The 3 Different Types of Cash Back Credit Cards, and How to Choose the Right One for You

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Cash back credit cards are a great way to easily maximize savings where you spend most.

But not every cash back credit card works the same. If you’re trying to decide which card will make the best fit for your wallet, it can help to understand the different rewards structures and how they may or may not fit your spending. In some cases, you can even get added value by pairing cards together as part of a more robust credit card strategy.

There are three primary types of cash back rewards: flat-rate rewards, tiered bonus categories, and quarterly rotating categories.

Pro Tip

Take a close look at your spending habits before applying for a cash back credit card, so that you can apply for the one that will help you maximize your savings.

To determine which works best for you, you should start by figuring out how much effort you’re willing to put into your card strategy, and looking at where your spending habits fall, recommends Jasmin Baron, a certified educator in personal finance and associate editor at Insider. “You’re going to do better if those categories line up,” she adds.

With that in mind, here’s more about these three different types of cash back cards, and what you need to know to decide which type is best for your wallet.

Flat Rate Cash Back Credit Cards

Flat rate cash back credit cards are the simplest type of rewards card. You’ll earn the same amount of cash back on your purchases, no matter the spending category. In other words, you can get the same amount of cash back on your purchase at CVS as you will on dining or airfare.

“If you want a hands-off, ‘set it and forget it’ card where you don’t have to think much about keeping track of earning rates, the flat rate is the way to go,” Baron says.

In general, you won’t find many options above 2% cash back in this category, so you’re not going to get the same rate of return as you might with a card that earns bonus or rotating cash back. The earning potential is a little less, but it’s “hassle-free,” she says. “If you’re not out to maximize every dollar you spend, either because you’re not interested or you don’t have the time, flat rate is the way to go.”

Here’s a closer look at some of our favorite flat cash back cards.

Citi® Double Cash Card

The Citi Double Cash card earns up to 2% on every purchase — you’ll get 1% cash back when you buy, plus an additional 1% as you pay for those purchases. That means there’s extra incentive to pay your balances in full and on time, so you’ll get the full rewards rate.

The card has a $0 annual fee, but does not offer a welcome bonus. It has a straightforward rewards earning structure and is geared towards those looking to maximize savings and rewards without much work.

Wells Fargo Active Cash℠ Card

The no annual fee Active Cash Card from Wells Fargo also earns an unlimited 2% cash rewards on purchases, without many added benefits beyond cellphone protection from the issuer.

This card does come with a welcome bonus, though. If you spend at least $1,000 on purchases within three months of account opening, you’ll get a $200 cash bonus. 

Citizens Bank Cash Back Plus™ World Mastercard®

The Citizens Bank Cash Back Plus World Mastercard earns 1.8% cash back on everything you buy. The card has a $0 annual fee and comes with a few travel protections and World Mastercard benefits, including extended warranty and cell phone protection.

Chase Freedom Unlimited®

Chase Freedom Unlimited®

Editor’s Score: (4.7/5)
  • Intro bonus:
    $200
  • Annual fee:
    $0
  • Regular APR:
    14.99% – 24.74% Variable
  • Recommended credit:
    670-850 (Good to Excellent)
  • Apply Now externa link icon At Chase’s secure site
Citi® Double Cash Card

Citi® Double Cash Card

Editor’s Score: (4.4/5)
  • Intro bonus:
    N/A
  • Annual fee:
    $0
  • Regular APR:
    13.99% – 23.99% (Variable)
  • Recommended credit:
    670-850 (Good to Excellent)
  • Learn more externa link icon At our partner’s secure site
Blue Cash Preferred® Card from American Express

Blue Cash Preferred® Card from American Express

Editor’s Score: (4.3/5)
  • Intro bonus:
    $300
  • Annual fee:
    $0 introductory annual fee for the first year, then $95.
  • Regular APR:
    13.99%-23.99% Variable
  • Recommended credit:
    670-850 (Good to Excellent)
  • Learn more externa link icon At our partner’s secure site See Rates & Fees, Terms Apply.

Tiered Bonus Category Cash Back Credit Cards

Rather than one percentage on every purchase, some credit cards earn more (or less) cash back depending on the spending category. For example, you might earn 3% cash back at the grocery store, but only 1% cash back on your monthly Netflix subscription.

When it comes to these cards, it’s important to look back at your spending habits over the past several months to make sure you get the card that offers the highest rewards where you spend most.

“If you think your spending matches closely with customizable or bonus cards, there is the opportunity to get more bang for your buck,” Baron notes. For example, if you spend a lot on dining, it might make sense to look for a card that has dining as a bonus category. In some cases, “You’re essentially doubling or tripling the rewards you would get from a flat rate card.”

Chase Freedom Unlimited®

The Chase Freedom Unlimited is one of our all-around favorite cash back credit cards. In fact, it combines the best of flat rewards and tiered bonus categories in one card.

It earns 5% cash back on grocery store purchases (not including Target or Walmart purchases) on up to $12,000 spent in the first year, as well as 5% back on Chase travel purchased through the Chase Ultimate Rewards portal and on Lyft rides through March 2022. In addition, the card earns 3% on dining and drugstores. Unlike most cards with bonus categories (which typically earn a standard 1% on everything else), every purchase that doesn’t fall into a rewards category will earn an unlimited 1.5% cash back.

