There are all sorts of bonuses attached to individual credit cards, but in my opinion, only the cash back credit cards prove to be the most useful ones.
Come on, I don’t need bonuses in the form of airline miles or subsidized hotel stays!
Sure, airline credit cards usually come with really good sign up bonuses, but if I don’t fly that often, those extra miles are worthless for me. If you are like me and don’t fly or travel often, your best bet of getting some kind of reward back from your credit card usage is a cash back credit card.
Reward me with actual cash, and I decide what to do with my money, not plan my expenditures according to the whim and fancy of the credit card issuers.
The cash back credit cards have been around for some time and for the longest period, the best rate one could find was often capped at 5% (or 6% if you have been extremely lucky) on purchases.
But with the impending economy recovery, some companies are convinced enough to further lower that barrier and start to offer even lower cash back on purchases. Of course, as with any dealings you have with any financial institutions, terms apply.
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Nevertheless, in general, you can expect the cash back to be based on just quarterly spending, and the amount you get back invariably would never exceed certain upper limits set by the corresponding banks or credit card companies.
A Quick Tip:
As any good financial adviser would say (not that I am one!), always clear your monthly card balance in full, before you hope to reap the full benefits of such cash back schemes.
Mind you the interest imposed by the bank on your overdue payment would more than offset whatever good from these cash back programs.
What will I learn?
The Top 10 Cash Back Credit Cards Available Today
It seems that 1% cash back is the norm nowadays. Having said that, there are still cards that offer more than the pathetic 1%, the trick is to find these cards.
To make your job easier, I have done some research and found the highest paying cash back cards.
1. Discover it
The Discover it card is the latest addition to the Discover More program, but the cash back guarantee is significantly better than any of the earlier cards.
On the flip side, this credit card is also among the handful of cards that do not provide any sign up bonus. In its place is a cash back promise of 5% on quarterly categories, which is among the highest in the industry.
It is also one of the very few cards that impose the least number of transaction fees, for example, it doesn’t charge a foreign transaction fee.
Additionally, the Discover it card also does not charge an annual subscription fee even though it is a cash back credit card.
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It also waives any penalty charge in case you are late in making payment, but only applicable for the very first late payment.
Cash Back Rewards – A 5% cash back on purchases grouped under the quarterly rotating category; all others entitled to 1% cash back.
In order to fully capitalize on the higher cash back amount, you will need to sign into the various quarterly rotating categories. Every quarter, Discover would make known the sort of purchases that go into the rotating category. Depending on the makeup of this category, you could enjoy 5% cash back when you buy home improvement products, fill your gas tank, and perhaps eat out at restaurants.
The maximum cash back amount is usually $1500 for every quarter. After you reach that threshold (assuming you do not sign up for the quarterly bonus category), the cash back will continue for your subsequent purchases within that same quarter, though it is now capped at 1%.
If you did not sign for the quarterly categories program, you will be entitled to flat 1% cash back on all your purchases.
There is also a bonus category that pays you 5%, but the maximum cash back is $75 a quarter, or $300 every year.
Fees:
- Annual Fee: None.
- Foreign Transaction Fee: None.
- Balance Transfer Fee: 3%
Sign-up bonus: There is no sign up bonus here.
Introductory APR: There is no APR for the first 14 months from account opening. This is applicable to both purchases and balance transfers. Beyond that period, the prescribed rate is between 10.99% and 22.99% subject to your credit record. Do take note that this rate may change dependent on the prevailing prime lending rate.
Redemption: Redemption can be made for every $50 saving, and this can go direct into your bank account or as a statement credit.
2. Chase Freedom
The cash back program from Chase Freedom credit card operates similarly to Discover it, i.e. quarterly rotating categories (with promises of 5% cash back).
The welcome addition here is that the Chase Freedom card actually offers you a sign-up bonus, unlike the Discover it card. But I don’t like the fact that Chase Freedom imposes a foreign charge if you decide to carry out your transaction outside of our shores.
