Shopping is fun and getting cash back on the purchases makes it even more enjoyable. Collaboration between banks and brands has made it possible for users to get discounts and cash backs on their purchases. New credit cards are being developed that specialize in offering these rewards.
But given the complexity of banking systems and the variety that is on offer, it is not an easy decision to make. We have developed a complete guide on the best cashback credit cards and things users should know about them. So, let’s dive right into it.
What Are Cash Back Credit Cards?
Banks offer multiple types of rewards on credit card purchases but those that return a certain percentage of the spent amount are known as Cash Back Credit Cards. For example, if you made a purchase worth 100$, the credit card would return 2% of it. So, while the purchased goods cost $100, you would get 2$ in reward.
Types of Credit Card Rewards
Credit cards have come a long way and banks even offer them for specific purposes. These include credit cards for air travel, gas, hotel, and retail among others. Since each of these cards has a specific purpose, the rewards are also developed to complement that.
Hence, the collection and redeeming of these rewards vary on different cards. Let’s take a look at them.
Cash Back
Cash Back credit cards are the simplest of lots that reward the users with points that are exchangeable with cash and its equivalents like gift cards. With some cards, these points are automatically redeemed and are expressed in bank statements.
But in most cards, the credit score builds up over time and the user has the liberty to withdraw them in either cash, bank deposits, or cheques.
That said, some cards also come with a minimum limit that is eligible for redemption. These thresholds range from $10 to $100. Users get theoretical unlimited rewards in most cards and the average cashback rate ranges from 1% to 2% depending on terms and different criteria.
Reward Points
Reward points are analogous to cash returns on some cards. But unlike cash units, these points can only be used for a specific set of purposes. You can only use them on selective food chains, clothing brands, and airlines. Furthermore, there is no monetary value to these points.
For example, If the same number of these points are offered, let’s say a 5% discount on certain clothing brands. There is no guarantee that you would get the same rebate on an airline or food chain.
Also, in most cards, the reward points are earned not on the basis of the amount spent but rather where it was spent. You may get 10 points for purchasing a $50 shirt from a particular outlet.
But if you choose to spend the same amount on another brand you may get 5 or 15 points. It depends on the partnerships and terms set between the card issuer and the brands.
The goods that can be purchased via these points also keep changing depending on the bank’s policies. Over time, new brands come on board and some choose to end their partnerships with the card issuers. Hence, there is no assurance that users will keep getting discounts on a particular brand.
Miles
Some credit cards offer rewards in the form of miles which are suitable for frequent travelers. The earned miles can be redeemed in airline tickets, lounge access, seat upgrades, and even in restaurants at some airport lounges. Issuers have varying policies on the earning of these miles.
Most cards provide miles on every dollar that you spend with the credit cards. But others only reward when the card is used on specific brands and items. Furthermore, if you use these cards on travel-related purchases you may get boosted reward rates.
Pros and Cons of Cash Back Credit Cards
Cashback credit cards offer many benefits but they also have a fair share of disadvantages as well. So, let’s take a look at the potential advantages and disadvantages users can expect from such cards.
Pros
No Annual Fee
Most cash-back credit cards do not have annual fees. It means that you would not have to sacrifice the earned rewards on the annual fees. That said, there are some cards that have an annual fee but they offer higher return rates as well which compensates for it.
Sign-up Bonuses
Many credit cards offer sign-up bonuses but with the condition of spending a specific amount in the first few months. If the users are able to spend that amount, the bonuses are worth hundreds of dollars.
Discounts on Retail Shops
Most credit card issuers have signed deals and partnerships with other brands that let the user enjoy discounts on them. It includes discounts on clothing brands, food chains, and even on gas stations. Best part? The discount is in addition to the cashback users get on each purchase.
0% APR offer
Credit cards have an introductory period and most issuers do not impose APR during it. It is essentially like borrowing money but returning it without interest. However, users must know that it does not last forever. So, enjoy the perks but do not carry away with the offer that you end up in a debt.
Cash Rewards
Cash rewards are the simplest and easy-to-use. Unlike hotel and travel cards, you can spend them anywhere you want. With most cards, there is no minimum amount that can be withdrawn. Hence, users can use even less than 10$ of their earned money on the purchase of their choice.
Cons
Higher Interest Rate
Cash Back credit cards charge higher than usual interest rates once the introductory phase is over. It could go as high as 30% in APR which can be financially damaging for users that have not cleared their balances.