Better yet, it has a $0 annual fee and comes with a complimentary 3-month subscription to Doordash’s DashPass, followed by 50% off DashPass for 9 months (activate by 12/31/21). It’s offering a $200 bonus after spending $500 within three months of account opening.

Capital One SavorOne Cash Rewards Credit Card

The Capital One SavorOne Cash Rewards credit card has great cash back rewards for dining, entertainment, and groceries, if that’s where the majority of your purchases fall. 

It earns 3% cash back on dining, entertainment, popular streaming services, and at grocery stores (excluding superstores like Walmart® and Target®), plus 1% cash back on all other purchases. Through January 2023, you’ll also earn 8% cash back on tickets at Vivid Seats. The card has no annual fee, and you’ll earn a $200 cash bonus after $500 in purchases within three months of account opening. 

“This is a really good one for those who do a lot of spending on dining and supermarkets. If you’re the type of person to go out a lot, go to shows/concerts, it could maximize your earnings,” Baron says. “It’s a great card for millennials and Gen Z since it hits all the high points.”

Blue Cash Preferred® Card from American Express

The Blue Cash Preferred from Amex is a solid pick for families, and one of the only cash back cards with an annual fee that we recommend. That’s because it earns 6% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%), as well as on select U.S. streaming subscriptions. You’ll also get 3% at U.S. gas stations and on transit, which includes:

  • Taxis
  • Rideshares
  • Parking
  • Tolls
  • Trains
  • Buses

This card’s rewards structure covers a wide array of bonus categories and can help you maximize savings on your day-to-day spending, especially if you spend a lot on groceries. It has a $95 annual fee, and new cardholders can earn a $300 statement credit after spending $3,000 in purchases within the first six months of card membership.

“This is a good one because you can try it out the first year, and determine if it’s worth it to pay the $95 annual fee,” Baron says. “For the average household, the cap on supermarket spending is pretty adequate.”

U.S. Bank Cash+™ Visa Signature® Card

The U.S. Bank Cash+ card is much more customizable than many other cards in this category. You can earn 5% cash back on your first $2,000 in eligible net purchases each quarter in the combined two categories of your choice. These categories include:

  • Fast food
  • TV, internet, and streaming services
  • Cellphone providers
  • Home utilities
  • Department stores
  • Electronics stores
  • Sporting goods stores
  • Movie theaters
  • Gyms/fitness centers
  • Furniture stores
  • Ground transportation

In addition, you’ll earn 2% cash back on your choice on one everyday category, between:

  • Gas stations
  • Grocery stores
  • Restaurants

The card earns 1% cash back on everything else. If you don’t activate your choice categories each quarter, every purchase will earn 1%. 

It has a $0 annual fee, and you can earn a $200 cash rewards bonus after making $1,000 in purchases during the first 120 days of account opening. Baron notes it’s a great “under-the-radar” cash back credit card.

Rotating Category Cash Back Cards

The third type of cash back card requires the most strategizing, but can potentially help you score hundreds in cash back each year. 

Cash back cards with rotating categories earn 5% cash back in specific issuer-chosen categories that change each quarter. These may include everything from streaming services to groceries to specific retailers like Walmart or Target. Because your rewards categories are constantly changing, these cards may work best for someone who doesn’t mind planning a budget in advance, so you can guarantee the best savings each quarter. 

Discover it® Cash Back

The Discover it Cash Back card earns 5% cash back on everyday purchases each quarter (up to $1,500 in quarterly purchases, then 1%) when you activate, and 1% cash back on everything else, with no activation required.

Discover announces its categories for the entire year in advance, making it easy to plan your spending accordingly. Past categories have included Amazon, grocery stores, restaurants, gas stations, PayPal, and more.

In addition to ongoing rewards, Discover matches all the cash back earned within the first year. There is certainly a great deal of cash back to be earned here, but you’ll need to put a bit of work into keeping track of the rotating bonus categories, as well as activating your card each quarter to get the bonus rewards. The card has a $0 annual fee.

Chase Freedom Flex℠

The other popular card in this category — Chase Freedom Flex — is similar, but offers a few more ongoing rewards categories and benefits.

You’ll earn 5% on up to $1,500 in combined purchase in quarterly bonus categories when you activate (then 1%). Previous categories are similar to the Discover it Cash Back; they include Walmart, select streaming services, PayPal, gas stations, grocery stores, and more. Unlike Discover, Chase only announces the upcoming categories a few weeks before a new quarter though, so you may have less time to plan your spending.

But in addition to rotating rewards categories, you can earn 5% cash back on grocery store purchases (not including Target or Walmart purchases) on up to $12,000 spent in the first year, 5% on Chase travel purchased through Ultimate Rewards, 3% on dining at restaurants and drugstores, 1% on all other purchases. 

And like its sister card, the Chase Freedom Unlimited, the Freedom Flex also comes with a complimentary 3-month subscription to Doordash’s DashPass, followed by 50% off DashPass for 9 months (activate by 12/31/21), plus a $200 bonus after spending $500 within three months of account opening.

Editorial Independence

As with all of our credit card reviews, our analysis is not influenced by any partnerships or advertising relationships.