Flat cash back credit cards are one of our favorite tools for saving money on everyday spending. Based on rewards rate alone, it’s easy to see how a 2% cash back credit card can outpace a 1.5% cash back credit card when it comes to earning potential. However, that doesn’t mean a 2% card will always be the better option.
There are plenty of other card details to consider, too. Though they have a lower cash back rate, some cards that earn 1.5% may offer additional bonus categories, a higher welcome offer, better benefits and perks, and more redemption options than 2% cash back cards. There are plenty of scenarios where a 1.5% cash back credit card can actually leave you ahead.
Here’s more information to help you decide which type of flat cash back card is right for you:
Flat Cash Back Rewards
Both 1.5% cash back and 2% cash back rewards cards are flat cash back cards. This is just one of the different types of cash back credit cards available. The three main types include:
- Flat rate cash back credit cards that offer a single cash back percentage on all your purchases
- Tiered bonus category cards that offer a different rewards rates in various bonus categories
- Rotating category cash back credit cards that offer 5% back in categories that change every quarter (up to limits)
Two percent back — or $2 in rewards for every $100 you spend — is one of the highest rates you’ll find among flat cash back credit cards. Cash back credit cards with tiered or rotating categories typically offer just 1% back on any purchases that don’t fall within their bonus categories.
There are several reasons you may want to pick a card that offers flat cash back. For example:
- You don’t want to deal with or keep track of bonus categories
- You regularly spend money in categories that aren’t common among bonus category cards
- You already have a card that earns rewards in certain bonus categories, and want to maximize all your other purchases
Pairing Flat Rate Cards
Pairing a 2% or 1.5% flat cash back card with other rewards cards in your wallet is a great way to maximize your rewards. This strategy gets you the best of both worlds — more rewards where you spend the most plus better than average cash back on everything else you buy.
An example of a popular card pairing is the Wells Fargo Active Cash Card and the Blue Cash Preferred® Card from American Express. In this case, you could use the Blue Cash Preferred to earn bonus rewards in everyday spending categories like U.S. supermarkets, streaming services and U.S. gas stations, then switch to your Wells Fargo card to earn 2% back on everything that doesn’t fall into those eligible categories.
1.5% Cash Back vs. 2% Cash Back
If you’re considering a flat cash back card — whether on its own or as a tool to pair with other cards — you’ll most commonly find cards with either 1.5% or 2% cash back. And while 2% cash back cards might seem like the best option based on rewards alone, there are a few more important factors to consider:
Welcome bonuses are more common among flat cash back cards with 1.5% rewards than those with 2% rewards. A generous cash welcome bonus can add a ton of first year value to your cash back card — and depending on how much you spend annually, can outpace the extra 0.5% back by a decent amount.
For example, let’s say you have a Citi Double Cash Card with 2% back on everything you buy (1% when you make a purchase and another 1% when you pay it off). This card doesn’t have a welcome bonus of any kind, so $10,000 in card spending within a year would net you $200 in cash back rewards.
On the other hand, with the Capital One Quicksilver Cash Rewards Credit Card, you’ll earn a lower flat 1.5% back on everything you buy, but can earn $200 in bonus cash when you spend $500 within three months of account opening. If you spent the same $10,000 on this card within a year and earned the welcome offer, you would wind up with $350 in rewards after year one.
Some 1.5% cash back credit cards offer other bonus categories in addition to flat cash back, which can help boost your overall rewards total. For example, the Chase Freedom Unlimited offers 1.5% back on everyday purchases, plus:
- 5% back on up to $12,000 in grocery store spending the first year
- 5% back on Lyft rides (through March 2022)
- 5% back on travel booked through Chase
- 3% back on dining and drugstore purchases
With these additional bonus categories in play, it’s easy to see how people who spend a lot on groceries, Lyft rides, travel, dining, and drugstore purchases could end up ahead.
Before you decide which cash back credit card is best for your needs, think about how you spend money each month. Ultimately, the best card for your wallet is the one that gives you rewards where you already spend most plus perks you can actually use.