Cash Back Caps
Although most cards do not put a cap on maximum or minimum rewards that could be earned or redeemed, so do. Hence, such cards would work as normal credit cards if the users are not able to meet those limits.
Who Can Benefit From Cash Back Credit Cards?
Many issuers offer cash back credit cards at 0% ongoing APR but it does not last forever. The average APR on credit cards is around 20% and it is even higher on cashback cards. APR is decided on the basis of creditworthiness. So, the users that do not have enough credit would have to have higher APRs.
In simple words, users that are capable of paying the full balance at the end of each month are better off with such cards. Otherwise, the paying interest will negate the cashback and make you vulnerable to higher APRs.
Hence, anyone who wants to sign up for cashback credit cards should be disciplined to earn rewards without piling up debts.
Guide To Select Best Cash Back Credit Card
While signing up for a credit card you would encounter several terms which can be overwhelming for people that are not familiar with banking systems. Each of these terms impacts the benefits one can get from a credit card.
To make things a little easier we have come up with a list of things that you need to take into account before signing up. Let’s take a look at it.
Types of Cash Back Credit Cards
By now, we have established that credit cards that return a certain percentage of the amount spent are cashback cards. But within this category, there is a further division that is dictated by exactly how much these cards offer in cashback. These include:
Flat-Rate Cash Back Credit Cards
As the name implies, these cards offer a single cashback rate on all eligible purchases. 1% was the standard reward rate but in recent years it has increased to 1.5%.
Most of these cards set no maximum cap limit and offer theoretical unlimited rewards at 1.5% on eligible purchases. Examples of such cards are:
- Capital One Quicksilver Cash Rewards Credit Card
- Chase Freedom Unlimited
- American Express Cash Magnet Card
- Capital One QuicksilverOne Cash Rewards Credit Cards
Furthermore, there are some cash back cards that offer more than 1.5% of the cash rate as well. These include:
- Fidelity Rewards Visa Signature 2%
- Alliant Cash Back Visa Signature Credit Card 2.5%
Flat-Rate cash back cards are the simplest. Users get the card, make the purchase and redeem the cashback without any hassle. However, you must be mindful that all transactions are not eligible for cash returns.
For example, most cards offer no return on balance transfers. Plus, if the card does not have good standing the privilege of cash return may get suspended.
Tiered-Rate Cash Back Credit Cards
These cards offer varying cashback rates on different transactions. You could get a 2% return on some purchases like dining, groceries, or travel. But for other transactions, you may get a flat return of 1.5%.
Such cards often have a maximum limit of rewards on purchases that are eligible for higher-tier purchases.
While most cards offer a balanced rate, there are some that are highly polarized. You may get 2.5% on the higher tier but it would compromise the flat rate of the card. A niche group of users with a habit of higher-tier purchases may find it beneficial.
But others should avoid it as it compromises the return on general purchases that the average user makes.
Rotating Category Cash Back Credit Cards
Rotating Category cards are the most unpredictable as the return rate keeps changing after every quarter. Such cards lure the users in by offering very high return rates, i.e., 5%, which can be very tempting. But what most issuers try to hide is that the 5% is only applicable on a very limited set of purchases.
Furthermore, with most cards users have to activate the 5% return rate before every purchase. Otherwise, the card provides a standard 1% return even on eligible purchases.
Plus, they have an earning cap as well. For example, Chase Freedom Flex offers a maximum of 1,500$ at 5% in each quarter. If the reward exceeds the said amount, users will receive a reward at a standard rate of 1-1.5%.
Such cards are not suitable for average users but again there could be a niche audience that sees them as ideal cards.
Limitations of Cash Back Credit Cards
Cashback credit cards come with all sorts of limitations. Some of them are general and others are exclusive to particular issuers. There are programs that have set a limit on the minimum amount that can be redeemed. Mostly the amount ranges between 20-30$.
So, if a user has a credit card that offers a 1.5% return on eligible purchases and one only spends 500 per month. It would take at least 3 months to reach the minimum redemption amount. And if you cannot clear the balance in three months the interest may negate the return is earned.
Hence, such cards are suitable for those users that spend a higher amount and are able to clear the dues at the end of each month.
