The right cash back credit card can save you hundreds of dollars per year on average. Some cards can save you upwards of $600 in their first year alone, according to NextAdvisor’s analysis.
With numbers like that, cash back credit cards are great tools for saving money on the regular items already in your monthly budget. Some earn a flat rate every time you swipe your card, while others earn more when you shop specific categories or operate within a rotating schedule of bonus categories.
Before you Start
With great rewards comes great responsibility. At NextAdvisor, we believe eliminating high-interest debt balances and building healthy credit habits are essential prerequisites to enjoying the perks of a rewards credit card.
Even the best cash back rewards won’t outweigh the cost of revolving debt on a card earning double-digit interest. What’s more, you may risk rejection from issuers, who often reserve approval for applicants with the best credit scores, especially in today’s economic environment. Before seeking the best cash back rewards for your wallet, make sure you’re prepared to use your new card responsibly. Establish a great credit score alongside healthy credit habits like timely payments, paying balances in full, and low credit utilization.
The Best Cash Back Cards
- Intro offer:Earn an Additional 1.5% Cash Back
- Annual fee:$0
- Regular APR:15.24% to 23.99% Variable
- Recommended credit score:670-850 (Good to Excellent)
Enjoy 5% cash back on travel purchased through Chase Ultimate Rewards®, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more;. 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service. 1.5% on all other purchases.
NextAdvisor’s Take
- Flexible, hybrid rewards structure made up of tiered categories and flat cash back
- No annual fee
- Valuable first-year bonus
- Competitive intro APR period can be useful for paying off large purchases over time
- Not a great choice for international travelers — you’ll incur a 3% foreign transaction fee
- Travel bonus rewards only apply to travel booked through Chase
Additional Card Details
- 0% introductory interest offer on purchases and balance transfers for the first 15 months after account opening, variable 15.24% – 23.99% interest thereafter; intro balance transfer fee of $5 or 3% of the amount of each transfer, whichever is greater in the first 60 days
- 5% cash back on Lyft rides through March 2025
- Complimentary 3-month subscription to Doordash’s DashPass, followed by 50% off DashPass for 9 months (activate by 12/31/24)
- Travel protections
- Purchase protections
- Intro offer:N/A
- Annual fee:$0
- Regular APR:14.74% – 24.74% (Variable)
- Recommended credit score:670-850 (Good to Excellent)
Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.
NextAdvisor’s Take
- Flat cash back on every purchase
- 18-month 0% intro APR for balance transfers
- No annual fee
- No welcome bonus
- 3% balance transfer fee ($5 minimum) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5)
- Delayed cash back rewards if you carry a balance
Additional Card Details
- Extra incentive to pay down your balance in full: You’ll earn only 1% cash back when you make a purchase, and the other 1% when you pay it off
- 18-month 0% intro period on balance transfers, 14.74% to 24.74% variable APR thereafter
- Redeem cash back for statement credits, direct deposit, check, or convert cash back value to Citi ThankYou points
- $25 minimum cash back redemption
- Balance transfers must be completed within 4 months of account opening and a 3% ($5 minimum) fee applies, After that, your fee will be 5% of each transfer (minimum $5)
- Intro offer:$200 cash rewards
- Annual fee:$0
- Regular APR:15.74%, 20.74%, or 25.74% Variable APR
- Recommended credit score:670-850 (Good to Excellent)
Earn unlimited 2% cash rewards on purchases.
NextAdvisor’s Take
- Unlimited 2% cash rewards on purchases
- Valuable welcome bonus
- 0% Introductory APR for 15 months from account opening on purchases and qualifying balance transfers (15.74%, 20.74%, or 25.74% variable APR thereafter)
- Cellphone and travel protections
- High variable APR after introductory offer ends
- No bonus categories to maximize
- 3% foreign currency conversion fee
Additional Card Details
- 0% intro APR for 15 months from account opening on purchases and qualifying balance transfers (followed by a variable APR of 15.74%, 20.74%, or 25.74% ).
