When it comes to rewards, cash back is king, since it’s more transparent and easier to use than points. The average earn rate on cash cards has edged up from 0.83% in 2010 to 1.09% today, NerdWallet reports.
But don’t get too excited: Your ability to earn is often less now, as “some attractive cards have put new limits on the amount you can get back in certain categories, like groceries,” says Alex Matjanec of MyBankTracker.com. Sign-up bonuses have been pared back a bit too, from an average of $82 in 2011 to $79 now.
BEST TIERED REWARDS (TIE)
American Express Blue Cash Preferred (americanexpress.com)
APR: 13% to 22%
Annual fee: $75
Sign-up bonus: $150 after spending $1,000 in first three months
Rewards: 6% on groceries on up to $6,000 in purchases and 1% thereafter; 3% on U.S. gas stations and certain department stores; 1% on everything else
Why it’s a winner: Impressive rates (6% is almost unheard of) on key categories. If you charge $2,000 a month — including the $364 on groceries, $275 on gas, and $166 on department stores the Bureau of Labor Statistics finds typical for households earning $74,000 to $161,000 — you’ll reap $489 a year, net the fee (excluding bonus).
The caveat: The 1% base rate is meager, so you may want to use this card in tandem with the one below.
U.S. Bank Cash Plus (usbank.com)
APR: 14% to 24%
Annual fee: $0
Sign-up bonus: $50 to $100
Rewards: 5% on two categories from a list of 12 (e.g., restaurants, department stores, cell service, hotels) on up to $2,000 a quarter; 2% on your choice of gas, groceries, or drugstores; 1% on everything else; $25 bonus when you redeem $100 or more, once a year
Why it’s a winner: 5% is pretty sweet, particularly since you get to choose where it’s applied and there’s no annual fee on the card. If you dish out $2,000 a month and $450 of it is on restaurants and your cell plan, you’ll earn $557 a year with the redemption bonus (but not the signing bonus).
The caveat: Must elect categories quarterly — they are subject to change — or you get only 1% on everything. Can apply for card only at U.S. Bank branches.
BEST FLAT-RATE REWARDS (TIE)
Fidelity American Express (fidelity.com)
APR: 14%
Annual fee: $0
Sign-up bonus: None
Rewards: 2% on every purchase
Why it’s a winner: Rewards are almost double the average earn rate with no limit on cash back, making this the best deal among no-fee, category-free cash cards. You’ll take back $480 a year if you spend $2,000 a month.
The caveat: Cash has to go into a Fidelity account (IRA, 529, brokerage, or cash management) — though funds can be withdrawn from the latter two.
Capital One Quicksilver (capitalone.com)
APR: 13% to 21%
Annual fee: $0
Sign-up bonus: $100 after spending $500 within the first three months
Rewards: 1.5% on every purchase
Why it’s a winner: Earn rate handily beats the average cash card, and there’s no cap. Rewards are redeemable as a statement credit, check, or gift card. Charge $2,000 a month and you’ll score $360 a year, not including signing bonus.
The caveat: Pays less than the Fidelity card, but offers easier access to the cash.