Earning rewards on your purchases is a great way to make the most of your spending. Cash back credit cards offer a straightforward way to earn rewards that can be redeemed for statement credits, direct deposits, or other options.
With so many cash back options available, choosing the right credit card can be overwhelming. This guide will help you navigate the top cashback credit cards of 2023, exploring their features, including annual fees, sign-up bonuses, and redemption options.
By understanding how cash back credit cards work and what to look for, you can maximize your rewards and minimize costs.
Understanding Cashback Credit Cards
Understanding how cashback credit cards operate is crucial for maximizing your rewards earnings. Cashback credit cards offer a straightforward way to earn rewards on your everyday purchases, essentially giving you a discount on the things you buy anyway.
How Cashback Credit Cards Work
Cashback credit cards work by returning a percentage of your spending as a reward. When you make a purchase with a cashback credit card, the issuer tracks the eligible spending and calculates your rewards based on the card’s rewards rate structure.
The accumulated cash back is stored in your credit card account until you redeem it. Redemption options typically include statement credits, direct deposits, gift cards, Amazon checkout, and charity donations.
Types of Cashback Structures
There are three main types of cashback structures: flat-rate cards, tiered cards, and rotating category cards. Flat-rate cards offer the same percentage on all purchases, typically between 1.5-2% cash back.
- Flat-rate cards are ideal for simplicity and consistency.
- Tiered cards offer higher rates in specific categories, making them suitable for those with predictable spending patterns.
- Rotating category cards change their bonus categories quarterly and can offer up to 5% cash back, but require more active management.
Understanding the redemption process is also crucial, as some cards automatically apply cash back as statement credits, while others require manual redemption with minimum thresholds.
How to Choose the Best Credit Card for Cashback
Choosing the best credit card for cash back involves evaluating your personal spending habits and financial goals. To maximize your rewards, it’s essential to understand how you spend money and where you can earn rewards.
Evaluating Your Spending Habits
Analyzing your spending patterns is the first step in selecting the ideal cash back credit card. Review your expenses over the past 3-6 months to identify consistent spending categories, such as groceries, dining, gas, travel, or online shopping. By understanding where you spend the most, you can choose a card that offers high rewards rates in those areas, helping you earn rewards effectively.
Key Features to Consider
When evaluating cash back credit cards, several key features should be considered. Look at the card’s base rewards rate, bonus category rates, and any spending caps. Additionally, consider the welcome offer, redemption flexibility, and extra perks like purchase protection or extended warranties. A card that aligns with your spending habits can significantly enhance your rewards earnings.
Annual Fees vs. Rewards Value
When choosing a credit card, it’s crucial to weigh any annual fee against the potential cash back rewards. Calculate your expected annual cash back based on your spending patterns and subtract the annual fee. If your rewards earnings exceed the fee, the card may still offer significant value, helping you to earn rewards while managing your expenses.
By carefully evaluating your spending habits and considering key card features, you can select a cash back credit card that maximizes your rewards and aligns with your financial goals.
Top Flat-Rate Cashback Credit Cards
For those seeking simplicity in their cashback rewards, flat-rate cashback credit cards offer a straightforward way to earn consistent returns on all purchases. These cards are ideal for consumers who want to avoid the complexity of tracking different categories or rotating spending limits.
Wells Fargo Active Cash® Card
The Wells Fargo Active Cash Card earns an unlimited 2% cash rewards on all purchases, making it a top choice for those seeking simplicity. With a $0 annual fee, a generous sign-up bonus, and a 0% intro APR period on both purchases and balance transfers, this card stands out among its peers.
Citi Double Cash® Card
The Citi Double Cash Card offers a unique structure, providing 1% cash back when you make a purchase and an additional 1% when you pay it off, effectively giving you 2% total cash back on all purchases. With no annual fee, it’s an attractive option for those looking to maximize their cashback rewards.
Capital One Quicksilver Cash Rewards Credit Card
The Capital One Quicksilver Cash Rewards Credit Card delivers a solid 1.5% cash back on all purchases with no annual fee. Additionally, it offers 5% back on hotels and rental cars booked through Capital One Travel, making it a great choice for travelers.
Chase Freedom Unlimited®
The Chase Freedom Unlimited card provides 1.5% cash back on all purchases, plus elevated rewards in specific categories: 5% on travel purchased through Chase, 3% on dining, and 3% at drugstores. This makes it a hybrid between flat-rate and category cards, offering flexibility and rewards potential.
Best Tiered Cashback Credit Cards
If you’re looking to optimize your cashback earnings, tiered cashback credit cards can offer a more tailored approach to rewards. These cards provide different cashback rates across various spending categories, allowing you to earn more in the areas where you spend the most.
