5 Best Cash Back Credit Cards

By Jason Steele. Last updated 24 April 2014. 23 comments

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 back rewards earn interest when unused and are not subject to the constantly changing terms and conditions of corporate loyalty programs.

Furthermore, cash back rewards are considered to be a discount on a purchase, not income that needs to be declared for tax purposes.

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 have always paid 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.

Once you have decided to earn credit card rewards in the form of cash back, you should definitely consider one of these top five cash back rewards cards.

The Current Top Five Credit Cards Featuring Cash Back Rewards

In my research, these are the best cash-back cards currently available.

Blue Cash Preferred® Card from American Express

This card from American Express (review here) offers an outstanding 6% cash back on all purchases from US stand-alone grocery stores. It did not take many credit card holders long to figure out that they could better reap this benefit by purchasing other merchants’ gift cards at the supermarket, this card still returns 3% on purchases from US stand-alone gasoline stations and select major department stores, as well as a decent 1% on all other transactions. There is a $75 annual fee for this card, which is what users will earn when they charge just $1,250 at their grocery store.

Here are the updated offer details:

  • Get 100 Reward Dollars, redeemable for a $100 statement credit, after you make $1,000 in purchases with your new Card in the first three months.
  • Plus, get one year of Amazon Prime after you sign up for a new membership with your Card and meet the spending requirement in the same time period.
  • As an Amazon Prime member, you get unlimited Free Two-Day Shipping on millions of items.
  • Earn Cash Back: 6% US supermarkets up to $6,000 per year in purchases, 3% US gas stations & select US dept stores, 1% other purchases. Terms and limitations apply.
  • Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit.
  • 0% intro APR on purchases and balance transfers for 15 months, then a variable rate, currently 12.99% to 21.99%, based on your creditworthiness and other factors.
  • Terms and Restrictions Apply.

Fidelity Investments Rewards American Express

Fidelity AmexOutside of a promotional offer, the highest cash back rate available on all purchases is 2%. Fidelity Investments’ Fidelity Rewards American Express Card offers unlimited cash back at that rate with no annual fee. Your card must be connected to one of their cash management or brokerage accounts, but there is no other catch. You can also use this card as a savings instrument by directing the funds to a Fidelity IRA. Finally, they even offer a version that funds a 529 college savings account. Note that the redemption value is different if you redeem your points for another reward.

Click here to apply for the Fidelity Investments Rewards American Express

Chase Freedom® Visa

The Chase Freedom card is an underdog that makes the list due to its generous sign up bonus of $100 in cash when you spend $500 in the first three months after opening an account. Think of it as a 20% cash back rate of return! Card holders are also eligible to receive 5% cash back on their first $1,500 of spending on different categories of merchants that change every quarter. All other purchases return a standard 1% cash back. This can really add up when the card is used often for small purchases.

With its significant cash sign-up bonus, but less-competitive standard rate, this card is best to maximize rewards for those who only charge a few hundred dollars a month to their cards, or customers who will only use it for purchases in the bonus categories that return 5%. There is no annual fee for this card.

Discover it® Card

With the new Discover it Card (review here), you can earn 5% cash back in categories like gas, restaurants, and department stores. The categories change through out the year. From April through June 2014, the bonus is Home Improvement Stores, Furniture Stores and Bed Bath & Beyond® on up to $1,500 in purchases when you sign up. You also get 1% on all other purchases. Plus, it's cash back on everything, not points.

Besides the generous cashback rewards, new cardholders start with 0% APR for 14 months, then it goes to 10.99-22.99% standard variable APR.

Plus, you get a free FICO® Credit Score on your monthly statement to help you stay on top of your credit.

And it's fair: Not only is there no annual fee, there's no late fee for your first late payment. On top of that, late payments will not increase your APR.

Click here to apply for the Discover it® Card

Blue Cash Everyday® Card from American Express

American Express offers a second Blue Cash card, called the Blue Cash Everyday®. The difference is this one earns you 3% back at supermarkets, 2% at gas stations and select department stores, and 1% on other purchases, but there's no annual fee.

