Best Cash Back Credit Cards

There are several reward cards that provide different incentives to consumers in an effort to get them to sign up for a credit card. Customer acquisition is key to running a successful credit card business. One of the most popular rewards is the cash back reward, where a credit card issuer offers customer’s cash back instead of reward points or mileage. If you generally do not use gift cards or purchase merchandise with rewards and you are not an active traveler than getting a cash back credit card might be the best option for you. There are also cash back credit cards that offer rewards which can be redeemed for cash but also give you the flexibility to redeem for other items.

What is a Cash Back Credit Card?

A cash back credit card is a reward program offered to credit card holders. Since the rewards are simply cash, customers will know exactly what they can redeem. There are different types of cash back programs. Some offer a flat rate for every purchase, while others offer variable rates which allows you to generate the best bang for your buck based on your spending habits.

Discover the Best Cash Back Credit Cards

How do Cash Back Credit Cards work?

A fixed rate cash back credit card will provide you with a rate that you will receive for every dollar spent. Your cash back can grow in dollars, but also can accrue points or miles that will allow you to redeem your points or miles in statement credits. You might also be able to receive a check or a deposit directly into your bank account. If your cash back card gives you the option of obtaining points or miles, you can also redeem your rewards for merchandise or travel rewards.

Depending on the credit card, you may see your cash back rewards grow ascents, points or miles. You can then redeem these for cash back in the form of a statement credit, check or deposit into a bank account.

Generally, a cash back credit cards pay 1-5% on purchases. Some are on all purchases while others are on specific purchases.  Many cash back credit cards offer bonus rates if you spending in a specific category.  There are even cards that offer bonuses when you pay our bill or spend a specific amount during a certain billing period.

What are the Pitfalls?

It’s important to perform due diligence and look at the terms and conditions to determine what qualifies as a purchase that is eligible for cash back. Non-eligible purchases are generally for financial services such as wire transfers, cash advances, payments on your mortgage, or balance transfers. Fraudulent purchase, if your card is lost or stolen, do not qualify as eligible purchases.  If you return an item, the rewards you gained are rescinded.

Pros and Cons of Cash Back Credit Cards


Cash back credit cards are the easiest reward cards to understand.  Since you do not need to convert every point or reward into cash equivalents you know exactly how much you have earned. Cash back rewards are easy to redeem, and while some cards might require that you redeem in specific increments, once you reach those levels it’s easy to convert your rewards into cash.

Another benefit is that many cash back cards offer a range of bonuses which could include double or even triple the normal rate if you spend money in certain categories. Bonuses can change throughout the year, and this is part of the marketing credit cards offer their clients. For example, providing a bonus on gas during the summer, when prices are generally higher allows a gas station to reap rewards during specific periods.

Sign up Bonuses

Cash back credit cards will also offer signup bonuses which can help you boost your rewards and earn hundreds of dollars. Additionally, referring new cardholders can be very lucrative, as specific programs are geared to offer a substantial bonus for new customers.


Cash back credit cards will also offer cardholder benefits which could include travel insurance, lost luggage reimbursement, liability protection, as well as, special event access.


Most cash back credit cards require a good to great credit score.  While there are some that provide cash back for fair credit scores, they may require an annual fee as well as employ a prohibitive interest rate when you carry a balance.

Most of the time when you receive a sign-up bonus you are required to spend a minimum before you are eligible to receive your bonus.  These spending requirements can be significant and in some cases, you are required to spend a few thousand dollars within the first few months of activating a cash back credit card.  The issue for many credit card customers is that if you alter your spending habits to qualify for a bonus you might end up carrying a balance that could cost you more in the end.

Another issue is that since many cash back credit cards offer their best deals on rotating categories you need to stay on top of the ones that pay the most.  Your credit card company will not warn you that it is time to update your category.

Cash back credit cards generally have fixed point valuations that provide a specific cash back redemption value. This means that it is unlikely that you will ever receive a better valuation. This compares too many airline mile rewards which can incent spending with high conversion rates. Additionally, cash back cards usually offer fewer perks than other reward programs.

Who Should Get a Cash Back Card?

If you have good to great credit and you have consistent spending habits on products that you can charge, and do not need to carry a balance then a cash back credit card is right for you. You should check your credit score, prior to applying to make sure you get a good rate.