There are credit cards that set no such limits but the redemption can only be done in a specific manner. Although such cards provide more value to a particular user, they can be frustrating at times. Liberty of spending the cash return on the purchase of your choice does not exist.
Moving on, another common limitation in some cards is the number of redemptions. Some cards only allow 1 redemption each year but they can be used at the purchase of your choice.
Plus, the redemption can only be used at a single purchase. Such cards are ideal for users that are looking to save money for a specific item.
In a nutshell, while cashback credit cards seem simple on the surface, they involve a number of complexities. Hence, it is important to understand your spending habits and financial goals to make a perfect choice.
Annual Fees
Most cash-back credit cards do not have an annual fee but some do and they offer higher cash-back rates in returns. American Express’s Blue Cash Card offers 6% cash back at U.S supermarkets, U.S streaming subscriptions, and 3% on U.S gas stations and transits. In the first year, there are no annual charges but after that users will have to pay 95$ annually.
Such cards are ideal for users that have good credit standing and spend on a higher number of purchases. Average users will not benefit from it as the annual fee would negate the earned cashback.
Comparing 6 Best Cash Back Credit Cards
Search for cashback credit cards and you will get a plethora of options. Issuers target the users with all sorts of gimmicks that compel the users to make superficial and often wrong choices.
Monetary decisions should be based on extensive research and understanding of one’s own finances. We have comprehensively screened the market and after considering several factors come up with a list of the best cashback credit cards.
| Card | Cash Back (%) | Regular APR (%) |
| Wells Fargo Active Cash Card | 2% | 15.24 – 25.24 |
| Citi Double Cash Card | 2% | 14.24 – 24.24 |
| Chase Freedom Unlimited | 1.5 -6.5% | 14.99 – 23.76 |
| Blue Cash Preferred | 1 – 6% | 14.24 – 24.24 |
| Amazon Prime Visa Signature Card | 1-5% | 14.24 – 22.24 |
| Capital One QuicksilverOne | 1.5% | 26.99 |
1. Wells Fargo Active Cash Card – Excellent Cash Back Rates & Easily Attainable Bonus
Very few cash-back credit cards offer a flat 2% return on all purchases and Wells Fargo is one of them. It was launched in 2021 but quickly rose to fame thanks to its 0$ annual fee and lucrative sign-up bonuses. The card offers $200 if the users spend $1,000 in the first three months.
Furthermore, there are no caps on the maximum rewards. Users can earn unlimited 2% cash rewards on all of their purchases. Also, in the first 15 months, there is zero APR on purchases and qualifying balance transfers.
Balance transfers within the first three months qualify for the intro rate and after that, there is a 5% fee which is very competitive.
Users can redeem the rewards by either withdrawing from Wells Fargo ATMs or depositing directly into a savings account. You can also get it mailed in a cheque but that takes a little more than time.
Best part? The rewards do not expire as long as the account is open. Users can also enjoy premium benefits at some of the most prestigious hotels and restaurants with a visa signature concierge.
Paying cellular bills via the card can make the user eligible for cell phone insurance worth $600 which can be claimed for damages and theft. However, the insurance is subject to 25$ deductibility.
Users with a credit score between 690 to 850 have excellent odds of approval for this card. Other benefits offered by the card include a mobile app, liability protection, and contactless delivery.
Pros
- High reward rates
- Zero annual fee
- APR free intro period
- Attainable bonus
Cons
- Varying APR rates
- No bonus categories
2. Citi Double Cash Card – Disciplines The Spending Habits
Citi Double Cash Card not just offers competitive cashback rates but also compels the users to become disciplined with their finance. It provides a 2% return rate but only 1% is collected on purchase, the remaining 1% is obtained once the balance is cleared. Rewards can be redeemed via statement credits, cheques, and direct deposits.
The introductory phase is about 18-month long and imposes no APR on balance transfer. After the initial phase, the APR ranges between 14.24 – 24.24 which is better than most cash back credit cards.
Ongoing APR is also well below the interest and one of the lowest for cashback credit cards. Furthermore, the credit does not have an annual fee which is a plus.
Citi Double extends a myriad of fraud protection and security features to its users. You can have 0$ liability and 24 hours fraud protection in addition to Lost Wallet Service. With this service, the company replaces the card within 24 hours and also provides emergency cash in the meantime.