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.

Back to the Credit Card Guide

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer Affiliate Program.

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Guest's picture
ncdrummer

The American Blue Cash grocery store loophole seems almost too good to be true. Are you sure AMEX isn't going to catch on eventually and shut it off. Does anyone else use this card? I'm tempted to try it.

Jason Steele's picture

Credit card agreements are not forever, so you are wise to consider that this product may go away at some point. That said, Amex doesn't create and eliminate new cards every day, like some other banks, so it is unlikely that this product will disappear tomorrow. I know people who use this card for their grocery spending and they swear by it.

Guest's picture
Oscar Castillo

To be fair they did cap the 6% rate at $6000 per year. So effectively you'd get $285 back ($360 back minus the $75 annual fee) assuming that it is used exclusively for groceries,

Guest's picture
Ron

My whole family uses Vanguard for investments. But I've heard good things about Fidelity as well. Maybe this card reward will give me the incentive to finally give them a look.

Guest's picture
WadleyS

"Capital OneLike the Fidelity card, Capital One also offers a 2% cash back rate, but in a Visa that is more widely accepted than Fidelity’s American Express"

It's been a long time since I've run into any merchants who accept VISA but not American Express. I don't think that's a big concern

Guest's picture
Steve

I find it interesting that this site is even talking about the use of credit cards. Many Americans are in debt because of the temptations to spend. They were and are able to spend because of the credit-card offers. The attractive logos, reward incentives, initial low interest rates, etc. have all been too enticing for many Americans to resist. I suggest that this site take a stand to "say no" to credit. Or, does "Wise Bread" receive money from the credit-card industry to survive???

Will Chen's picture

Hi Steve,

Your concern is understandable. That is why Jason specifically warned in this article that only people who pay off their monthly balance fully should try cashback cards. He said this twice in the article.

I'm sure some people agree with your view that all credit cards are bad--in fact there are probably some Wise Bread writers who believes this as well, and I look forward to reading their rebuttal articles. =)

But that's the thing about Wise Bread. We're a group blog and we try to bring you a variety of views about personal finance.

I think certain people definitely should "say no" to credit. But that doesn't mean a personal finance website should never talk about the proper ways to maximizing credit card rewards.

Every major personal finance website picks and talks about rewards credit cards. Just a quick Google shows that Time Magazine, US News & World Report, MSNBC, New York Times and Lifehacker have written similar articles. Rewards credit cards is also a popular topic among most blogs.

And like all those news outlets and blogs, yes, Wise Bread is supported by advertising.

But that in no way affects our picks. We ask Jason--a credit card expert--to pick the best cards according to his opinion. We would never ask him to pick a certain card to appease an advertiser.

Do we make money off these articles? Yes. After Jason picks the cards and turn in his article, we then look at each program he picked to see if there are any affiliate links we can insert. Some of them do (like pick #5 Chase Freedom) and some of them don't have affiliate programs (like pick #1 AARP).

This is really no different from writing an article called 5 Best Personal Finance Books, and then adding amazon links to those books after the books have been selected.

I hope this answers some of your questions. It is our goal to help responsible consumers maximize their rewards from all financial instruments at their disposal. But of course we'll continue to write articles to help educate debt-laden readers on how to stay away from credit cards altogether and use cash instead.

Guest's picture
GuestNate

Steve, I agree with your assessment of those who spent like children. Like it or not, credit is what makes the world go 'round and it's quite foolhardy not to establish a good line of credit. A person who is irresponsible with credit will be likewise with cash. People pay more and miss out in the long run without it.

Guest's picture
Betty

I'm proud to be one of the "deadbeats" hated by the credit card companies.

I earn my cash back, never pay interest or late fees, and have zero loyalty towards companies. If I see a better deal I jump ship. Never considered the aarp card before though. Always thought there was an age limit. Thank you for the tip.

Guest's picture
Chereen

Thanks for the detailed choices you mentioned. The AARP will be getting an application from me, 5% is pretty good, better than what I'm using right now.

