Credit Card Guides
Guide to Cash Back Credit Cards
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When it comes to earning rewards using credit cards, a great place to start is with cash back credit cards. Unlike with some options that accrue points or airline miles, cashback cards reward users by giving them a percentage of their purchases back in the form of (you guessed it) cash. Then, these earnings can be redeemed for statement credits, transfers to your bank, or, in some cases, gift cards for top brands. Of course, while cashback cards tend to be more straightforward than other travel-centric companions, they do come in many different varieties.
With that in mind, let’s take a look at a few common types of cashback cards you may encounter — as well as some specific cards that may be worth exploring.
Table of Contents
Note: Click here for information on how to apply for a cash back credit card.
Cash Back Cards with Multiplier Categories
Cash Back Cards with Multiplier Categories
If you’re willing to put a little more work into your credit card game, cards with multipliers can often reward your effort. In addition to many cards featuring a solid base (such as 1% back on everything), they may also offer as much as 3% to 6% back in specific spending categories — such as gas, dining, travel, and more. Obviously the trick here is to find a card that makes the most sense for your spending habits and complements your lifestyle. Also be aware of annual fees associated with some of these cards and be sure to run the numbers to ensure that you’ll be getting positive value each year.
Capital One Savor
Capital One Savor
- Cash back categories/earnings rates: 4% back on dining and entertainment, 2% back at grocery stores, and 1% back on everything else
- Current intro bonus: $300 back when you spend $3,000 in your first three months
- Annual fee: $95
- Foreign transaction fee: 0%
For those who enjoy dining out (or ordering in), the Capital One Savor could yield some major cash back. Not only does this card feature 4% back on dining and the broadly defined “entertainment” but also gives 2% back on grocery store purchases and 1% on everything else. In terms of downsides, the card does have a $95 annual fee. However, you can also get $300 back after you spend $3,000 in your first three months as an intro bonus, which will more than cover the fee.
Capital One SavorOne
Capital One SavorOne
- Cash back categories/earnings rates: 3% back on dining and entertainment, 2% back at grocery stores, and 1% back on everything else
- Current intro bonus: $200 back when you spend $500 in your first three months
- Annual fee: $0
- Foreign transaction fee: 0%
Lest you worry that you’re experiencing deja vu, yes, this is a different card from the Capital One Savor. The biggest difference between these two similar-named option is that the SavorOne tops out at 3% back on dining and entertainment (compared to 4% for the Savor) and the fact that this version of the card carries no annual fee. Moreover, the sign-up bonus is also different, with the SavorOne currently offering $200 back when you spend $500 in your first three months. Ultimately, while both versions are attractive choices, you’ll want to decide if the annual fee that comes in year two of the Savor makes the extra percentage point worth it. If not, there’s always the SavorOne instead.
Blue Cash Everyday
Blue Cash Everyday
- Cash back categories/earnings rates: 3% back on U.S. grocery store purchases (up to $6,000 per year in purchases, 1% back after that), 2% back on U.S. gas station purchases, 2% back on U.S. department store purchases, and 1% back on everything else.
- Current intro bonus: $200 back after spending $1,000 in your first three months.
- Annual fee: $0
- Foreign transaction fee: 2.7%
Overall, the Blue Cash Everyday from American Express is a well-rounded cash back card for many consumers. While the most notable perk is the 3% back at grocery stores (up to $6,000 of spend per year), the 2% back at gas stations and department stores could also come in handy. This card also has a nice intro bonus of $200 back when you spend $1,000 in your first three months.
Blue Cash Preferred
Blue Cash Preferred
- Cash back categories/earnings rates: 6% back on U.S. grocery store purchases (up to $6,000 per year in purchases, 1% back after that), 6% back on U.S. streaming service subscriptions, 3% back on U.S. gas station purchases, and 1% back on everything else
- Current intro bonus: $300 statement when you spend $3,000 in your first three months
- Annual fee: $0 introductory annual fee for one year, then $95
- Foreign transaction fee: 2.7%
As attractive as the 3% back on groceries that the Blue Cash Everyday offers, the 6% back (up to $6,000 in spend per year) that the Blue Cash Preferred carries blows it out of the water. Additionally, with this edition of the card, you’ll also get 6% on streaming service subscriptions and 3% back on gas. The trade-off here is the $95 annual fee — although you can easily cover that if you’re maxing out the grocery multiplier. Plus, at this time, Amex is waiving that annual fee for the first year. Also notable is that this card currently has a welcome bonus, earning you a $300 statement credit when you spend $3,000 in your first three months.