Blue Cash Preferred® Card from American Express
The Blue Cash Preferred® Card from American Express is a standout option, offering 6% cash back at U.S. supermarkets (up to $6,000 per year) and on select U.S. streaming subscriptions. It also provides 3% cash back at U.S. gas stations and on transit, and 1% cash back on other purchases. Although it comes with a $95 annual fee, the rewards can outweigh this cost for the right user.
Capital One Savor Cash Rewards Credit Card
The Capital One Savor Cash Rewards Credit Card is another excellent choice, offering 4% cash back on dining and entertainment, 3% cash back at grocery stores and on popular streaming services, and 1% cash back on all other purchases. This card is ideal for those who frequently dine out or enjoy entertainment.
Bank of America® Customized Cash Rewards Credit Card
The Bank of America® Customized Cash Rewards Credit Card offers flexibility with 3% cash back in a category of your choice (gas, online shopping, dining, travel, drug stores, or home improvement), 2% cash back at grocery stores and wholesale clubs, and 1% cash back on everything else. There’s a quarterly spending cap on the 3% and 2% categories, making it essential to manage your selections carefully.
Blue Cash Everyday® Card from American Express
For those who prefer to avoid annual fees, the Blue Cash Everyday® Card from American Express is a viable alternative. It offers 3% cash back at U.S. supermarkets, U.S. gas stations, and on U.S. online retail purchases (each up to $6,000 per year), and 1% cash back on other purchases. This card provides a straightforward rewards structure without the burden of an annual fee.
Best Rotating Category Cashback Cards
For those who can keep track of changing categories, rotating category cashback cards offer a lucrative way to maximize rewards. These cards provide higher reward rates in categories that change quarterly, requiring activation but potentially delivering substantial returns for strategic spenders.
Discover it® Cash Back
The Discover it® Cash Back card earns 5% cash back in quarterly categories that you activate, up to a quarterly maximum, and 1% on all other purchases. A standout feature is the Cashback Match program, where Discover matches all cash back earned in the first year, effectively doubling your rewards.
Chase Freedom Flex®
The Chase Freedom Flex® offers 5% cash back on activated quarterly categories, up to $1,500 in combined purchases per quarter, along with permanent bonus categories: 5% on travel purchased through Chase Ultimate Rewards, 3% on dining, and 3% at drugstores. Both cards require activation of categories each quarter and provide calendar reminders.
Rotating category cashback cards like Discover it® Cash Back and Chase Freedom Flex® are ideal for consumers who can manage the activation process and have spending habits that align with the quarterly categories. By understanding the terms and staying on top of activation requirements, cardholders can significantly enhance their cashback earnings.
Best Cashback Cards for Specific Categories
Category-specific cashback credit cards offer a lucrative way to earn higher rewards in particular spending areas. By choosing a card that aligns with your spending habits, you can maximize your cashback earnings.
Best for Groceries
For grocery shoppers, the Blue Cash Preferred® Card from American Express stands out with its 6% cash back at U.S. supermarkets (up to $6,000 per year). Another excellent option is the Amazon Prime Visa, which offers 5% back at Whole Foods Market for Prime members.
Best for Dining and Entertainment
If you frequently dine out or enjoy entertainment, consider the Capital One Savor Cash Rewards Credit Card, which offers 4% cash back on dining and entertainment. The Chase Freedom Flex® is another great choice, providing 3% back on dining with no annual fee.
Best for Gas and Transit
For those who spend heavily on gas and transit, the Citi Custom Cash® Card can provide 5% cash back on your top spending category each billing cycle (up to $500), which could be gas stations if that’s where you spend most.
Best for Online Shopping
Online shopping enthusiasts should look into the Bank of America® Customized Cash Rewards card, which offers 3% back in the online shopping category when selected. Alternatively, the Amazon Prime Visa offers 5% back on Amazon.com purchases for Prime members.
By selecting a cashback credit card that matches your primary spending categories, you can significantly increase your rewards earnings. Always review the terms and conditions to understand the earning limits and categories that qualify for cashback rewards.
Best Cashback Cards with No Annual Fee
For consumers seeking to maximize their rewards without incurring additional costs, cashback credit cards with no annual fee are an attractive option. These cards allow users to earn rewards on their purchases without the burden of a yearly charge, making them an excellent choice for many consumers.
Top No-Annual-Fee Options
Some of the top no-annual-fee cashback cards include the Wells Fargo Active Cash® Card, offering 2% back on all purchases, and the Citi Double Cash® Card, which provides 2% total cashback (1% when you buy, 1% when you pay). The Chase Freedom Flex® and Capital One Quicksilver Cash Rewards Credit Card are also notable, offering 5% rotating categories and 1.5% flat-rate cashback, respectively.