Cash Back Rewards – 5% Cash Back in Rotating Categories Every Quarter; 1% on Everything Else
Different purchase categories are created quarterly. And if you want to enjoy 5% cash back, you need to enroll on each rotating category.
There is a cap on rotating categories, i.e. $1,500 for every category. Whereas its standard 1% cash back applies to all purchases.
Although this is comparatively smaller bonus, the 1% cash back would just keep rolling regardless of the amount you spend, unlike the rotating categories, which impose a maximum cap on how much you get your cash back.
Fees:
- Annual Fee: None.
- Balance Transfer Fee: $5 or 3%, whichever is more.
- Foreign Transaction Fee: 3%
Sign-up Bonus: This sign-up bonus can go up to $100 cash back if you bill $500 to your new card 3 months upon opening the account.
Introductory APR: Good news is that the APR would remain 0% on purchases and balance transfers, in the first 15 months from signing up for the card. This would revert to 13.99% to 22.99%, subject to your credit record and obviously the prime-lending rate prevailing at that time.
Redemption: There is really not much to choose from between the Discover it and the Chase Freedom, except the latter allows you to redeem at only $20 for a statement credit, direct deposit, or paper check. If you have also a Chase checking account, expect another 10% bonus on the points earned in the preceding year.
3. Citi Dividend Platinum Select Visa
The usual reward system for the Citi credit cards is based on ThankYou points, which users can exchange for merchandise, gift cards, and cash back. But this Citi Dividend Platinum Select Visa focuses solely on cash back, specifically in the form of Dividend Dollars.
In addition, it cash back method is probably the most lucrative one among all credit cards, through its Citi Bonus Cash Center.
Cash Back Rewards – You get 5% Cash Back in Rotating Categories Every Quarter; 1% on Everything Else
The cash back reward for Citi Dividend Platinum Select Visa comes in the form of Dividend Dollars. For quarterly rotating categories, you get 5% cash back (please note that you must enroll in all those respective categories every quarter in order to enjoy 5% cash back entitlement), and 1% cash back on all other purchases.
For the 5% cash back offer, they place a ceiling of $6,000 purchase every year, so maximum you can earn is $300 in Dividend Dollars within that one year across all categories.
Unlike most of its competitors, you cannot save the extra 1% on purchases once you hit the ceiling. But with its Citi Bonus Cash Center, there is no limit on cash back. Essentially, it is Citi’s online portal of retailers, where retailers offers special cash back programs starting from 5% minimum – and sometimes this could go up to 10%.
If you transfer your outstanding balance over to this Citi card, you will get $5 cash back (note that minimum of $1500 balance transfer for every transaction).
Fees:
- Annual Fee: None.
- Foreign Transaction Fee: 3%
- Balance Transfer Fee: $5 or 3%,whichever more.
Sign-up Bonus: If you spend $500 or more inside the first 3 months of account activation, you get a bonus $100 cash back.
Introductory APR: In the first year from account activation, the APR is 0% (applicable on both purchases and balance transfers). Beyond this period, the APR is fixed at 12.99%, 17.99%, or 22.99%, subject to your credit rating and the prevailing market rate.
Redemption: Redemption of the Dividend Dollars is made in checks, at every $50 increments. Every Dividend Dollar pays out $1.
4. Blue Cash Everyday® Card from American Express
Even if you don’t find the quarterly rotating categories appealing, there is still a way to get decent cash back from everyday expenditures (things like gasoline and grocery items).
While the cash back rate is not going to be as high as 5%, I have no problem with the 3% cash back from American Express, through their Blue Cash Everyday Card.
It doesn’t impose any annual fee, and I am just glad to have cash back for everyday items that I need to buy anyway.
Take note that the cash back is only applicable for up to $6,000 every year if you shop at supermarkets. Indeed, this Blue Cash Everyday Card from American Express is widely regarded as the best value card for grocery shopping.