- Cell phone protection worth up to $600 when you pay your bill with your eligible Wells Fargo card (subject to a $25 deductible)
- Visa Signature® Concierge service
- Travel and emergency assistance services
- Roadside dispatch
- Intro offer:$300
- Annual fee:$0 introductory annual fee for the first year, then $95.
- Regular APR:14.74% – 24.74% Variable
- Recommended credit score:670-850 (Good to Excellent)
6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%). 6% Cash Back on select U.S. streaming subscriptions. 3% Cash Back on transit including taxis/rideshare, parking, tolls, trains, buses and more. 3% Cash Back at U.S. gas stations. 1% Cash Back on other purchases.
NextAdvisor’s Take
- Great rewards in everyday spending categories
- 0% introductory interest offer for new purchases
- Competitive welcome bonus
- $0 introductory annual fee for one year, then $95
- No intro offer for balance transfers
- U.S. supermarket 6% rewards capped after $6,000 annual spend
Additional Card Details
- 0% introductory APR on purchases for the first 12 months, then 14.74% – 24.74% variable APR
- Early event ticket access and seating through American Express Experiences
- Eligible for Amex Pay It, Plan It
- Travel protections
- Purchase protections
- Minimum $25 rewards redemption
- Intro offer:$200
- Annual fee:$0
- Regular APR:14.24% – 24.24% Variable APR on purchases and balance transfers
- Recommended credit score:670-850 (Good to Excellent)
Earn 3% cash back in the category of your choice (up to $2,500 in combined choice category/grocery store/wholesale club quarterly purchases). Earn automatic 2% at grocery stores and wholesale clubs (up to $2,500 in combined choice category/grocery store/wholesale club quarterly purchases). Earn unlimited 1% on all other purchases.
NextAdvisor’s Take
- Tiered cash back rewards
- 0% Introductory APR for 15 billing cycles on purchases and balance transfers
- $200 online cash rewards bonus
- No annual fee
- Limited rewards potential if you consistently exceed rewards caps in choice categories
- 3% balance transfer fee ($10 minimum)
Additional Card Details
- Introductory 0% APR for first 15 billing cycles after account opening for purchases and for any balance transfers made within the first 60 days, after which you will receive a variable APR of 14.24% to 24.24%. A 3% fee (minimum $10) applies to all balance transfers.
- You can change your selection for the 3% category every calendar month, among: gas, online shopping, dining, travel, drug stores, or home improvement/furnishings
- Earn 25%-75% boosted rewards if you’re a Bank of America Preferred Rewards member
- Access free FICO score, updated monthly
- Intro offer:$200
- Annual fee:$0
- Regular APR:14.74% – 24.74% (Variable)
- Recommended credit score:670-850 (Good to Excellent)
5% cash back on your first $2,000 in eligible net purchases each quarter on the combined two categories you choose. 2% cash back on your choice on one everyday category, like Gas Stations, Grocery Stores or Restaurants. 1% cash back on all other eligible net purchases.
NextAdvisor’s Take
- Pick your bonus rewards categories
- 0% intro APR offer for purchases and balance transfers
- No annual fee
- Cash welcome bonus offer
- Quarterly caps limit 5% cash back
- Introductory APR offer does not apply to purchases
- Limited rewards redemption options
- Must reactivate categories each quarter
Additional Card Details
- 0% APR on purchases and balance transfers for 15 billing cycles, followed by a variable APR of 14.74% to 24.74%
- Zero fraud liability
- Contactless payment options
- Travel and purchase protections through Visa Signature program
- Intro offer:$200
- Annual fee:$0
- Regular APR:15.24% – 23.99% Variable
- Recommended credit score:670-850 (Good to Excellent)
5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories each quarter! 5% cash back on travel purchased through Chase Ultimate Rewards®, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service. Unlimited 1% cash back on all other purchases.