Guest's picture

I am torn on this subject. For someone like me, very responsible with their money since I was just a child buying candy in a store, I could benefit from these cards. Most of my clients though, not so much. They would just be another way for either them or their spouses to dig themselves a bigger hole.

It is actually very easy to be Economically Intelligent if you have the will to resist stupid things. For example: A USB controlled Nerf Missile launcher for the office I seen at Staples the other day.... I mean really $20.00 bucks for that??

Guest's picture
Oren

Very interesting list. I had never heard of the AARP card before. What is involved with becoming an associate member? Does it cost any money?

Guest's picture
Guest

American Express Preferred charges annual fee. So, forget about it. Its no annual fee Everyday Cash Card is better though it earns 3% cash back in grocery stores. Then you need to find 3% cash back in gas purchase and get a Discover More to earn 5% cash in rotate category. Then you will earn the maximum cash back on everything.

Guest's picture
Cenor

Currently I'm using Citibank Cash Back. Once the accumulated cash back reach $50, it will be credited into my credit card's account. Based on my monthly credit card expenses, I'm constantly received $50 in every 2 months. Definitely I will not go back to bonus or rewards type credit card.

Guest's picture
Charles

The Discover More card isn't listed here, right now they have a 15 month introductory APR offer and a beastly 5% cash back in rotating categories. I've used Chase and Amex in the past, but I gotta say Discover's customer service is on point. The only downside to the More card is you only get .25% cash back outside the rotating categories until you spend $3,000 on the card. At that point you begin to get 1% cash back on all purchases - and of course the 5% cash back on quarterly categories always stays true. Just another card to consider.

Guest's picture
Max G

I have a spark business card but rarely use it because I don't have many business expenses yet. I do like Capital One cards. Very easy to use. I was looking into getting Fidelity Amex card. 2% cash back is hard to beat.

Guest's picture
Karen Elstone

Do you suggest/advise any CANADIAN credit cards for Cash Back?

I only know of one = RBC MC = Royal Bank of Canada M/C.

-------

ALSO

do you have an article or section on "Balance Protection" on credit cards?

I'm finding all my credit cards (3), banks, frequently calling for me to sign up. Average cost per month $9.95 + tax (12% in BC Canada).

I never! Carry a balance, so no reason to call I didnt think.

But they put the "SCARE" tactic into you, asking "how would you pay for your c. Credit if you were in hospital & cannot work? Or if you are laid off suddenly?"...

What would you advise?
I'm sure they must have "Balance Protection" or similar in the USA as well.
(they assure you that they will cover the minimum balance paid, to protect your credit score. While hospitalised or unannounced, god forbid!).

Thank you,

Karen Elstone
Vancouver BC
Canada

PS: I read your site all! time time very helpful & forward to my Canadian friends!

Guest's picture
Josh

I'm reading this article on 3/08/13. The US Bank Cash+ doesn't offer 5% back on airfare. Did it when this article was originally written and posted?

Guest's picture

I'm a big fan of the Blue Cash Preferred from AMEX. The 6% really adds up quickly and its very easy to redeem the money for statement credit. I use this card almost exclusively for gas and groceries.

Guest's picture
Guest

The Fidelity card does NOT require you to have one of their savings or investment accounts. You can take the reward as cashback in the form of check that is mailed to you. IF you wait until you have at least 25,000 points first, it comes out to 2%.

Guest's picture

I tried to apply for a better rewards card but many of the high rewards cards have a minimum income that is higher than the 49K that I made last year. I have an excellent credit rating but they only looked at my income not my credit score or my other assets.

Guest's picture
Sharon Heuser

What about the cosco American express card?
has 3% gas 2% cash 1% everything else?

Guest's picture
Guest

I've researched this subject to no end. Here's my NO ANNUAL FEE results, and what I personally use: 1. American Express Blue Cash Everyday 2. DiscoverIT 3. Chase Freedom. Signing up for these cards will get you several hundred dollars in free bonuses as well.