Here’s a simple credit card strategy to boost savings on your spending: Carry a flat rate 2% cash back card in your wallet.
A cash back credit card that earns you the exact same amount of cash back on every purchase you make is one of the simplest types of rewards credit cards — and can add up to major savings. Flat rate cards typically dole out at least 1.5% back on all purchases. However, there are a few that offer as much as 2% cash back, which is the high end of rates you’ll find from widely-available flat cash back cards (with some exceptions).
“Whether you get 1%, 1.5% or 2%, you don’t really have to think about what category you’re spending in,” says Beverly Harzog, a credit card expert and consumer finance analyst for U.S. News and World Report.
Here’s a closer look at how you can maximize a 2% cash back card to save on everyday purchases, and a few of our favorite 2% cash back cards available today.
Why You Should Carry a 2% Cash Back Card
Whether you’re a beginner or long-term credit card user, a 2% flat cash back card can make a valuable addition in just about anyone’s wallet.
That’s because flat cash back rewards are the simplest type of rewards card. You’ll earn the same amount of cash back on every purchase, which makes this type of cash back card very different from a card with tiered bonus categories or quarterly rotating categories. These cards are also more straightforward than travel rewards credit cards, which may net more value long-term, but can have more complicated rewards structures and redemption programs.
“Flat rate is just that — no matter what you buy, from a candy bar to a flat-screen TV, you earn your card’s cash back rate,” says Benét Wilson, senior credit cards editor with The Points Guy (which is owned by Red Ventures, like NextAdvisor).
Two percent cash back is often the highest rate you’ll find among these cards, which translates to about $0.02 back as a reward for every dollar that you spend. Most of the time, flat cash back cards have no annual fee and may offer other benefits like an introductory 0% APR or welcome bonus offer. Depending on how much you spend annually and how often you use the card, unlimited 2% cash rewards on every purchase could earn you hundreds in cash back.
“For people that don’t like to have to think hard about which credit card to use, that’s perfect for you,” says Harzog.
How to Maximize a 2% Cash Back Card
To maximize your 2% cash back card, simply use it for all the spending regularly within your budget you don’t already earn a higher rewards rate on with another card.
For example, instead of using your debit card to make a common purchase online or in-store, pull out your 2% cash back card to increase your savings. Just remember, you’ll only get value from using your credit card if you pay your balance on time and in full each month. Carrying a balance results in interest charges, which in turn can quickly negate any cash back you earn. The key is to use the card for purchases you are already planning to make within your budget.
“Cards with more rewards tend to have higher APRs, so you never want to carry a balance,” says Harzog.
If you want to further maximize the amount of cash back you earn, consider pairing a flat rate 2% cash back card with another card that earns higher cash back in specific categories you might spend most.
Say, for example, you spend most on gas and groceries. With a card like the Blue Cash Preferred® Card from American Express, you can earn 6% back at U.S. supermarkets on up to $6,000 spent per year (then 1%), 6% back on U.S. select streaming services, and 3% on transit and at U.S. gas stations. You could use it on all eligible spending in those categories, and still earn 2% on all other spending with your flat cash back card.
“That’s why it’s so important before you even start researching credit cards to look at your budget and see where you are spending the most money,” says Harzog.
The Best 2% Cash Back Cards
Wells Fargo Active Cash® Card
The Wells Fargo Active Cash Card is one of the best cash rewards cards on the market right now. You can earn unlimited 2% cash rewards on purchases with no annual fee, and you can also earn a welcome bonus of $200 cash rewards when you spend $1,000 in purchases in the first three months (equal to about $333 each month).
The card offers cellphone protection and a competitive introductory 0% APR on purchases and qualifying balance transfers for the first 15 months from account opening, then 15.74%, 20.74%, or 25.74% variable APR. The cash rewards you earn on the card can be redeemed as a statement credit or withdrawal from a Wells Fargo bank account or ATM.
Citi® Double Cash Card
The Citi Double Cash Card offers up to 2% cash back on your spending: 1% when you make a purchase, and another 1% cash back when you pay it off. That means as long as you pay off your balance every month, you’ll get 2% back, which you can redeem for cash via statement credit, direct deposit into a bank account, gift card, or check in the mail. If you have a Citi travel card, you can also convert your cash back to ThankYou Points. There’s no welcome bonus, but you do get a 0% intro APR for 18 months on balance transfers, after that the variable APR will be 14.74% – 24.74%.
Alliant Cashback Visa® Signature Card
Alliant Cashback Visa Signature Card* stands out even among 2% cards because it offers 2.5% cash back on every purchase — but there are additional eligibility requirements to qualify. The high rewards rate applies to the first $10,000 you spend each billing cycle if you have an eligible checking account and meet account requirements. Otherwise, you’ll earn 1.5% flat cash back. This card doesn’t charge an annual fee or any foreign transaction fees.
But you have to be a member of Alliant Credit Union to qualify for this credit card, and to qualify for 2.5% rewards, you’ll need to maintain an average daily balance of at least $1,000 in your Alliant High-Rate Checking account each quarter.
Wells Fargo Active Cash® Card
Citi® Double Cash Card
- Intro offer:N/A
- Annual fee:$0
- Regular APR:14.74% – 24.74% (Variable)
- Recommended credit:670-850 (Good to Excellent)
- Learn more At our partner’s secure site
Before you sign up for a cash back credit card, it helps to take a look at your spending habits.
If you spend a lot of money in specific categories like dining, then a card with rotating bonus rewards categories may add more value to your most frequent purchases. But if you prefer a hands-off card that can guarantee cash back on everything, a flat rate cash back card with 2% rewards or more is a smart choice.
If you really want to increase your savings potential, consider combining a flat rate card with a rotating bonus or tiered bonus category card. With the right combination of credit cards in your wallet and a little bit of strategizing, you can add significant savings over time.
“There’s a card out there for everybody right now,” says Harzog. “It just depends on your specific needs.”
*All information about the Alliant Cashback Visa® Signature Card has been collected independently by NextAdvisor and has not been reviewed by the issuer.