NextAdvisor’s Take
- Extensive tiered rewards structure
- Rotating bonus rewards categories every quarter
- Valuable welcome bonus offer
- 0% introductory APR for purchases and balance transfers
- No annual fee
- High ongoing APR after intro period
- Rotating quarterly bonus categories capped after $1,500 in spending
- Keeping track of rewards categories may be more complex than some other cash back cards
Additional Card Details
- 0% introductory APR for 15 months from account opening on purchases and balance transfers (15.24% – 23.99% variable APR thereafter) ; intro balance transfer fee of $5 or 3% of the amount of each transfer, whichever is greater in the first 60 days
- 5% cash back on qualifying Lyft rides through March 2025
- 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate
- Cell phone protection
- Free credit score and monitoring
- Access to Chase Offers savings
- Intro offer:Cashback Match™
- Annual fee:$0
- Regular APR:12.24% – 23.24% Variable
- Recommended credit score:670-850 (Good to Excellent)
Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate. Earn 1% unlimited cash back on all other purchases – automatically.
NextAdvisor’s Take
- 5% back in popular categories like grocery stores, gas stations, or Amazon.com purchases throughout the year
- No annual fee and no late fee on your first late payment.
- 15-month intro APR on purchases and balance transfers
- Cashback Match at the end of your first 12 months
- High ongoing variable APR
- Limited redemption options for rewards
- Must keep track of rotating bonus categories to maximize rewards
Additional Card Details
- 0% intro APR on purchases and balance transfers for 15 months, followed by a variable APR of 12.24% to 23.24%
- No foreign transaction fees
- All quarterly rotating categories for the ur annpcoming yeaounced in advance
- 5% category earn only applies after you activate rewards each quarter (bonus rewards do not apply retroactively if you wait to activate mid-quarter)
- Intro offer:N/A
- Annual fee:None
- Regular APR:13.99% Variable
- Recommended credit score:740-850 (Excellent)
2 Points per $1 on every eligible net purchase
NextAdvisor’s Take
- Earn 2% back on everything you buy
- No annual fee
- Lower ongoing APR than most rewards credit cards
- Visa Signature benefits
- Rewards are worth less if you redeem for travel, gift cards or other options
- No welcome bonus
- 1% foreign transaction fee
Additional Card Details
- No rewards cap or expiration
- Visa Signature benefits such as purchase protection, roadside dispatch, travel and emergency assistance services, lost luggage reimbursement, and travel accident insurance
- Visa Signature concierge access
- Zero fraud liability
- Minimum 2,500 points required for redemption
- You can’t fund a new Fidelity account with your rewards — the account you connect to your card must be previously opened and funded
- Intro offer:$150 Amazon Gift Card
- Annual fee:$0
- Regular APR:14.24% to 22.24% Variable
- Recommended credit score:670-850 (Good to Excellent)
5% back at Amazon.com and Whole Foods Market with eligible Prime membership* 2% back at restaurants, gas stations, and drugstores* 1% back on all other purchases*
NextAdvisor’s Take
- Rewards on Amazon.com and Whole Foods purchases, plus popular everyday spending categories
- No foreign transaction fees
- Metal card
- Sign up bonus comes in the form of an Amazon gift card
- No annual fee, but $119 Amazon Prime membership required
- High variable APR
Additional Card Details
- Visa Signature Card with benefits like Visa Signature Concierge Service and Luxury Hotel Collection access
- Travel and emergency assistance
- Lost luggage reimbursement and baggage delay coverage
- Travel accident insurance
- Purchase protection
- Extended warranties
- Auto rental coverage and roadside assistance
- Intro offer:N/A
- Annual fee:$0
- Regular APR:15.99% (Variable)
- Recommended credit score:740-850 (Excellent)
4% cash back on eligible gas for the first $7,000 per year and then 1% thereafter. 3% cash back on restaurants and eligible travel purchases. 2% cash back on all other purchases from Costco and Costco.com. 1% cash back on all other purchases.
