When it comes to earning rewards from a credit card, you have plenty of options. Many bank rewards points can be redeemed for gift cards, merchandise or travel reservations while many others offer cards with travel rewards from airline and hotel partners. Still, many rewards credit card users prefer a cash-back option.
How to Choose the Right Cash-Back Credit Card
It may seem easy to choose the best cash-back card; just look for the card offering the highest rate of return for your spending. But in the highly competitive credit card industry, some card issuers offer high return rates within certain merchant categories in addition to a cash-back rate for all purchases. So the trick is to pick a credit card offering the best combination of returns for bonus categories and general spending.
Adding to the confusion is some cards will place limits on the amount of rewards you can earn in bonus categories. Meanwhile, many credit card users will overestimate the amount of money they spend in featured categories. For example, you may consider gasoline a major expense. But with gas prices as low as they’re been in over a decade, in addition to increased fuel efficiency, more drivers are spending less than $1,000 annually on gas. For some, a credit card offering 3% cash back on gasoline will only realize $30 a year in rewards. This makes it important for applicants to consider their actual spending on bonus categories when choosing a cash-back card.
Other Factors to Consider
Beyond the cash-back rewards, there are several other important aspects to cards such as these. For example, some of these cards offer generous sign-up bonuses that can dramatically increase your cash back earned during your first year as a cardmember. In addition, some of these cards feature 0% APR introductory financing on new purchases, balance transfers or both. It’s also important to consider other cardholder benefits as well as fees such as annual fees and foreign transaction fees.
And, of course, a cash rewards credit card isn’t for everyone. Though there are increasingly more options for those with fair or bad credit, the best rewards credit cards are only available to those with good or excellent credit. You can check two of your credit scores for free on Credit.com to see where you stand.
After ranking a number of cash-back credit cards on a variety of these factors, here are the three credit cards that topped our list of the best cash-back credit cards in America.
The Winner: Citi Double Cash
Why It Won: This card rewards you twice — 1% back when you make a purchase and 1% back when you pay it off.
Other Features: This card offers 1% cash back on at the time of purchase and a second 1% of cashback after payment. There is no limit to the amount of cashback you can earn and you can redeem your rewards as a check, statement credit or as gift cards. (You can read a full review of the Citi Double Cash card here.) New cardholders also receive 0% APR introductory financing on balance transfers for 18 months, with a 3% balance transfer fee. After that, the card has a variable APR of 13.49% – 23.49%. The Citi Double Cash also features strong benefits such as trip cancellation/interruption protection, extended warranty coverage and a damage and theft purchase protection policy. (Full Disclosure: Citibank, as well as American Express & Chase, advertise on Credit.com, but that results in no preferential editorial treatment.)
The Cost: There is no annual fee for this card but there is a 3% foreign transaction fee. In addition, cardholders also receive their first late payment fee waived automatically.
1st Runner-Up: Chase Freedom
Why It Won: Strong rates of return and a generous sign-up bonus.
Other Features: New applicants receive a $150 sign-up bonus after spending $500 on new purchases within three months of opening an account. And another $25 after adding an authorized user who makes a purchase during the same time period. Cardholders receive 5% cash back on up to $1,500 spent each quarter at merchants in featured categories in addition to 1% cash back on all other purchases. This card also offers new applicants 15 months of interest free-financing on both new purchases and balance transfers, with a 3% balance transfer fee. After the intro period, the card has a 14.24% – 23.24% variable APR. (You can read a full review of the Chase Freedom card here.)
The Cost: There is no annual fee for this card but there is a 3% foreign transaction fee.
2nd Runner-Up: American Express Blue Cash Preferred
Why It Won: This card offers impressive cash-back rates on bonus categories and a large sign-up bonus.
Other Features: New applicants receive $150 cash back after spending $1,000 on new purchases and 10% back when spending with U.S. wireless telephone service providers up to $200 until June 15, 2016. This card offers 6% cash back on up to $6,000 spent each year at U.S. supermarkets, 3% cash back at U.S. gas stations and at select U.S. department stores and 1% cash back on all other purchases. New account holders also receive 12 months of interest-free financing on both new purchases and balance transfers with a 3% balance transfer fee. After that, the card has a variable 13.49% – 23.49% APR. (You can read a full review of the American Express Blue Cash Preferred card here.)
The Cost: There is a $95 annual fee for this card and a 2.7% foreign transaction fee.
At publishing time, the American Express Blue Cash Preferred, Chase Freedom and Citi Double Cash cards are offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for this card. 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.