Cash Back Rewards – You will get 3% cash back from purchases at supermarkets; 2% at gas stations and departmental stores; and finally 1% from anywhere else.
For supermarket purchases (only in the US), the Blue Cash Everyday Card will offer you a 3% cash back on $6,000 purchases every year (beyond that threshold amount, a flat 1% rate would apply), 2% on topping off your gas tank and purchases from any US-based department store, and another 1% for your other purchases.
Even though the 3% cash back is only applicable to supermarket purchases (and up to $6,000 in spending), the cash back can translate to a cool $180 savings every year on your daily supplies.
The card does not impose any spending ceiling on all other sorts of purchases.
Fees:
- Annual Fee: None.
- Foreign Transaction Fee: 2.7%.
- Balance Transfer Fee: $5 or 3%, whichever is more.
Sign-Up Bonus: After you receive your card, the first $1000 (or more) you spend on it will entitle you to 50 reward dollars, provided you spend the said amount within the first three months. That 50 reward dollar bonus is equivalent to a $50 statement credit when you redeem. In addition, you will also get a free year of Amazon Prime if you satisfy the above criteria (applicable for new membership only).
Introductory APR: For the first 15 months from account activation, there is no APR chargeable on purchases and balance transfers. After the introductory period, the APR rate ranges from 12.99% to 21.99%, subject to the prevailing market rate and your credit worthiness.
Redemption: The cash back is awarded in the form of reward dollars, with every reward dollar having a face value of one dollar. Redemption can happen anytime after you have accumulated at least 25 reward dollars.
5. Blue Cash Preferred® Card from American Express
This is yet another cash back card from American Express. Compared to its Everyday card, this Blue Cash Preferred Card does charge an annual fee. This by no means actually diminishes its competitiveness as a valuable cash back credit card.
Subject to how you plan your monthly budget, this Preferred card may present you with an even greater savings on your necessary purchases. In fact, the ultra-competitive 6% cash back rate on day-to-day purchases makes it the best value cash back credit cards around.
Cash Back Rewards – You will get 6% cash back at supermarkets, 3% at gas stations and department stores, and 1% on anything else.
The American Express Preferred card has a reward program that works in this way: a 6% cash back on US-based supermarket purchases (applicable for the first $6,000 spent in the first year, thereafter 1% flat), a 3% cash back at US gas stations and department stores, and another 1% on all your other purchases.
You may notice that there is a spending ceiling of $6,000 every year (similar to its Everyday card) at supermarkets in order to get the full 6% cash back, but keep in mind that the Everyday version would just entitle you to a 3% cash back.
In numerical terms, the maximum savings you can get from the Everyday version is just $180, but the Preferred version would earn you back $360 every year, which is twice as much as you can hope with the American Express Blue Cash Everyday card.
Regardless, I would advise that you look at the possible savings from your total spending at supermarkets, gas stations and department stores, in order to form an accurate picture if the rewards you ultimately earn could easily offset the yearly fee imposed.
I would like to remind you even if you hit the $6000 limit, you continue to enjoy 1% cash back from your subsequent purchases from supermarket for the rest of the year.
There is no pre-imposed ceiling on other items on 1% cash back.
Fees:
- Annual Fee: $75 (the only card on this list with an annual fee, but other perks make up for it which is why it is listed here.
- Foreign Transaction Fee: 2.7%
- Balance Transfer Fee: $5 or 3%, whichever is more.
Sign up Bonus: The first $1000 spent on your card during the three months from account opening will entitle you to a 100 reward dollars bonus, which translates to a $100 statement credit. You will get also a free year of Amazon Prime if you at least spend that amount within the stipulated period (for new members only).
Introductory APR: There is no APR during the first 15 months, on both balance transfers and purchases. Once the 15 month allowance is up, the rate could range from 12.99% to 21.99%, subject to prevailing market rate and your credit record.
Redemption: As in the case of the Everyday card, the reward comes in the form of reward dollars. Similarly, the Preferred version allows redemption from 25 reward dollars onwards, one reward dollar in exchange of $1.