The Blue Cash Everyday® Card from American Express is another strong option, offering tiered rewards (3% at U.S. supermarkets, U.S. gas stations, and U.S. online retail purchases, each up to $6,000 annually) without an annual fee.
When a No-Annual-Fee Card Makes Sense
No-annual-fee cashback cards make the most sense for moderate spenders who might not generate enough rewards to offset an annual fee, for those building or rebuilding credit, and for consumers who want to maintain multiple cards for different spending categories. Even rewards-savvy consumers often keep at least one no-annual-fee card as a long-term credit building tool, as these cards can be kept open indefinitely without incurring costs, helping to establish a longer credit history.
Cashback Cards with the Best Sign-Up Bonuses
Cashback credit cards with generous sign-up bonuses are highly sought after by savvy consumers. These bonuses provide a substantial initial reward for new cardholders who meet a specified spending threshold within the first few months of account opening.
Current Top Welcome Offers
The current top welcome offers include the Chase Freedom Unlimited with a $300 bonus after spending $500 in the first three months, and the Capital One Savor Cash Rewards card with competitive bonuses that change periodically. The Wells Fargo Active Cash Card typically offers a $200 cash rewards bonus after spending $1,000 in purchases in the first three months.
These offers are subject to change, so it’s essential to check the latest deals when applying.
How to Maximize Sign-Up Bonuses
To maximize sign-up bonuses, time your application around planned large purchases to help meet spending requirements without changing your normal spending habits or carrying a balance. Be strategic about application timing – many issuers have restrictions on how frequently you can earn welcome bonuses.
For instance, Chase’s 5/24 rule limits approvals if you’ve opened 5 or more personal credit cards in the last 24 months. Understanding these rules can help you make the most of the credit card offers available.
Best Cashback Cards for Specific Retailers
For loyal customers of specific retailers, cashback credit cards can offer significantly higher rewards rates. These cards are designed to reward loyalty to particular brands or stores, often providing the highest available cash back rate for purchases from those retailers.
Amazon Prime Visa
The Amazon Prime Visa stands out with 5% cash back on Amazon.com and Whole Foods Market purchases for Prime members. It also offers 2% back at restaurants, gas stations, and on local transit and commuting (including rideshare), and 1% on all other purchases.
Apple Card
The Apple Card provides 3% cash back on Apple purchases and at select partners like Uber, Walgreens, and Nike when using Apple Pay. It offers 2% on all other Apple Pay purchases and 1% when using the physical titanium card, with rewards credited daily through “Daily Cash.”
PayPal Cashback Mastercard®
The PayPal Cashback Mastercard® offers 3% cash back on purchases made through PayPal and 1.5% cash back on all other purchases. This makes it particularly valuable for online shoppers who frequently use PayPal as their payment method.
These retailer-specific cashback cards work best as part of a broader credit card strategy. Use them for purchases at their specific retailers to maximize rewards, while using general-purpose cashback cards for other spending.
Cashback Cards with 0% Intro APR Offers
Cashback credit cards with 0% intro APR offers can be a game-changer for consumers looking to earn rewards while saving on interest. These cards provide a dual benefit, allowing users to earn cash back on their purchases while temporarily avoiding interest charges on new purchases or transferred balances.
Best Cards for Balance Transfers
For those looking to transfer existing balances to a new card, the Citi Double Cash® Card stands out with its extended 0% intro APR on balance transfers for 18 months, followed by a variable APR of 18.24% to 28.24%. This card also offers a competitive 2% cash back rewards structure (1% when you buy, 1% when you pay).
- The Citi Double Cash Card offers an intro 0% APR on balance transfers for 18 months.
- It provides 2% cash back on all purchases.
- Variable APR ranges from 18.24% to 28.24% after the intro period.
Best Cards for New Purchases
When it comes to new purchases, cards like the Chase Freedom Unlimited® and Chase Freedom Flex® offer 0% intro APR for 15 months from account opening on purchases. The Wells Fargo Active Cash® Card is another strong option, providing a competitive 0% intro APR period along with unlimited 2% cash rewards on purchases.
- The Chase Freedom Unlimited and Chase Freedom Flex offer 0% intro APR for 15 months on purchases.
- The Wells Fargo Active Cash Card offers unlimited 2% cash rewards on purchases.
- Remember to make at least minimum payments during the intro period to maintain the 0% rate.
It’s crucial to note that most balance transfer cards charge a fee, typically ranging from 3-5% of the transferred amount. Making timely payments is essential to maintaining the promotional rate and avoiding potential interest charges.
