Best Cash-Back Credit Cards

It’s little surprise that cash-back cards are some of the best credit cards on the market. Cardholders earn rewards for using their cards to make purchases, and can qualify for new cardholder bonuses that pay out as much as $200 in the first few months after opening an account. Whether you want flat cash back on all of your spending, or a card that doles out bonuses for spending on gas, groceries, restaurants, and other categories, there’s a credit card out there that’s perfect for you. Best of all, very few cash-back cards carry an annual fee, making them suitable for people with all levels of spending needs. 

Card issuers earn fees from merchants every time you use your card to make a purchase, which helps them afford to pay rewards to cardholders who use a particular type of card.

A cash-back credit card gives cardholders cash back when they make a purchase with the card. Cash back is usually accrued as a percentage of the amount a cardholder spends on purchases, typically ranging from 1% to as high as 10% on select purchases.

A 2% cash-back credit card would reward you with $0.02 per $1 spent. A 3% cash-back credit card would reward you with $0.03 in rewards per $1, and so on.

Cash-back credit cards generally fall under one of three different categories of rewards programs. Which one is best for you depends what you spend, where you spend, and how much effort you want to put into collecting cash back on every swipe of your card.

Flat cash-back credit cards -- These are the simplest cash-back cards, because they offer flat cash-back rewards every time you make a purchase. These cards usually offer unlimited cash back equal to 1% to 2% of your purchases. The key advantage of these cards is that all spending earns rewards at the same rate, making them a great pick for a “one-card” wallet. Rewards are typically unlimited, so you earn the same cash-back rate whether you spend $10 or $10 million. The Capital One® Quicksilver® Card - 0% Intro APR for 15 Months, American Express Cash Magnet™ and Wells Fargo Cash Wise Visa® Card are both leading flat cash-back cards.

Bonus category cards -- Some cash-back cards offer enhanced rewards rates on certain types of spending. For example, the Bank of America® Cash Rewards credit card offers 3% cash back on a category of your choice, 2% cash back on grocery stores and wholesale clubs, and 1% cash back on everything else, with bonus rewards earned on the first $2,500 of total spending in bonus categories each quarter. Bonus category cards are best for people who spend a disproportionate amount in a particular category (groceries or gas, for example). The Capital One SavorOne^SM Cash Rewards Credit Card is another bonus category card earning 3% cash back on dining and entertainment and 2% cash back for groceries, and Blue Cash Preferred® Card from American Express rewards U.S. supermarket spending at up to 6% back.

Rotating bonus category cards -- These cards offer a high cash-back bonus on certain types of spending, in addition to a flat amount of cash back on all other types of spending. Chase Freedom® is a popular rotating bonus category card that offers 5% cash back in rotating categories you activate (on the first $1,500 of spending in quarterly categories), and 1% cash back on all other spending. Discover it® Cash Back pays 1% cash-back on regular purchases, and 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum ($1,500 of spending) each time you activate. 

Our handy checklist can help you decide if a cash-back credit card is right for you. If most or all of these statements apply to you, you’re probably a good candidate for a cash-back credit card.

There are five basic features that tend to separate the best cash-back cards from the worst. These details are often lost in the fine print, but we’re here to shine light on the things that can guide you toward picking the best card for you.

Here are five features you want your cash back card to have:

1. A low minimum redemption threshold -- Cash back rewards don’t have any value unless you can cash them in. Some cards require you to earn as much as $50 in rewards before they can be redeemed, whereas other cards have no minimum redemption requirement. People who have lower spending needs may be smart to prioritize a card that offers a no minimum redemption feature, even if it offers a lower cash back rate per $1 of spending.
   
2. New cardholder bonus -- Qualifying cardholders can get a new cardholder bonus that offers as much as $150 in bonus cash back for opening an account and meeting a minimum spend requirement. For example, many of our favorite cash-back cards offer $150 in bonus cash back after spending $500 in the first 90 days after account opening.
   
3. 0% intro APRs -- Some cash-back credit cards offer up to 12 months of 0% intro APRs on purchases and balance transfers. This is a valuable perk that can save you hundreds of dollars in interest compared to carrying a balance at a typical APR of 18%. (This isn’t a “must-have” feature if you don’t carry a balance.)
   