Best Cash Back Cards of March 2022
Chase Freedom Unlimited
Best for: Overall value
The Chase Freedom Unlimited can’t be beat for valuable ongoing rewards with a simple structure. You’ll have access to premium Chase benefits and the opportunity to earn Chase Ultimate Rewards, ensuring you’ll have the most access to valuable redemption opportunities.
- First-year rewards value: $449.62
- Subsequent annual rewards value: $250.75
Citi Double Cash Card
Best for: Earning over time
Not only does the Citi Double Cash Card offer straightforward flat cash back, it can also incentivize you to pay your credit card bill on time. You’ll earn 2% back on every purchase — 1% when you swipe your card, and 1% when you pay it off.
- First-year rewards value: $265.16
- Subsequent annual rewards value: $265.16
Wells Fargo Active Cash® Card
Best for: Simplicity
There’s nothing to keep track of except the money going back into your wallet with the Wells Fargo Active Cash Card — unlimited 2% cash rewards on purchases. Plus, you can boost your first-year earnings with a $200 cash rewards bonus after spending $1,000 on purchases within three months of account opening.
- First-year rewards value: $465.16
- Subsequent annual rewards value: $265.16
Capital One SavorOne Rewards Credit Card
Best for: Dining and entertainment
If you find yourself frequently swiping your card on dining, entertainment, and groceries, then the SavorOne can save you some serious cash back, with no annual fee. You’ll get 3% cash back on dining, entertainment, popular streaming services and grocery stores (excluding superstores like Walmart and Target), and 1% on everything else.
- First-year rewards value: $555.56
- Subsequent annual rewards value: $355.56
Blue Cash Preferred Card from American Express
Best for: Groceries and gas
The Blue Cash Preferred Card offers one of the highest cash back percentages for groceries of any rewards card. You’ll get 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1% after that).
- First-year rewards value: $547.96
- Subsequent annual rewards value: $302.96
Bank of America Customized Cash Rewards Credit Card
Best for: Flexibility
It’s all about your choice with the Bank of America Customized Cash Rewards credit card. You’ll earn 3% cash back on a category of your choosing, 2% at grocery stores and wholesale clubs (up to $2,500 in combined choice category/grocery store/wholesale club quarterly purchases, then 1%), and 1% on all other purchases.
- First-year rewards value: $446.40
- Subsequent annual rewards value: $246.40
U.S. Bank Cash+® Visa Signature® Card
Best for: Unique Bonus Categories
U.S. Bank Cash+ Visa Signature Card is unique because it offers 5% back in two categories of your choice, up to $2,000 in spending each quarter, then 1%. Some eligible categories are rare among cash back cards, too, such as gym and fitness centers or home utilities. You’ll also earn an unlimited 2% back on your choice category between grocery stores, gas stations, and restaurants and 1% on everything else.
- First-year rewards value: $416.98
- Subsequent annual rewards value: $216.98
Chase Freedom Flex
Best for: Revolving rewards
The Chase Freedom Flex card offers high-value revolving rewards categories as well as ongoing everyday bonus categories. You’ll earn 5% cash back on purchases at different retailers each quarter upon activation, like PayPal or grocery stores (on up to $1,500 in quarterly purchases, then 1%), 5% back on travel purchased through Chase Ultimate Rewards, 3% back on dining and at drugstores, and 1% on everything else.
- First-year rewards value: $500.84
- Subsequent annual rewards value: $300.84
Discover it Cash Back
Best for: First year bonus and rotating categories
The Discover it Cash Back card offers cash back in everyday rotating rewards categories, plus a match of all the rewards you earn over your first year. You’ll earn 5% cash back on rotating quarterly bonus category spending, up to the quarterly maximum when you activate. Everything else earns 1% cash back.
- First-year rewards value: $465.78
- Subsequent annual rewards value: $232.89
Fidelity Rewards Visa Signature Card
Best for: Investors
The Fidelity Rewards Visa Signature Card* earns an unlimited 2% back on every purchase you make for no annual fee. However, to open this card you must own an eligible Fidelity account. And while you can redeem your rewards for cash, you’ll only get the full 2% by redeeming via deposit into your eligible Fidelity account, such as a brokerage account, retirement account, 529 Plan, or other investment vehicle.
