5 Best Cash Back Credit Cards
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
Outside 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.
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 January through March 2014, the bonus is on purchases at restaurants and movie theaters. 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.
Barclaycard® Rewards MasterCard® - Excellent Credit
The new Barclaycard (review here) offers a great rate and great rewards. There's a sign-up bonus of 10,000 points after spending $1,000 in the first 90 days of cardmembership. You also get double points on gas, groceries, and utilities, then one point for every dollar on all other purchases. The card comes with a special 0% APR for 18 months on purchases and balance transfers.
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.
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.