6. Bank AmeriCard Cash Rewards
This Bank AmeriCard Cash Rewards work just great if you have been a customer with Bank of America or Merrill Lynch, and you don’t want to be bothered with rotating categories.
You get the bonus with every spending, with the bonus linked to either your Bank of America or Merrill Lynch Cash Management account.
Cash Back Rewards – You get 3% Cash Back on Gasoline; 2% on Grocery Item Purchases; 1% on Everything Else
BankAmericard Cash Rewards credit card awards pays you back 3% on your gas purchases, 2% on groceries, and 1% on everything else.
They have a ceiling of $1,500 purchases every quarter. The pre-set limit applies to all purchases, from gasoline to grocery items, and you don’t have to enroll in any individual purchase category. Once the preset $1500 is reached, you carry on getting 1% cash back on all purchases.
Fees:
- Annual Fee: None.
- Foreign Transaction Fee: 3%
- Balance Transfer Fee: $10 or 3%, whichever is more.
Sign-up Bonus: You spend a minimum of $500 on your card within the first 3 months of account opening; you will get $100 cash back.
Introductory APR: The APR is fixed at 0% for the first twelve months on both purchases and balance transfers. Thereafter, the APR rate ranges from 12.99% to 22.99%, dependent on the prevailing market rate and your credit worthiness.
Redemption: Your redemption comes in the form of a statement credit or direct credit into a Bank of America account (either checking or savings). For Bank of America or Merrill Lynch Cash Management account holder, you get a further 10% bonus when you link the redemption to your account.
7. Fidelity® Investment Rewards American Express® Card
Again, this Fidelity Investment Rewards American Express cash back credit card is for those who can’t be bothered with enrolling in many quarterly categories or those not concerned with any bonus categories.
The program is straightforward and you earn points as you spend with no consideration on spending limits or rotating categories. In the absence of special spending categories; you earn points as you make purchases, and your redemption can be credited straight into your account and also as a statement credit.
Cash Back Rewards – You get 2% Cash Back on All Eligible Purchases
Every dollar spent entitles you to a flat two points (or roughly 2% on purchase). Since there is no preset cap or limit, you can get as much cash back as you desire.
Fees:
- Annual Fee: None.
- Foreign Transaction Fee: 1%
- Balance Transfer Fee: $10 or 4%, whichever is more.
Sign-up Bonus: There is no sign-up bonus.
Introductory APR: For spending on the card, the APR rate stands at 13.99%. For balance transfers, there is now an introductory offer of 0% during the first 7 months from account opening. The APR rate would return to 13.99% from the eighth month, subject to the prime rate.
Redemption: First off, you must be a Fidelity account holder, whether investment or banking, before you can be issued this card. Your redemption can be direct credit into your Fidelity account.
Alternatively, or you can use your reward in their WorldPoints program, where points can be exchanged for airline travel, gift certificates, cash, car rentals, or hotel stays. There is also an automatic deposit scheme; every time your spending hits $2,500, a $50 deposit would go directly into your account.
8. Capital One Quicksilver Cash Rewards
This program impresses me with its simplicity and flexibility. The Capital One Quicksilver Cash Rewards credit card could be ideal if you regularly cover the pre-set limits stipulated by other cash back credit cards.
You always get flat 1.5% cash back no matter what you spend on (provided these are eligible purchases). The redemption comes in the form of an account credit, check, or gift card, and there is no minimum requirement.
They don’t put a cap on how much cash back you can earn, and there is no pre-set condition on the sort of items you want to purchase.
So as long as you spend on eligible purchases, there is always the 1.5% cash back. Of course, the fact that it does away with any minimum requirement means that you can redeem whenever you feel like it, which offers a lot of convenience.
Cash Back Rewards – 1.5% Cash Back on All Purchases
There is only one flat 1.5% rate cash back for all purchases with Capital One QuickSilver Cash Rewards card. You need not bother with rotating categories or specific purchases with varying degree of cash back rate.