The downside to Citi Double is that it does not offer a welcome bonus or introductory APR on purchases. Plus, users that travel abroad frequently would also have to pay a 3$ fee on the foreign transactions. So, it is not an ideal option for such users.
All in all, Citi double is a brilliant option for users looking to earn rewards while becoming more disciplined in their spending habits.
Pros
- Disciplines spending habits
- Flat cash return on all purchases
- Introductory APR for a balance transfer
- Easy redemption options
- Competitive APR
Cons
- No introductory APR on purchases
3. Chase Freedom Unlimited – High Reward Rates with Lucrative Sign-Up Bonus
The reward structure of Chase Freedom is not the easiest to remember but it is one of the most appealing ones on the market. The card offers 1.5% flat cashback on all purchases but in some categories, the cashback can reach up to 6.5%. Users receive 6.5% cashback on travel, 4.5% on drugstore, and 3% on restaurant purchases.
Furthermore, it has probably the most lucrative signup and long-term bonuses. You receive a 1.5% cash return on everything if the annual purchase is about 20,000$.
This amount is in addition to the cashback that you earn throughout the year. The icing on the cake? There is no minimum amount that users can redeem for cashback.
Regardless of the amount, you can redeem it in either statement credit or by making a direct deposit in the savings account. The rewards do not expire as long as the account is active.
In addition to a zero annual fee, the card also offers 0% intro APR for 15 months on both purchases and balance transfers. After that, there is a variable APR between 14.99 – 23.74% which is one of the longest in cashback credit cards.
The app for the card is also intuitive which lets you keep a tab on credit health, and score and provides real-time alerts. Apart from the requirement of an excellent credit score, there is not much that warrants criticism.
Provided that users are able to clear their balance after each month, the credit card will prove to be a wonderful companion.
Pros
- High reward rates
- Long APR
- Long intro period that applies to purchase and balance transfer
- No minimum amount for redemption
Cons
- Require excellent credit score for approval
4. Blue Cash Preferred – Ideal Card For Expensive Purchases
Blue Cash Preferred by American Express certainly stands out with its high rewards, competitive APR, and appealing signup bonuses. But perhaps the best feature of the card is the installments that it offers on expensive purchases.
Users can get expensive items and the monthly installments would be deducted from the card. Best part? There is no additional fee for creating such a plan in the first 12 months. Even after that, users have to pay a minute of 1.33%.
The Reward system of Blue Cash is a bit complex as it is divided into categories. With purchases at U.S supermarkets, users get about 6%, 3% at U.S gas stations, and 1% on all other purchases. This is not the most balanced reward system but certain users can definitely enjoy it more than others.
Furthermore, the card does not have annual charges for the first 12 months but after that, you would have to pay 95$. Again, not something that most users would appreciate but a certain audience would not mind it.
Besides that, the card offers a $300 sign-up bonus which is one of the easiest to attain. Users have to spend 3,000$ in the first 6 months to become eligible for that bonus. 0% APR is applicable on purchases in the first 12 months followed by 14.24-24.24%.
The bottom line is while the card is not ideal for all users it is certainly an excellent option for a niche audience. Users that can clear the dues after each month and want to get expensive goods like furniture or electronics would find it very beneficial.
Pros
- High rewards
- Achievable bonus
- Installments on expensive purchases
- Rewards can be redeemed easily
Cons
- Annual fee
- Puts a cap on maximum reward
5. Amazon Prime Rewards Visa Signature Card – Online Shopping Cannot Get Better
Online shopping has become mainstream and needless to say Amazon is the giant in the market. The store offers everything that you can possibly name and because of that is a preferred website for many. For such users, the Amazon Prime card is the best thing that they can get their hands on.
The card offers a massive 5% cashback on Amazon and Whole Foods purchases. It also provides a standard 2% cash back on restaurant purchases and 1% on all other purchases. Considering that users can get pretty much everything from the two stores, the card is well balanced.
Furthermore, the card does not have an annual fee but users will have to pay for Prime membership. It also imposes no extra fee on foreign transactions which makes it a decent option for frequent travelers.
Besides that, there is no minimum limit on the amount that can be redeemed. APR is also fairly competitive. Plus, the users are eligible for a plethora of visa concierge services.