- First-year rewards value: $265.16
- Subsequent annual rewards value: $265.16
Amazon Prime Rewards Visa Signature Card
Best for: Amazon and Whole Foods Shoppers
The Amazon Prime Rewards Visa Signature Card offers one of the highest ongoing rewards rates that can potentially apply for nearly all of your everyday spending needs. If you’re an Amazon Prime member ($119 annually), you can earn 5% cash back at Amazon.com and Whole Foods Market; 2% cash back at restaurants, gas stations, and drugstores; and 1% on everything else. For this card specifically, also keep in mind that annual rewards value can vary greatly depending on how much you spend with Amazon.
- First-year rewards value: $215.80
- Subsequent annual rewards value: $215.80
Costco Anywhere Visa Card by Citi
Best for: Wholesale Club Savers
With the Costco Anywhere Visa Card by Citi* you’ll earn 4% cash back on your first $7,000 (then 1%) in eligible gas purchases annually, including at Costco, plus 3% cash back on restaurant and eligible travel purchases worldwide, 2% on all other purchases at Costco and Costco.com, and 1% on everything else.
There’s no annual fee, but you must be a Costco member to apply, which costs $60 annually for the club’s Gold Star base tier. Instead of redeeming cash back as you go, you’ll receive an annual reward certificate each February billing cycle, which you may bring to a Costco store to redeem for cash or use toward a purchase.
- First-year rewards value: $265.16
- Subsequent annual rewards value: $265.16
Best Cash Back Credit Cards Summary
| Card | What It’s Good For | First-Year Rewards Value | Subsequent Annual Rewards Value |
|---|---|---|---|
| Chase Freedom Unlimited | Good for Overall Value | $449.62 | $250.75 |
| Citi Double Cash Card | Good for Earning Over Time | $265.16 | $265.16 |
| Wells Fargo Active Cash Card | Good for Simplicity | $465.16 | $265.16 |
| Capital One SavorOne Rewards Credit Card | Good for Dining and Entertainment | $555.56 | $355.56 |
| Blue Cash Preferred Card from American Express | Good for Groceries and Gas | $547.96 | $302.96 |
| Bank of America Customized Cash Rewards credit card | Good for Flexibility | $446.40 | $246.40 |
| U.S. Bank Cash+ Visa Signature Card | Good for Unique Bonus Categories | $416.98 | $216.98 |
| Chase Freedom Flex | Good for Revolving Rewards | $500.84 | $300.84 |
| Discover it Cash Back | Good for First Year Bonus and Rotating Categories | $465.78 | $232.89 |
| Fidelity Rewards Visa Signature Card | Good for Investors | $265.16 | $265.16 |
| Amazon Prime Rewards Visa Signature Card | Good for Amazon and Whole Foods Shoppers | $215.80 | $215.80 |
| Costco Anywhere Visa Card by Citi | Good for Wholesale Club Savers | $249.67 | $249.67 |
What Are Cash Back Credit Cards?
Cash back credit cards can be a good way to maximize your purchases without having to strategize too much or figure out complicated points values. These cards allow cardholders to earn back a percentage of each purchase, usually in a form of cash that may be redeemed for a statement credit, check, or bank deposit.
There are a few different types of cash back cards, so it’s important to align your cash back rewards with the categories in which you spend most.
How to Compare Cash Back Credit Cards
The best cash back credit card for you is the one that best matches your spending habits and credit needs. Here are a few details to consider when you’re comparing cash back cards:
- Approval Odds: Because cash back cards are rewards cards, they generally require a good-to-excellent credit rating for approval. Develop healthy credit habits and establish a solid credit history before you apply.
- Type of Cash Back: Determine whether you prefer a card with flat cash back on every purchase, tiered bonus cash rewards in the categories you spend most, or cash back in rotating quarterly categories.