Moreover, there is no stopping on how much cash back amount that you can earn, only you can decide how much cash back you like to get, on a reward system that runs perpetually.
Assuming monthly spending averages at $2,000 on your card, you get back $360 every year – it is simple process as there is no cap to be considered and you don’t have to sign up for each and every quarterly categories.
Fees:
- Annual Fee: None.
- Foreign Transaction Fee: None.
- Balance Transfer Fee: 3%
Sign-up Bonus: Sign-up bonus is a decent $100 cash back, provided you spend a minimum of $500 on your card, inside the 90 days from account opening.
Introductory APR: The introductory APR rate is often set at 0% on both purchases and balance transfers. Thereafter, it is fixed at 12.9% to 20.9%, subject to prime rate and your credit record.
Redemption: You can redeem the cash back in the form of a statement credit, check, or gift card in any denomination. There is no pre-set minimum that you must accumulate before making your redemption.
9. Barclaycard Rewards for Excellent Credit
For some reason, not many perceive Barclay as a generous player in the reward department. Truth is that the Barclaycard Rewards card for Excellent Credit is probably right up there among the best cash back cards.
The bank offers another card version for “good” credit customers but it is the excellent credit edition that offers more “value for the money”, and we will talk about this here.
Cash Back Rewards – You get 2% Cash Back on Gas, Groceries, and Utilities; 1% on Everything Else
For every dollar on your card, the Barclaycard Rewards for Excellent Credit put in two points (or roughly 2% on purchases). This works on gas, grocery, and utility purchases. For other transactions, only one point is awarded.
There is no expiration for the points earned, and you can go on to accumulate as many points as you want.
Assuming your yearly expenditure is $36,000 on your card (or averages of $3,000 every month), you stand to get $720 in rewards. This compares favorably on other credit cards with 5% cash, as such cards would impose conditions like a cap of $1,500 in purchases every quarter or $6,000 every year. I did the math, the most I can get back is about $600 a year (by leveraging both bonus categories and the 1% categories). So, we are talking about 20% upside with the Barclaycard Rewards for Excellent Credit Card.
Fees:
- Annual Fee: None.
- Foreign Transaction Fee: 3%
- Balance Transfer Fee: $10 or 4%, whichever is more.
Sign-up Bonus: Sign-up Bonus comes in the form of 5,000 points as you register your first purchase on the card. The amount of points can be equated as a $50 cash back statement credit.
The sign-up bonus may not look impressive among the competitions (in fact only Discover it has no sign-up bonus to start with). But it does away with some preset minimum, and within certain months, in order to enjoy your sign-up bonus, so it may be a refreshing, if not welcome, alternative.
Introductory APR: After you sign up, the APR stays at 0% on purchases and balance transfers during the first 15 months. From that point on, the APR will revert to 14.99%, 17.99%, or 24.99%, subject to your credit record and the prevailing lending rate.
Redemption: After you gather as much as 2,500 points (roughly $25), you can redeem them as a statement credit, gift cards, or merchandise.
Take note that this cash back card does not exchange points for straight-out cash. Anyway you can use your cash back for your statement credit.
10. U.S. Bank Cash+ Visa Signature
The U.S. Bank Cash+ Visa Signature card is a great value proposition for diligent cardholders. If you regularly breach the upper caps on either annual or quarterly basis, you may want to choose specific categories on which you spend the most.
The logic is that you can enjoy the most cash back on purchases you make regularly and/or those that cost you more money.
So, consider your spending pattern and decide what purchases can yield the most lucrative cash back, be it grocery items, car rentals, hotels, or movie theaters. With better planning, you focus on categories that can earn you 5% and 2% every quarter, and there is no limit in the 2% and 1% cash back categories, while the reward system runs perpetually.
You will also be rewarded with an extra annual bonus of $25 every year, and the redemption of this cash back can take place any time you desire.
The only catch is that the application has to be made at a U.S. Bank branch for this to work.