Note: Click here to learn more about multiplier cashback credit cards.
Flat-Rate Cash Back Cards
Flat-Rate Cash Back Cards
If you want to start earning cashback but don’t want to worry about what card you’re using where, a flat-rate card could be your best best. Typically, these cards offer 1% to 2% back on everything you buy, regardless of the merchant category. Therefore, these can be great options for minimalists, rewards newbies, or anyone who doesn’t want to juggle a bunch of different cards.
Citi Double Cash
Citi Double Cash
- Cash back categories/earnings rates: Total of 2% back on everything (1% back when you buy and 1% back as you pay)
- Current intro bonus: None
- Annual fee: $0
- Foreign transaction fee: 3%
True to its moniker, the Citi Double Cash card effectively offers 2% back on everything you buy. However, these earnings are awarded when you make purchases (1% back) and then when you pay off said items (the other 1% back). While that structure makes this card a bit different than most others, the 2% total still leaves it as the gold standard for flat-rate cash back cards on the market. That said, the lack of a traditional sign-up bonus is the one downside of this otherwise solid card.
Chase Freedom Unlimited
Chase Freedom Unlimited
- Cash back categories/earnings rates: 1.5% back on everything, 5% back on travel purchases through Chase Ultimate Rewards portal, 3% at restaurants, and 3% at drug stores
- Current intro bonus: $200 back when you spend $500 in your first three months
- Annual fee: $0
- Foreign transaction fee: 3%
Previously, the Chase Freedom Unlimited card was a flat-rate cashback card that offers 1.5% back on everything you buy. While it retains that aspect, it’s recently added some multipliers as well. Now, customers can earn 5% back on travel purchases they book through the Chase Ultimate Rewards portal, earn 3% at restaurants, and 3% back at drug stores. Plus, the $200 back after $500 spend in your first 90 days bonus is one of the best intro bonus spend-to-reward ratios currently available.
Even with those multiplier additions, this card is a strong flat-rate contender in its own right.
Note: Click here to learn more about flat-rate cashback credit cards.
Business Cash Back Cards
Business Cash Back Cards
If you’re a small business owner, it may actually be more beneficial to seek out a business cash back card instead of or in addition to a consumer one. Incidentally, business cash back cards also come in multiple flavors — including those we’ve already discussed (flat-rate and category multipliers). This not only allows you some flexibility but also presents the opportunity to maximize rewards for your business just as you would on your personal cards.
Costco Anywhere Visa Business
Costco Anywhere Visa Business
- Cash back categories/earnings rates: 4% back on eligible gas (up to $7,000 in spend per year, 1% after that), 3% back on restaurant and eligible travel purchase, 2% back on Costco and Costco.com purchases, 1% back on everything else
- Current intro bonus: None
- Annual fee: $0 (but requires paid Costco membership)
- Foreign transaction fee: 0%
Admittedly, the Costco Anywhere Visa Business is kind of an odd pick for me to highlight. For one, the card requires that you have a paid Costco membership. Secondly, its rewards are paid out as an annual reward certificate that can then be redeemed for cash or for merchandise at Costco. Despite these quirks, it’s a good example of a business cash back card with attractive multipliers, including 4% back on gas (up to $7,000 in spend per year), 3% back on dining and eligible travel, and of course 2% back on Costco purchases. So while this might not make sense for every small business owner, it could certainly be right for some.