4. Free FICO® scores -- It’s becoming more common for credit cards to offer free access to your real FICO® credit score. This is a useful feature for people who value being able to watch their credit score rise or fall over time.
   
5. No annual fees -- Luckily, annual fees are relatively rare in the world of cash-back credit cards.
   

High rewards rates offered by bonus category cards are particularly compelling for cardholders who have large spending needs in certain categories. The Bank of America® Cash Rewards credit card offers a lucrative 3-2-1 rewards program that pays 3% on a category of your choice, 2% on groceries and wholesale clubs, and 1% cash back on all other types of spending.

Whether it is a good card for you, however, depends on your spending needs. Let’s use an example where you spend $100 per month on gas, $400 on groceries and wholesale clubs, and $1,000 on other purchases to see how the card’s rewards program compares to 1.5% cash back offered by Capital One® Quicksilver® Card - 0% Intro APR for 15 Months.

In this example, the Capital One® Quicksilver® Card actually offers higher rewards through its flat 1.5% cash back program than Bank of America® Cash Rewards credit card because so much of the spending is outside the bonus categories.

Of course, if the example were changed so that the majority of the spending was in bonus categories, then the Bank of America® Cash Rewards credit card would offer more value. There is no best card for everyone since no two people spend exactly the same way.

Continuing with the above example, a cardholder who uses Capital One® Quicksilver® Card - 0% Intro APR for 15 Months and Bank of America® Cash Rewards credit card in tandem can maximize their rewards by using them for different types of spending. Purchases that earn bonus rewards could be put on the Bank of America® Cash Rewards credit card, while Capital One® Quicksilver® Card - 0% Intro APR for 15 Months can be used to maximize rewards on all other types of spending.

We’ll use the same budget of $1,500 per month, which was broken down into $100 of gas, $400 of groceries, and $1,000 on all other purchases. If you optimized your spending, you could earn $26 of monthly rewards by using two different credit cards.

Of course, carrying multiple cash-back credit cards isn’t for everyone, and the examples above illustrate why that is. Using two cash-back credit cards to maximize rewards results in $26.00 in cash back rewards per month. That’s just $3.50 more than you would earn by using Capital One® Quicksilver® Card - 0% Intro APR for 15 Months by itself.

You might reasonably conclude that juggling multiple cards and payment due dates isn’t worth the hassle of earning a slightly higher rewards yield on your spending. Besides, since many credit cards have a minimum redemption threshold, dividing your spending across several different cards may mean waiting a very long time before you are able to cash them out. We recommend most people stick to just one card, maybe two, to maximize their rewards without making their financial lives overly complicated.

Following some best practices can help ensure that you earn the highest possible rewards from a cash-back credit card without paying fees or interest to do so. Here’s a quick guide to using a cash-back credit card responsibly:

1. Don’t carry a balance -- If you plan to carry a balance, a 0% intro APR credit card is a better solution than a cash-back credit card. The cash back you earn on purchases typically amounts to just one month of interest charges, so carrying a balance is almost always a losing strategy.
   
2. Enroll in bonus categories -- If your card offers bonus categories, make sure you enroll. Most cards that have rotating bonus categories require you to enroll every three months by logging into your account and clicking a link. Set up reminders so you can be sure to maximize your rewards.
   
3. Get a new cardholder bonus -- Sign-up bonuses add a lot of upfront value to cash-back credit cards, as many offer as much as $150 in bonus rewards for spending as little as $500 within 90 days of account opening. To put that in perspective, you’d have to spend $10,000 at a flat 1.5% cash back rate to earn $150 in ordinary rewards. 
   
4. Use an issuer’s shopping portal -- Many card issuers have an online portal that pays bonus rewards when cardholders use it to navigate to an online retailer. These bonus rewards can add up fast, as many offer 3% to 10% cash back on purchases you’d make anyway. Before you shop online, see if your card issuer has a relevant bonus offer.
   
5. Look for rewards bonuses and multipliers --Customers who are Preferred Rewards clients with Bank of America, for example, can score an even larger bonus of 25% to 75% on their rewards. Depending on your status with the card issuer, these bonuses can substantially increase the effective rewards yield of a cash-back credit card. This is just one example of how having a banking relationship across multiple products (not just credit cards) can increase the value of a cash back card.