Cash Back Rewards – You get 5% Cash Back in any combination of Two Categories; 2% in the 3rd Category; and 1% on Everything Else
For the two chosen categories (see above), you are entitled to 5% cash back on your first $2,000 in combined purchases from the U.S. Bank Cash+ card. You have sole discretion on what purchase items to go into these top two categories (whether food from restaurants or supplies from department stores).
The makeup of each category may change as the quarter ends, and make sure you get your categories right – otherwise, those purchases will be condemned to just a flat 1% rate.
For the 5% categories, the bank sets the upper limit at $2,000 every quarter, thereupon the cash back rate falls back to 1%. It is advisable you include the day to day expenses like gas or groceries in the 2% cash back category.
For the other purchases, leave them inside the 1 % cash back bracket.
There is no pre-imposed cap on purchases that fall within the 2% or 1% categories, and the reward system just goes on perpetually.
Fees:
- Annual Fee: None
- Foreign Transaction Fee: 2% extra if it is in U.S. dollars, or 3% if foreign currency.
- Balance Transfer Fee: 3%
Sign-up Bonus: Here there is no sign-up bonus offer. Anyway, you still get the additional bonus of $25 at the end of every year. Redemption is for every $100 up.
Introductory APR: No special 0% APR here, but they do have an introductory 0% APR for balance transfer during the first 6 months of account activation. Thereafter the APR for balance transfer is set at 13.99% to $23.99%, similar rate as on purchases.
Do take note that APR rate may vary subject to your credit record and the prevailing lending rate.
Redemption: No minimum preset redemption amount. At any time you choose, you can redeem the reward either in the form of a statement credit or direct credit to a checking or savings account.
How to Choose
Comparison is a way of life; it is just as applicable before you decide on your next cash back credit card.
Check if the reward system, annual fees and interest rates work to your favor.
Once you draw up a short list, do further research by checking out online reviews regarding the top cash back credit cards you may have an initial interest in.
The main questions you should be asking are:
Does it Fit Your Life Style?
Make sure the credit card fits nicely on how you would spend your money. Rule of thumb: use the new cards on purchases that are absolutely necessary. This way, you will never lose.
In short, such cards can become most useful when you have eyes on attractive promotions (like cash back rewards) and are willing to discipline yourself on your spending habit, so that you know you can pay off the monthly balance comfortably.
Are the Rewards Worthy?
Is the reward system structured in a way that gels with your lifestyle?
It is common for cash back to be organized according to some specific purchase categories, things like gas, restaurants, or groceries.
The system then decides on how much the cash back is going to be. Some keep individual categories fresh by making regular changes to the makeup of each category.
Often the basket mix would stay a few months before it gets refreshed again. Those can offer you up to 5% cash back but chances are you need separate enrollments to take part.
On the other hand, there are cards that fix the reward rates over an extended period if time, but be prepared to accept a lower rate from such scheme.
What’s the Annual Fees?
Obviously, zero annual fee is perceived more favorably than a fixed amount of annual fee. But strangely this may not always be right in our increasing complex financial offerings. In some cases, the generous sign-on bonuses more than outweigh any annual fees a credit card company may impose on you.
When you take this in addition to the lucrative reward system, then the credit card that charges yearly fee may just turn out to be a better bargain than those without any annual fee imposed.
What About the Interest Rates?
Pay attention that cash back credit cards in general charge more interest rates.
If balance transfer is what you have in mind, make sure the new card has a 0% introductory balance transfer offer.
If you are not confident in clearing all of the outstanding bill, try your best to find one credit
card with the lowest interest rate.
If you anticipate no problems with your monthly credit card bill payment, always try to fish out the best credit card rewards, that naturally cover credit cards with cash back program.
Bottom Line
The bottom line is that you need to do your research and take everything into account before getting a cash back credit card.
Just because a card rewards you doesn’t mean its a good choice.
You may even come out losing if the overall fees total much more than the rewards you may get out of cash back credit cards.