- Rewards Rate: After deciding on the type of cash back you prefer, find a card with a rewards rate that best suits your spending. Flat cash back cards typically earn 1%-2% on every purchase, tiered cash back cards often range between 2%-4% or higher, and rotating cash back categories earn 5%.
- Annual Fee: Many cash back cards charge no annual fee, which means all the cash you earn goes straight back into your wallet — as long as you don’t accrue interest. But some cash back cards with an annual fee may offer higher rewards. Calculate your spending and estimated rewards to determine if an annual fee card makes sense for you.
- Welcome Bonus: Many cash back credit cards offer introductory cash bonuses when you spend a certain amount of money within a given timeframe after approval. These bonuses are only a short-term benefit, but can boost your first-year value, especially if you can meet the spending threshold with your regular spending.
- Other Benefits: In addition to cash rewards, look for other benefits from your card, like travel protections, annual statement credits, discounts from partners, and more.
Types of Cash Back Credit Cards
We can generally divide cash back credit cards into three categories: flat, tiered, and rotating cash back rewards. Each of these may suit different types of spenders. If you’re comfortable juggling multiple cards without taking on debt, you can even combine them to further maximize each purchase.
Flat Cash Back
Flat cash back rewards cards offer a simple value proposition: There are no bonus tiers or categories to track. Instead, you’ll earn a fixed cash back return on every eligible purchase you make with the card. For many people, flat cash back can offer the most value on everyday spending since you’ll earn on every purchase regardless of category.
Examples:
Tiered Cash Back
Cash back credit cards which offer tiered rewards in standard bonus categories may be the most common cash back card type across issuers. While these cards don’t provide the same simplicity of flat cash back, they can be highly valuable for the average spender. Bonus categories typically range between 2-4% cash back and may or may not cap bonus earn after a certain amount each year. Before applying for a tiered category card, look into your own regular spending and past bank statements to determine the categories that will best maximize your spending.
Examples:
Rotating Cash Back
Rotating category cards won’t win any points for simplicity — you must keep track of each quarterly category change to make the most out of them — but if your spending aligns with the available categories, they can offer among the highest rewards rates. Categories can vary, but the cash back rate across these types of cards is generally 5%. Issuers typically reveal upcoming categories in advance, and to earn the bonus cash back on your spending, you must activate the rewards in your account each quarter.
Examples:
Common Cash Back Bonus Categories
With dozens of cash back credit cards to choose from, you can easily tailor your card choice to your own spending, whether you’re a frequent traveler, love to dine out, or always hailing a rideshare service.
Most commonly, bonus categories for cash back cards include some combination of dining, groceries, and travel. But in response to the pandemic and a push for customer retention, more issuers are further highlighting everyday spending. You’ll find many cash back cards today with increased rewards on streaming services, utilities, department or home improvement stores, gas stations, and more.
Here are a few common spending categories in which many cash back cards offer bonus rewards:
- Groceries
- Dining at restaurants (including takeout and delivery)
- Gas stations
- Streaming services or subscriptions
- Drugstores
- Wholesale clubs
- Specific retailers (Target, Walmart, department stores, etc.)
Cash Back vs. Travel Credit Cards
Cash back cards and travel cards are both types of rewards credit cards, but they can serve very different purposes in your wallet.
Cash back credit cards offer low-cost, straightforward rewards focused on everyday spending, which can be a great option for someone looking to keep things simple. Travel credit cards, on the other hand, often have more complex rewards structures and high annual fees. But they can also be more lucrative long-term, with higher rewards, valuable benefits, and more flexible redemptions.
Earn Rewards
Cash back and travel cards often offer similar rewards categories on everyday purchases, such as groceries, dining, and gas. But travel cards often also earn bonus rewards on travel-related purchases like flights, hotels, auto rentals, and more. However, you won’t find the same flat bonus rewards or rotating categories that some cash back cards offer.
Redeem Rewards
Cash back cards earn percentages of cash back on your spending which you can typically redeem for cash or statement credits. But travel credit cards earn points or miles, and offer more redemption options. You can redeem your points and miles for cash back and statement credits, but you’ll usually get the most value by booking travel, transferring to travel partners, or other travel-related redemption options.