Pros
- Very high reward rate
- No cap on minimum redemption
- No fee on foreign transactions
- No annual fee
Cons
- 5% cashback is eligible only on US Amazon sites
6. Capital One QuicksilverOne – Balanced Card For People With Average Credit Score
QuickSilverOne is a solid pick for people that have an average or below-average credit score. The card not only offers decent cashback rates but incentives to improve credit scores as well. If the users are able to maintain good practices the card automatically makes them eligible for higher credit lines.
The card offers unlimited 1.5% flat cashback on all purchases but charges $39 as an annual fee. It does not offer as many perks as other cards that cost an annual fee.
But it is one of the few cards that people with below-average credit scores can get approved. Furthermore, the rewards are unlimited and there are no charges on foreign transactions as well.
Moving on, the card does not put a limit on the minimum amount that can be redeemed. And also, the rewards never expire so users can redeem them as long as the card is active.
With the Capital On-site, the rewards can be converted into gift cards but it may devalue the capital. Hence, most users are better off redeeming them in either statement credit or a cheque.
Pros
- Available for people with low credit score
- No minimum limit of redemption
- Rewards can be changed into gift cards
- Flat cashback return on all purchases
Cons
- High APR
- No welcome bonus
Things To Know Before Getting a Cash Back Credit Card
The thought of earning rewards on purchases made via credit card is tempting. But while one chooses to get such a card there are certain things one must know. These include:
Higher APR Rates
The annual Percentage Fee or APR is the cost users have to pay each year for borrowing money from issuers. It is similar to interest but unlike that, it also includes charges like fees, closing costs, loan origination fees, and discount points.
Most cashback credit cards have an introductory period where APR is 0%. But as the introductory phase is over and users will have to pay APR higher than typical credit cards.
Plus, if you are unable to clear the dues at the end of the introductory period, ongoing APR will be calculated on the remaining balance.
Interest Rate
Many cash-back credit cards offer introductory bonuses and a period that is free of interest. It can be tempting for users but they must be mindful that it will not last forever.
Try to clear all dues before the interest-free period is over, otherwise, the debt will pile up and cash return will be moot.
While selecting the card, do not look for the interest-free time but rather the interest rate on them. If a card has a higher interest rate, it will outweigh the earned rewards and render it useless.
Transaction Fee on Foreign Purchases
Travel credit cards usually waive the fee on transactions made abroad but most cash back cards are not as generous. Hence, you would have to pay a fee on each transaction made abroad which is about 3% of the purchase.
Travel Rewards
Some credit cards offer travel rewards that can be used on airline tickets, lounge access, etc but most do not. Hence, if you are looking for a card specifically for travel or hotel there are other cards specialized in that.
FAQs – Best Cash Back Credit Cards
How Do Cash-Back Credit Cards Work?
Every time a user makes an eligible purchase the card issuer pays back a certain percentage of that. For example, a credit card that offers a flat rate of 2% cash return would pay back 2$ on a purchase worth 100$.
How Can I Redeem Cash Back Earning?
Cashback earning redemption depends on the card that you are using. Some allow redemption without putting a limit on the minimum or maximum amount.
With others, users have to meet those limits to redeem the cashback. That said, the redeemed amount can be used at the purchase of your choice.
Do Cash-Back Cards Actually Give You Cash?
Yes, the cashback credit cards actually return rewards in the form of cash that is accounted for in the bank statement. Depending on the issuers, you can withdraw it in either form of cash or use it anywhere you want.
What Are The Tips to Maximize Cash Back Or Reward Cards?
Users can maximize the benefit of cashback cards by achieving the goal of sign-up bonuses. You should also try to clear all dues before the end of the month to ensure interest does not negate the earned amount.
And lastly, keep an eye on promotions and limited-time offers and try to earn as many rewards and discounts as you can.
Which Type of Reward Card is Best For Me?
The choice of reward card should be dictated by your lifestyle and spending habits. Frequent travel can get the maximum benefit from a travel and hotel card.
Average users, on the other hand, can maximize the advantage with cashback cards as the rewards can be used everywhere.
Conclusion
Cashback credit cards are tempting for everybody but they are not suitable for all. Users that are able to clear the balance before the month ends can get maximum advantage from them.
Those that cannot do that will only damage themselves financially as such cards have higher APR and interest rates.
We have researched a lot to come up with this piece and the best cash-back credit cards that users can get. We hope this piece has helped in making an informed choice or at least narrowed down the option.
Let us know if you have a query. We would love to respond. Thank you!
