a restaurant than at the supermarket checkout line? You can also save on your food consumption by getting the right kind of credit card. Take a look at our extensive guide on credit cards for restaurant rewards.
Credit Cards for Small Businesses
You can find lucrative rewards when you choose a business credit card. These cards can be used for a range of business types, including side businesses.
SimplyCash Plus: Do you want more control over what types of purchases get the most cash back?
With the SimplyCash Plus, you'll earn 3% cash back on the category of YOUR choice (from a list of 8 select categories, on purchases up to $50,000 per calendar year).
You also get 5% cash back (on up to $50,000 per calendar year in purchases) at U.S. office supply stores and on wireless telephone services (purchased directly from U.S. service providers).
For more information, read our SimplyCash Plus review.
Travelers can get more out of their credit cards if they forget cashback and opt for a travel rewards credit card that earns miles.
If you do not have a particular airline or hotel preference, look for a credit card rewards program with miles that you can redeem toward travel with any airline and any hotel. That way, you'll have more flexibility.
Excellent Credit: You Have More Choices
You have been responsible with your credit. You pay your bills on time, every time. So why use an average credit card? Take a look at our list of credit cards for people with excellent credit.
You'll find deals reserved for the most creditworthy applicants.
High Spenders: Pause Here
Are you a big spender? Do you routinely spend thousands a month on your credit card? Take a look at our list of credit cards for high spenders.
Yes, many of these offers have annual fees. But for high spenders, the rewards you'll reap from a premium credit card may offset the annual fee.
But wait. Are you a big spender who routinely carries a balance? Then instead of a rewards credit card, focus on low interest rates instead.
For any type of spender, it does not make sense to chase after rewards if you usually have a balance. The interest rates you will pay over time will wipe out any savings you earn. Focus instead on getting the lowest interest rate you can and try to pay down your debt.
How to Choose a Cashback Credit Card
Compare rewards, annual fees and interest rates to determine the best one for you. Narrow your comparison by reading reviews on the credit card offers with cash back, such as:
Be sure to pick a card that fits your current spending pattern. You will save money with a cash back card as long as you limit your purchases to those you would have made anyway. These types of cards are best for people who both like deals and can pay off their balance each month but also spend responsibly.
Some credit cards with cash back earn more on specific purchase categories, such as gas, restaurants, or groceries. Some have rotating categories of up to 5% cash back that often change every few months and require free enrollment, while others offer a lower, but consistent reward rate year-round.
Some credit cards with annual fees offer lucrative introductory bonuses that pay for the annual fee and more. Plus, they often include generous benefits and reward structures that are favorable for big spenders or frequent travelers.
Disclaimer: Opinions expressed here are those of the author's alone. Please support CreditDonkey on our mission to help you make savvy financial decisions. Our free online service is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. This site may be compensated through the Advertiser's affiliate programs.
Disclaimer: The information for the Chase Freedom and Discover it® Cashback Match™ have been collected independently by CreditDonkey. The card details on this page have not been reviewed or provided by the card issuer.
Disclaimer: The information for the Citi® Double Cash Card, Chase Freedom Unlimited, Capital One® Quicksilver® Cash Rewards Credit Card, Chase Freedom, Discover it® Cashback Match™, Discover it® for Students, Journey® Student Rewards from Capital One®, Discover it® chrome, BankAmericard Cash Rewards™ Credit Card, Costco Anywhere Visa® Card by Citi, and Discover it® Chrome for Students have been collected independently by CreditDonkey. The card details on this page have not been reviewed or provided by the card issuer.
Cash Back Rewards Benefits
Why Choose a Rewards Credit Card with Cash Back
Here are some of the advantages of having cash back rewards:
What to Watch Out For
Consider these factors before and after you decide on a cash back rewards credit card:
Calculate the rewards you could earn with several cards, based on your normal spending habits, to figure out which card will earn you the most rewards. No matter which card you choose, always remember the importance of paying your bill in full each month – or else you will lose out on the reason you chose a cash back card in the first place.
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