General travel rewards cards usually offer redemptions through an issuer rewards program — such as Chase Ultimate Rewards or Citi ThankYou Rewards — while co-branded travel rewards are tied to an airline or hotel loyalty program — like Delta SkyMiles or Hilton Honors.
Pair Cash Back and Travel Cards
Cash back and travel cards can work great paired together to maximize your rewards.
For example, you may get great value from a travel card like the American Express® Gold Card if you spend a lot on dining and travel and enjoy Amex Membership Rewards redemptions. But you can further maximize every purchase by pairing the Gold Card with a flat cash back card like Citi Double Cash, and earn rewards on purchases outside bonus categories. This strategy can be especially lucrative if you choose to pair cash back and travel cards from the same card issuer.
Is a Cash Back Card Right for You?
If you’re already carrying a debt balance on a credit card, you shouldn’t add another credit card to the mix, no matter how good the rewards might be. Focus on paying down your high-interest debts and securing a healthy credit score before opening a cash back card.
A cash back credit card may be a great fit for you, though, if you stick to your budget, have no high-interest debts, and you’re looking to add value to your purchases. If you already have another type of rewards card, adding a cash back card to your wallet can help you further maximize each purchase, as long as you pay off your balances in full each month before accruing interest.
Pros and Cons of Using a Cash Back Card
Pros
Simplicity: Earn straightforward rewards on every purchase
Flexible redemption options and rewards categories
Many charge no annual fee and offer cash welcome bonuses
Some cash back cards have great balance transfer and 0% interest offers
Cons
Cash back cards may have lower potential redemption value than rewards cards that earn points or miles
Rewards earnings may have annual or quarterly caps
Carrying a balance can result in sky-high interest, with APRs upwards of 20%
Potential costs of fees and penalties
How to Maximize Cash Back Rewards
Strategize how you use your cash back credit card to get the best value on each purchase you make. Here are some things to consider:
- Choose the Right Card: Make sure you choose a cash back card that can help you maximize value on your most frequent purchases. If your monthly budget is largely dedicated to groceries or gas, open a cash back card that matches. You can even pair a higher-earning tiered or rotating cash back card with a second card that earns flat cash back rewards for spending that doesn’t fit into a common category.
- Qualify for the Welcome Bonus: Many cash back cards come with a one-time intro or sign-up bonus after you meet a certain spending threshold (earn $150 in cash rewards after spending $500 within three months of account opening, for example). Plan your spending so you can snag this bonus and maximize your first-year rewards.
- Start Swiping: Use your cash back card each time you spend in a qualifying rewards category or, in the case of flat cash back cards, for every purchase you make. Even for purchases that don’t earn bonus rewards, you’ll typically get a blanket 1% back, no matter where you spend.
- Don’t Carry a Balance: Pay your purchases off in full and on time each month to avoid high interest charges that can wipe out any cash back rewards earned.
Cash Back Credit Cards Frequently Asked Questions
What are cash back credit cards?
Cash back credit cards are credit cards that let you earn cash back on your purchases. Instead of earning points or miles (like most travel credit cards), you’ll earn cash rewards, which you can redeem as a statement credit, gift card, check, or toward new purchases.
Cash back cards don’t always offer as much value or as many added benefits as other rewards cards, but they can be more flexible and make it easy to earn and redeem rewards on your everyday spending.
How do cash back cards work?
Cash back cards let you earn a percentage of eligible purchases back in cash rewards. For instance, if you choose the Capital One Quicksilver Cash Rewards Card, you’ll earn 1.5% cash back on all purchases. That means for every $150 you spend, you’ll earn $2.25 cash back.
The cash back rate you’ll earn on each purchase depends on several factors — like the bonus categories the card earns rewards in and the type of cash back card you choose. Some cards offer flat-rate cash back on all purchases, while others have tiered or rotating categories in which you can earn a higher cash back value.