Some cards also boast better redemption options than others, including options that let you redeem your rewards for more than the standard one cent per point.
If you pair the Chase Freedom Unlimited, for example, with a Chase travel credit card like the Chase Sapphire Preferred or Chase Sapphire Reserve, you can unlock premium travel redemptions. Pool all your Chase Ultimate Rewards points from both cards into your Chase Sapphire Preferred account for 25% more value when you redeem points for travel booked through Chase or 50% more value with the Chase Sapphire Reserve. Pairing your Chase Freedom Unlimited with a Sapphire card also lets you transfer points to Chase Ultimate Rewards partners, which can net your potentially greater redemption value.
Which Should You Choose?
Whether you’ll get more value from a 2% flat cash back card or a 1.5% cash back card depends on what you’re looking to get from the card. If you prefer long-term value and frequently use your card, you’ll likely have an easier time maximizing 2% rewards. But if you value a cash welcome bonus or you’re looking for more redemption options, some flat cash back cards that offer only 1.5% on every purchase may have more flexibility.
Look at your past spending to get an idea of how you’ll use your card and the features that are most valuable for you, and compare different options before you apply. Here are a few we consider among the best:
Wells Fargo Active Cash℠ Card
- Intro bonus:$200 cash rewards
- Annual fee:$0
- Regular APR:14.99%-24.99% (Variable)
- Recommended credit:670-850 (Good to Excellent)
- Learn more At our partner’s secure site
Chase Freedom Unlimited®
- Intro bonus:$200
- Annual fee:$0
- Regular APR:14.99% – 24.74% Variable
- Recommended credit:670-850 (Good to Excellent)
- Apply Now At Chase’s secure site
Recommended 2% Cash Back Cards
Wells Fargo Active Cash Card
The Wells Fargo Active Cash Card earns a flat 2% back on everything with no annual fee. Plus, you’ll get $200 in bonus cash after spending $1,000 on purchases within three months of account opening. When it comes time to redeem rewards, you can trade them for statement credits, gift cards, cash at an ATM with a Wells Fargo debit card, or transfers to a qualifying bank account.
The Wells Fargo Active Cash Card also comes with 0% APR on purchases and balance transfers for 15 months, followed by a variable APR of 14.99%, 19.99% or 24.99%.
Citi Double Cash Card
The Citi Double Cash Card also offers cardholders 2% back on everything — 1% when you make a purchase and another 1% when it’s paid off. This card charges no annual fee.
Redemption options include statement credits, although cardholders can also convert their rewards to Citi ThankYou points. The Citi Double Cash Card has a generous balance transfer offer — 0% APR on balance transfers for 18 months followed by a variable APR of 13.99% to 23.99%.
Recommended 1.5% Cash Back Cards
Chase Freedom Unlimited
The no annual fee Chase Freedom Unlimited has a $200 welcome bonus offer when you spend $500 on purchases within three months of account opening. In addition to earning a baseline 1.5% back on all your spending, you’ll get a total 5% back on up to $12,000 in grocery store spending the first year, 5% back on Lyft rides (through March 2022), 5% back on travel booked through Chase and 3% back on dining and drugstore purchases.
This card also offers 0% APR on purchases and balance transfers for 15 months, followed by a variable APR of 14.99% to 24.74%.
Bank of America Unlimited Cash Rewards Credit Card
The Bank of America Unlimited Cash Rewards Credit Card offers a flat 1.5% back for each dollar you spend, although Bank of America Preferred Rewards members can earn an additional 25% to 75% more rewards on all their purchases depending on their tier of membership. That’s equal to up to 2.62% back on every purchase if you reach the highest Preferred Rewards tier.
There’s no annual fee, and you’ll earn $200 in bonus cash after spending $1,000 on purchases within 90 days of account opening. You can also save with 0% APR on purchases and balance transfers made within 60 days of account opening for 15 billing cycles, followed by a variable APR of 13.99% to 23.99%.