American Express Blue Business Cash
American Express Blue Business Cash
- Cash back categories/earnings rates: 2% back on purchases up to $50,000 in spending per calendar year, 1% after that
- Annual fee: $0
- Foreign transaction fee: 2.7%
With the ability to earn 2% back on all of your business purchases (up to $50,000 in spending during a calendar), the American Express Blue Business Cash offers an easy way to make your business’s budget go further. Plus, cash back earned will automatically be applied to your statement for easy redemption. With all that and considering that the card carried no annual fee, it could be a good option for small business owners looking for a simple cash back solution.
Note: Click here to learn more about Small Business cashback credit cards.
Other Cash Back Card Types
Other Cash Back Card Types
Rotating Bonus Category Cards
Rotating Bonus Category Cards
Another form of cashback card you may encounter is one with rotating bonus categories. For example, the card might have a 1% cashback base but offer 5% back on select spending categories that update every few months. On the one hand, these types of cards can be powerful, as the 5% bonuses will likely top your other options. However, there may be some quarters where the bonus categories are more useful to you than others. Also, in many cases, you’ll need to opt-into these bonuses in order to earn the higher rate. Nevertheless, if you’re looking to supplement a solid flat-rate card, a rotating bonus card could be a great way to expand your reward potential.
Travel Cards with Cash Back Options
Travel Cards with Cash Back Options
More often than not, when people speak of “travel credit cards,” they’re referring to points and miles cards that are contrasted with cash back cards. Despite this, there are some travel cards that still allow users to redeem their points for statement credits or cash deposits much as they would with a more traditional cash back card. At the same time, be aware that cash-out options may not offer the best value for some of these cards. In fact, some may only offer 0.6¢ per point for statement credits compared to 1¢ per point or more for other redemptions. Because of this, while it’s possible to find a flexible travel card that doubles as a cash back driver when needed, it may be best to stick to regular cash back cards if you value simplicity and straightforward value.
Brand-Specific “Cash” Back Cards
Brand-Specific “Cash” Back Cards
Finally, another growing trend in the world of cash back cards is those that don’t technically offer cash but, instead, allow users to earn credits good for specific purchases. A prime example of this is the Uber Credit Card, which used to offer regular cash back but now yields Uber Cash. Yet, this isn’t the only brand-specific “cash” back card you can find — so be sure to read all the details before applying for any new card.
While there are several types of credit cards available to consumers that each offer their own pros and cons, in many cases, a card that earns cash back may be your best option. What’s more, thanks to the numerous structures that cash back cards can take on, there’s plenty of opportunity for consumers to expand their strategy and maximize their rewards. So whether you decide to start with a flat-rate card you can use anywhere, opt for a card with multipliers on your largest expenses, or decide to get a card for your small business instead, you really can’t go wrong with a solid cash back credit card.
Frequently Asked Questions
Q:
What is a cash back credit card?
A:
A cash back credit card is a type of rewards card that allows users to earn a percentage of their purchase back in the form of cash. Often times, accrued cash can be redeemed as a statement credit, used to purchase gift cards, sent as a check, or transferred to a bank account.
Q:
How do cash back credit cards work?
A:
In most cases, a percentage of your purchases will be tallied and added to your cash back balance after each monthly statement closes. These percentages will vary by card, with some offering a flat percentage for any type of purchase and others putting higher percentages on specific categories of spending.
Q:
What is the best cash back credit card?
A:
The best cash back credit card will depend on your personal preference and needs. For example, those who want a simple solution may prefer a card with a flat 2% cash back rate while those who do a lot of travel and dining out might opt for a card that earns 3% or 4% in those specific categories.
Q:
Is cashback on a credit card taxable?
A:
Typically, the cash you accrue from cash back credit cards is considered a rebate and is non-taxable. This is also true for sign-up bonuses you earn that required you to spend money. However, if you receive a Form 1099 from your card issuer, you will want to be sure to include it in your tax return.
Q:
Can you get cash back from a credit card?
A:
Cash back from a transaction is typically only an option for those paying with debit cards, not credit cards. Credit cards do often offer cash advance checks that can be used to access cash if your balance is under the total card limit. However, cash advance interest rates are usually extremely high (20%+) so this option should only be used as a last resort.
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