Expert Strategies for Maximizing Cashback
The key to maximizing cash back lies in understanding how to use multiple credit cards strategically. Experts recommend employing a “card stack” to optimize rewards across various spending categories.
Card Stacking Techniques
Card stacking involves using multiple credit cards to maximize the cash back earned across different spending categories. A basic strategy might include a flat-rate 2% cash back card for general purchases, a grocery-focused card for supermarket spending, and a dining/entertainment card for restaurants. By diversifying your card usage, you can earn cash back at higher rates across various categories.
- Use a 5% category card for its bonus categories.
- Utilize a store-specific card for purchases at that store.
- Employ a 2% flat-rate card for all other purchases.
Optimizing Category Spending
To optimize category spending, it’s essential to track category activation dates for rotating category cards and set reminders. Using mobile wallet technology can also keep your highest-earning cards accessible. Consider using card management apps to help you remember which card to use for each purchase, maximizing your cash back earnings.
Redemption Strategies
When it comes to redeem cash back, aim to redeem your rewards as statement credits or direct deposits to get the full value. Other redemption options, like gift cards or merchandise, often provide less value per point. By choosing the right redemption method, you can maximize the benefits of your cash back rewards.
By implementing these expert strategies, you can significantly enhance your cash back earnings and make the most out of your credit card usage.
Common Mistakes to Avoid with Cashback Cards
To get the most out of your cashback credit card, it’s essential to avoid common pitfalls. Cashback credit cards offer a rewarding way to earn money back on your purchases, but navigating their terms and conditions can be tricky.
Overlooking Category Spending Limits
One of the most significant mistakes cardholders make is overlooking category spending limits. Many cashback cards offer higher rewards rates for specific categories, such as groceries or gas, but these rates often come with caps. For instance, a card might offer 6% cash back on groceries up to $6,000 in annual purchases. After reaching this limit, the cash back rate reverts to a lower rate, typically around 1%. Understanding these limits is crucial to maximizing your rewards.
Ignoring Annual Fee Value Proposition
Another mistake is dismissing credit cards with annual fees without considering their value proposition. While it’s true that annual fees can eat into your rewards, some cards offer substantial benefits that can more than offset the cost. For example, the Blue Cash Preferred® Card from American Express offers 6% cash back on groceries, which can yield significant rewards for heavy grocery shoppers, easily justifying its $95 annual fee.
Using the Wrong Card for Your Spending Pattern
Using a flat-rate cashback card for all purchases without considering your spending pattern can also lead to missed opportunities. If your spending is concentrated in specific categories, a card that offers higher rewards in those categories can provide more value. For instance, if you spend a lot on dining, a card that offers 3% cash back on dining purchases will likely offer more rewards than a flat-rate 2% cash back card.
How to Compare Cashback Credit Cards
To find the ideal cashback credit card, it’s essential to have a systematic approach to comparing various card offers. This involves evaluating several key factors that can significantly impact the card’s overall value to you.
Calculating Your Potential Rewards
Start by analyzing your spending habits across different categories and apply each card’s rewards structure to these expenses. For instance, if you spend $6,000 annually on groceries, a card offering 6% cash back on groceries could earn you $360 in that category alone. Create a simple spreadsheet to compare potential earnings from different cards.
- Review 3-6 months of expenses to understand your spending patterns.
- Categorize your spending according to how each card classifies purchases.
- Apply each card’s rewards rate to your categorized spending.
Weighing Perks Against Fees
When comparing cashback credit cards, it’s crucial to look beyond the headline rewards rate. Consider the total value package, including welcome bonuses, statement credits, and other perks that might justify an annual fee. Also, factor in redemption flexibility and minimum redemption thresholds.
- Evaluate the total value of rewards and benefits against any annual fees.
- Consider the redemption options and any minimum thresholds.
Considering Your Credit Score Requirements
Many of the best cashback cards require good to excellent credit scores, typically FICO scores of 670 or higher. If your score is lower, look for cards designed for fair or building credit. Understanding your credit score requirements can help narrow down your options.
Key considerations:
- Check your current credit score.
- Look for cards that match your credit profile.
Conclusion: Choosing the Right Cashback Credit Card for You
The key to maximizing your cash back rewards lies in selecting a credit card that aligns with your financial goals.
To choose the right cashback credit card, consider whether you prefer the simplicity of a flat-rate card or the potential for higher rewards with a tiered or rotating category card.
If you value simplicity, a flat-rate card offering 1.5-2% cash back on all purchases may be the best choice. For those with concentrated spending in specific categories, a tiered rewards card can provide greater total rewards.
Ultimately, the best cash back credit card is one that fits your lifestyle, financial goals, and spending habits, while also considering factors like your credit score and redemption flexibility.