While travel reward credit cards offer the opportunity to enjoy a “free” vacation, those promises may not appeal to some cardholders. Maybe some have been unhappy with their experience in trying to redeem their miles, while others simply have no desire to use their credit card rewards for travel. These cardholders would prefer to receive cash back rewards that they can use for their savings, investment or any other purpose they choose.
Now, credit card issuers are offering ever more valuable cash back reward cards. In the past, credit card users who preferred cash back often had to choose between higher rates of return with higher annual fees, or the lower levels of cash back offered by cards with no annual fee. Yet today, many of the top cash-back cards have no annual fee at all.
Choosing a Cash Rewards Credit Card
There are three types of cash back cards available today. First, there are the cards that offer the same level of cash back on all purchases. Next, are cards that offer bonus levels of cash back on specific, fixed categories of purchases. Yet these bonuses are enjoyed at the expense of a lower rate of cash back, typically just 1%, on purchases not eligible for the bonus, and many of these cards have an annual fee. Finally, there are some cards that offer bonuses on categories of spending that change each quarter. The downside of these cards is that some bonus categories can be very valuable, like gas and groceries, while others might not appeal very much to many cardholders.
Applicants should look at the way they use their credit cards in order to choose the type of rewards that best suits their needs, although most cardholders will be better off with a card that offers the same level of rewards on all purchases. This way, there are no categories to keep track of, and they can always have a second card if there is a particularly lucrative bonus category they want to take advantage of.
Other factors to consider include the cards fees such as annual fees, late fees and foreign transaction fees. Interest rates may be worth considering for those who might occasionally carry a balance, but those who expect to incur interest charges may want to instead focus on cards that have the lowest interest rate, and possibly a 0% APR promotional financing offer. This is because reward credit cards will always have higher interest rates than similar products that do not offer rewards.
Before you apply for any credit card, it’s helpful to compare offers and make sure that not only is it a good deal, but that the card’s benefits will meet your specific needs. Furthermore, it’s helpful to know what your credit score is before you search for a card so you know whether you’ll meet a card issuer’s general requirements. You can see two of your credit scores for free on Credit.com. Also, in order to fully benefit from cash-back rewards, it’s ideal not to carry a balance on these cards, and instead plan your spending so that you’re able to pay the balance in full every month.
With all this in mind, we looked at the top cash reward credit cards to find the best offers out there. After much consideration, we have our winners for this month’s Best Cash Rewards Credit Card in America.
The Winner: Citi Double Cash
Why It Won: This card offers a total of 2% cash back with no annual fee.
Other Features: Cardholders earn 1% cash back when they make a purchase, and another 1% when their purchase is paid for. In addition, new applicants receive 15 months of interest-free financing on new purchases as well as balance transfers, with a 3% balance transfer fee. Finally, this card comes with all of the same features and benefits found on Citi cards including several purchase protection and travel insurance policies.
The Cost: There is no annual fee for this card, but there is a 3% foreign transaction fee imposed on all charges processed outside of the United States.
1st Runner-Up: Fidelity Investment Rewards American Express Card
Why It Won: This card also offers 2% cash back on all purchases, which is deposited into a qualifying investment account with Fidelity.
Other Features: For every $2,500 in purchases made, cardholders earn 5,000 points, which can be redeemed for a $50 deposit to their Fidelity Investments account. Other options include having rewards credit to a qualifying brokerage account, investment account, 529 college savings account or retirement account. This means that cardholders earn 2% cash back on all purchases, and there is no limit to the amount of cash back they can receive. And instead of cash back, cardholders can redeem their rewards with Bank of America’s WorldPoints program, which offers gift cards or travel rewards.
The Cost: There is no annual fee for this card, and the foreign transaction fee is just 1%, as opposed to the 2.7% fee on most other American Express cards.
2nd Runner-Up: Discover It Miles
Why It Won: This new card offers 1.5 miles per dollar spent, and each mile can be redeemed for cash back.
Other Features: Discover is doubling the miles earned by customers in their first year of card membership, making its rewards worth an impressive 3% of spending for the first 12 months. Cardholders also receive an annual $30 statement credit towards in-flight Wi-Fi purchases. Finally, Discover offers cardholders many different purchase protection and travel insurance policies, as well as 100% U.S.-based customer service representatives.
The Cost: There is no annual fee for this card, no foreign transaction fees, and Discover automatically waives the cardholder’s first late payment fee.
At publishing time, Citi Double Cash and Discover it Miles are offered through Credit.com product pages, and Credit.com is compensated if our users apply for and ultimately sign up for either of these cards. However, this relationship does not result in any preferential editorial treatment.
Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.
We want to hear from you and encourage a lively discussion among our users. Our credit experts regularly review your comments & questions and chime in with guidance and information. Our experts moderate all comments so it may take a little time for you to see them on the page. We appreciate your patience.
Any comments posted below, including those posted under Credit.com’s official account, are not reviewed or endorsed by representatives of financial institutions affiliated with the credit cards listed on the this page.