You can get your FICO score to get a better understanding of whether you will be approved for a cash back card.  You might be able to get a free credit report at your bank or from a current credit card you hold. Your credit score will rely on historical payment history, the use of available credit and public records along with the length of your credit history.

Monitor your Purchases

This is especially important if you sign up for subscriptions, and then forget you are paying for them.  Knowing how much you spend on different items throughout the month is very helpful if you want to take advantage of a cash back credit card.  You want to try to avoid running a balance, especially after a trial zero percentage rate, as even the best rates will quickly erode any gains you will receive from holding a balance.  You can go as far as creating a budget to make sure you don’t spend more than you make. Another important tip is to figure out where you spend the most and see if your spending habits can be used in a specific purchase category where your credit card company is offering a cash back bonus.

Choosing a Cash Back Card

You want to find a cash back card that rewards you for your standard spending habits.  Don’t pick cards that have great rewards for a place where you hardly shop. This is especially true for store credit card that is not widely accepted.

You need to pick the right rewards program and you should calculate your earnings potential before you sign up for a card. Look at the signup bonuses, and see if you can or need to spend money if there is a requirement that calls for a specific spending amount over a certain period of time. For example, if you know you are going to spend $2,000 over the holding season, then getting a credit card that rewards you for this type of spending is prudent. When you are performing your potential reward make sure you back out an annual fee for your cash back credit card. Lastly, determine if the additional cardholder benefits are worth it.  For example, if you travel a lot and your credit card offers a credit for luggage on certain airlines, this would likely qualify as a worthwhile benefit.

Picking the Right Program

Cashback cards can include a flat rate, bonus categories (that can rotate), which will give customers cash back. Some will credit your automatically accrue to your account monthly, while others will allow you to redeem it whenever you want, in certain increments. You might also have the choice of receiving a statement credit, a check or gift card or even a money transfer to a bank account or brokerage account. Generally, there are minimum increments to redeem your cash back.

Which is Better Reward Points or Miles Cards?

This is a matter of preference but your spending habits play a role in determining which is better for you. There are cash back cards that actually allow you to earn points or miles in a program and then redeem those points for cash. The benefit of some of these programs is that the rate you will receive for an item other than cash might be attractive.  Many times the cash reward rate will be lower than a straight cash back program. The benefit is that these cards have flexibility, especially if you are looking for gift cards or merchandise.

Flat-rate cards

A flat-rate cash back credit cards have a flat rate for all purchases and do not discriminate based on category. Most cards are either 1% or 2% cash back, or occasionally you will find a promotion for a slightly higher rate. If your spending is consistent and evenly spread amongst most purchasing categories, then a flat rate card will be your best bed.

Category Cards

Cashback cards that provide offers with different rates are best for people who have uneven spending habits. The base rate is generally 1%, and higher for specific categories based on your choice. For example, you might be able to receive 5% on gasoline up to a specific spending cap. Bonus categories also help the credit card company market to vendors in specific categories. Common categories include supermarkets, gas stations, travel, and restaurants.

Rotating category cards

These cash back cards provide higher rates for categories that rotate every quarter, and usually, have a base cash back rate of 1%. These cash back cards offer 5% in one category which is about as high as you will see and a more modest rate for other categories. Many times these cash back cards limit your bonus in specific categories that are seasonal. For example, eliminating department stores during the holiday season. The benefit is that if you can alter your spending toward a specific category you can generate a higher rate for yourself than you would receive with a flat rate cash back card. These cards are also best for someone who wants to track their rewards looking to maximize your card. If you do not have the time to track your rewards than a flat rate card such as the Citi Double Cash Card which is a flat rate of 2%, is likely best for you.

Learn More about Credit Cards


There are several reward cards that provide different incentives to consumers in an effort to get them to sign up for a credit card.  Before choosing a cash back credit card, consider how you’re likely to use the card and how much you tend to spend on different types of merchants. If simplicity is best for you, a flat-rate card could be a good fit. If you keep a close eye on your spending and remember to sign up for rotating bonus categories, you might be better off with a card that offers bonus cash back rates.

Many cards attract new applicants by offering a sign-up bonus. This is an incentive to get you to apply for a card. The bonus could be a temporary increase in your cash back rate but could be worth hundreds of dollars if you plan on spending a specific amount over a small period of time. Cash Back Credit cards also offer cardholder benefits that can provide benefit beyond the standard rewards program.

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