Is a cash back card worth it?
A cash back card may be worthwhile if the rewards categories align with your regular spending. And because many of these cards charge no annual fee, they can help you save money for no added cost — as long as you pay your balances in full and on time each month. For instance, the Capital One SavorOne Cash Rewards Card lets you earn unlimited 3% cash back on dining, entertainment, popular streaming services, and grocery stores (excluding superstores like Walmart and Target), and 1% on all other purchases.
But if your most frequent purchases don’t align with popular bonus categories, a flat rate cash back card, like the Citi Double Cash, may be a better fit. You can earn unlimited 2% cash back rewards on all purchases — 1% as you spend, and the other 1% when you pay off the purchase — instead of in select categories, to make sure you’re earning maximum rewards based on your spending habits.
Which cash back card is best?
The best cash back card for you is one that best aligns with your regular spending and budget. You’ll also want to consider any annual fee cost, introductory 0% APR offers, and added benefits before you decide.
That being said, the Chase Freedom Unlimited is NextAdvisor’s cash back card pick for its flexible rewards on everyday spending. It also has a welcome bonus, introductory offer for purchases and balance transfers, and the option to maximize rewards even further with access to Chase’s Ultimate Rewards program.
Which cash back card pays the most cash back?
The cash back card that offers the most cash back for you is the one that earns the best rewards on your most frequent purchases. Consider different types of cash back cards before you apply to find the right rewards combo for your budget. For example, some cards offer up to 5% cash back in select categories, but may cap the 5% rate after a certain amount, which can reduce how much you’ll earn overall. On the other hand, some cash back cards offer a lower 2% cash back on every purchase, but the rewards you can earn are unlimited.
How do cash back rewards build credit?
You can build credit with a cash back credit card as long as your card issuer reports your account activity to credit bureaus. To improve your credit with your credit card, practice good credit habits — like keeping your credit utilization low and paying your bill on time and in full each month. That way, you can build credit while earning cash back rewards and practicing the habits that will help you maintain good credit over time.
Are cash back rewards taxable?
Generally, cash back rewards are not taxable. Cash back usually counts as a rebate on your spending — which is not taxable. When you earn the rewards through other spending, the IRS counts that as a discount. However, there are cases in which you may need to report rewards on your return; if you’re unsure, it’s best to ask your tax professional to make sure your rewards don’t need to be reported when filing.
Do cash back credit cards give you actual cash?
Cash back credit cards can offer cash redemptions in the form of a check or direct deposit into a bank account. One of the simplest options for redeeming cash back, though, is as a statement credit toward your card balance. You also may be able to redeem cash back rewards for gift cards, merchandise, toward new purchases, or as points for travel.
Our Methodology
EDITORIAL INDEPENDENCE
As with all of our credit card reviews, our analysis is not influenced by any partnerships or advertising relationships.
To determine our picks for best cash back credit cards, NextAdvisor’s editorial team developed a framework to evaluate potential cash back earnings based on national average consumer spending data in broadly representative categories — dining, groceries, gas, and entertainment. We applied this framework to each card currently open for applications by every major credit card network and issuer, and divided each into subcategories for more accurate comparison. After potential rewards earnings, we also evaluated each card’s annual fee, first-year vs. ongoing value, bonus offers, and redemption flexibility.
*All information about the Citizens Bank Cash Back Plus™ World Mastercard®, Capital One Savor Cash Rewards Credit Card, Bank of America® Customized Cash Rewards credit card, Discover it® Cash Back, Alliant Cashback Visa Signature Card, Fidelity Rewards Visa Signature, Amazon Prime Rewards Visa Signature, and Costco Anywhere Visa® Card by Citi, U.S. Bank Cash+® Visa Signature® Card has been collected independently by NextAdvisor and has not been reviewed by the issuer.
For rates and fees of the Blue Cash Preferred Card from American Express, click here.
Eligibility and Benefit level varies by Card. Terms, Conditions and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by Amex Assurance Company.
