5 Best Cash Back Credit Cards
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Many people prefer cash back rewards to other credit card perks such as frequent flyer miles. Cash has the advantage of being simple to understand and universally accepted. Unlike points and miles, cash can earn interest when unused and are not subject to the constantly changing terms and conditions of corporate loyalty programs. (See also: How Cash Rewards Credit Cards Really Work)
My family is a perfect example of how you can use credit cards to receive cash back. Using our cards for day-to-day purchases, we may spend as much as $2,500 with them each month. When we are not looking for travel rewards, we use a card that returns 2% on all purchases in order to earn an additional $50 a month in cash back. That equals a return of $600 each year that we can add to our discretionary spending or apply to our savings.
Just one word of caution — cash back credit cards should only be used by people who can pay their credit card balances in full and on time. To do otherwise virtually ensures that you will owe more in interest and penalties than you will ever receive as cash back.
The Top 5 Credit Cards Featuring Cash Back Rewards
Once you have decided to earn credit card rewards in the form of cash back, you should definitely consider one of these top 5 cash back rewards cards.
Discover it offers 5% cash back in categories that change each quarter up to the quarterly maximum when you sign up, plus 1% cash back on all other purchases. As an exclusive offer, Discover will double all the cash back you've earned at the end of your first year — automatically. Besides being a great cash rewards credit card, it also offers protection from higher APRs due to late payments and you get a free FICO® Credit Score on your monthly statement, online, and in their mobile app so you can keep track of your credit. Their new Freeze ItSM on/off switch allows you to prevent new purchases, cash advances and balance transfers in seconds via their website or mobile app. There is no annual fee.
As a sign-up bonus, you can get 0% APR on purchases and balance transfers for the first 12 months — then a variable purchase APR applies (currently 10.99% - 22.99%). A 3% fee applies to each transferred balance.
Blue Cash Preferred® Card from American Express
The Blue Cash Preferred® card offers the highest cash back you can get for groceries. Get 6% cash back at US supermarkets (up to $6,000 per year in purchases), 3% at U.S. gas stations and select U.S. department stores, and 1% on other purchases. Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit. There is a $75 annual fee.
As a sign-up offer, you can get $150 back in the form of statement credit after you make $1,000 in purchases with your new card in the first three months. You also get 0% APR on purchases and balance transfers for the first 15 months. After that, your APR will be a variable rate, currently 12.99%-21.99%, based on your creditworthiness and other factors. Terms and limitations apply.
Chase Freedom® has been named the Best Card for Cash Back by MONEY Magazine. Get 5% total cash back on up to $1,500 in combined purchases in bonus categories each quarter. Now through June 30, those categories are restaurants, Bed Bath & Beyond, H&M, and Overstock.com. You get unlimited 1% cash back on all other purchases. There is no annual fee.
As a sign up bonus, earn $100 after you spend $500 on purchases within the first 3 months of account opening. You can also earn an extra $25 if you add an authorized user and make a purchase within the same 3-month period. Get 0% APR for 15 months on purchases and balance transfers. After that, a variable APR of 13.99-22.99% applies.
Citi® Double Cash Card
The Citi® Double Cash Card stands out from other credit cards offering cash back rewards in that you earn cash back not once, but twice on every purchase. You get 1% cash back when you buy, plus another 1% cash back as you pay for those purchases. No need to wait until you pay off a purchase to earn the additional cash back — you'll get it whether you can pay in full or over time, as long as you pay at least the minimum amount due. Unlike many other cards, the Double Cash card has no category restrictions, no enrollments in rotating categories, and no limits on the amount of cash back that you earn. There's no annual fee, either.
There is a 0% Intro APR on Balance Transfers and Purchases for 15 months. After that, the variable APR will be 12.99%-22.99%, based on your creditworthiness
Upromise World MasterCard®
Upromise World MasterCard® offers several ways to earn cash back. Get 5% cash back on eligible online shopping through their portal, 4% at thousands of participating Upromise Dining Restaurants, up to 3% cash back on eligible gas purchases from Exxon or Mobil, 2% cash back at movie theaters, and 1% on everything else. There are no caps. You also have various options on cashing out your rewards -- contributing to a Upromise 529 College Savings plan, depositing to a Sallie Mae High-Yield Savings Account, making a payment towards a Sallie Mae services loan, or redeeming a check. There is no annual fee.
As a sign-up bonus, you can get $25 cash back with your first purchase, and a 0% APR on balance transfers and purchases for the first 12 months.
Capital One® Quicksilver® Cash Rewards Credit Card
Don't want to bother with rotating quarterly categories? The Capital One Quicksilver Cash Rewards Card will get you 1.5% cash back on all purchases. There is no limit to the amount of cash you can earn, and no minimums to redeem the cash back. The cash back doesn't expire, either! You can get cash back in the form of an account credit, check, or gift card. There is no annual fee.
There is currently a sign up offer of $100 cash bonus after you spend $500 on purchases within the first 3 months. There is also a 0% APR on purchases and balance transfers until March 2016. (After the intro period, there is a 12.9%-22.9% variable APR; a 3% fee applies to each balance transferred.) This card comes with the Capital One® Credit Tracker, which allows you to easily monitor your monthly credit score anytime, anywhere — for free! Plus, you get 20% statement credit on all Uber rides purchased with this card through April 2016.
Within the credit card industry, the term “deadbeat” is used as slang to describe customers who always pay their balances in full and on time. These customers don’t provide the banks with any profits from interest payments or late fees, but they are still valued customers due to the merchant fees their spending generates and their impeccable payment history. If you are a proud member of this group, and you have no interest in travel rewards, you should be using one of these cards that offer the maximum cash back for your spending.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any bank, card issuer, airline or hotel chain.