Comparing Cash Back Credit Card Offers
Updated: July 13, 2018
Our experts at CreditCards.com have pulled together the best cash back credit cards for you in various spending categories. Each card has different rewards and fees, but we make it easy for you to decide on which is best for your spending habits. Choosing a credit card is an important financial decision, so we lay out the pros and cons for you all in one place. We evaluated over 600 credit card offers using the criteria below to come up with our list of the top cards for cash back. Here are our findings!
Whether you want to know what to look for in a cash back card or how to use it, we can help.
Research methodology: how we arrived at the best cards
Cash back credit cards analyzed: 682
Criteria used: Cash back rate, other rewards, redemption options, redemption flexibility, cash back categories, credit needed, miscellaneous benefits and features, security, ease of application, sign-up bonus, customer service, rates and fees
After analyzing 600+ card offers, we've hand-selected the 10 best cash back credit cards. The Chase Freedom Unlimited and Capital One Quicksilver cards offer a 1.5% flat-rate cash back on every purchase and are our top picks due to their high rewards value and flexibility in redeeming cash back.
Editor's notes on the best cash-back credit cards
The best credit card for you will depend on your personal needs and preferences. Here's our take on 2018's best cash back cards. Feel free to email us at email@example.com if you have any questions!
Capital One® Quicksilver® Card - Best for flat-rate cash back
If you're looking for a card with all the boxes checked, you'll want to eye the Capital One Quicksilver Card. While it has competitive rewards with 1.5% back on all purchases and a decent sign-up bonus, the Quicksilver also comes with reasonable regular APR of 14.74% - 24.74% variable for both purchases and balance transfers.
With the 1.5% back on all purchases, you don't have to deal with the hassle of rotating categories or quarterly sign-ups. Also, you won't have to choose between an introductory APR and rewards, because this card has both. Finally, there is no annual fee and no foreign transaction fee.
The sign-up bonus isn't the highest — the Wells Fargo Cash Wise offers $200 back with a $1,000 spend within the first 3 months, while some luxury cards offer even larger sums. And the required credit of good to excellent is a high bar for someone whose credit isn't his best.
Chase Freedom Unlimited® - Best for cash back with no annual fee
Other cards chase the Freedom Unlimited's sign-up bonus and ongoing cashback rewards, but this card is a tough one to beat. You can earn a $150 bonus after a $500 spend within 3 months of card membership and 1.5% back on all purchases.
The Freedom Unlimited can be partnered with a Chase Sapphire card to take advantage of the travel boost those cards offer through the Chase Ultimate Rewards portal. There's also no annual fee. Finally, you can get a 0% intro APR for 15 months on purchases and balance transfers (then 16.74% - 25.49% variable).
The Freedom Unlimited may not be the best choice for world travel, with its 3% foreign transaction fee. Also, the balance transfer fee is high, at 5% or $5, whichever is higher. The go-to rate also starts out high, at a variable rate of 16.74%-25.49% APR.
Discover it® Cash Back - Best for cash back at Amazon.com
This card comes with a twist – rather than a sign-up bonus, Discover will automatically match all the cash back you earn at the end of your first year, encouraging your love and devotion. There's 5% cash back each quarter on rotating categories such as Amazon.com, grocery stores and wholesale clubs up to the quarterly maximum each time you activate.
If you like the idea of working the system, this card is a good choice for you, because you could potentially earn up to $600 at year end by earning 5% back up to $1,500 each quarter and the double cash back at the end of the first year (activation required). You can also receive free Social Security number alerts, a special feature of Discover cards.
The 0% intro APR for 14 months on purchases and balance transfers on this card is a little less than its competitors. After the introductory period ends, standard APR of 13.74% - 24.74% variable applies. Also, while competitive, Discover as a network is not as robust as Mastercard and Visa. Finally, you'll need to decide if rotating categories are for you.
Chase Freedom® - Best for cash back on rotating categories
The Chase Freedom offers a $150 sign-up bonus after a $500 spend within 3 months of card membership, and 5% back on rotating categories up to $1,500 a quarter each time you activate. That comes to up to $300 back for the year. It's 1% back after that on all other purchases.
Like the Freedom Unlimited, this card can partner with the Chase Sapphire cards to take full advantage of the Ultimate Rewards travel portal. Also, the Chase Freedom might accept you even if you don't have excellent credit. And the 5% back categories are often everyday items, such as gas, groceries and restaurants.
The sign-up bonus is not competitive with the Discover it Cash Back's year-end offer if you plan to max out the Cashback Match. Also, this card on its own is not the best choice for overseas travel, because the 3% foreign transaction fee can be a heavy drain on world travelers. Finally, consider whether you will take full advantage of the rotating categories.
Wells Fargo Cash Wise Visa® - Best for sign-up bonus
This card's $200 back after a $1,000 spend within 3 months of card membership is hard to beat, and it comes with the standard 1.5% back on all purchases. The Cash Wise also delivers 1.8% cash rewards on qualified mobile wallet purchases during the first 12 months on account opening.
With the Cash Wise, you can get up to $600 protection on your cellphone (with a $25 deductible) for covered damage or theft when you pay your monthly cell bill with this card. Also, excellent credit may not be necessary, which means you might be accepted with a score as low as 670. Finally, there's no hassle of quarterly sign-ups or changing categories.
The 0% intro APR isn't competitive, with only 12 months on purchases and balance transfers (then variable APR or 14.74% - 26.74% applies). You can do better on this front with the Chase Freedom or Freedom Unlimited. There's also a foreign transaction fee of 3%, which may not be the best choice for overseas travel. And there are cards that offer a better cashback rate on everyday purchases, such as the Blue Cash products from American Express.
Bank of America® Cash Rewards - Best for cash back on gas
This card offers a competitive sign-up bonus of $150 after a $500 spend the first 90 days of card membership, as well as 2% back on grocery stores and wholesale clubs, and 3% on gas on up to $2,500 combined each quarter. That means that you get improved ongoing cashback rewards without the hassle of quarterly categories.
The maximum spend on the heightened categories is higher than that of competitors, up to $10,000 a year, compared to $6,000 for other cards. One nice feature: You can earn 10% or more back when you redeem your cash back into a Bank of America checking or savings account.
You can do better with the sign-up bonus if you get the year-end offer of the Discover it Cash Back. Also, you can get up to 2% on all purchases with the Citi Double Cash, so figure out if that's a better fit for you.
Capital One® Savor® Cash Rewards - Best for restaurants
This relatively new card rewards generously for restaurant dining, allowing you to earn an unlimited 3% on dining, 2% on groceries and 1% back on all other purchases – perfect for the foodie.
This card's unlimited spend on dining and groceries gives it an edge over similar cards, such as the Blue Cash Everyday. And like the Blue Cash Everyday, there's no fussing with rotating categories or quarterly sign-ups. Finally, the 15-month 0% intro APR on purchases and balance transfers doesn't make it the best offer, but it's competitive with similar cards. After the intro period ends, the standard variable APR of 16.24% - 24.99% will apply.
If you are a cash back enthusiast looking for maximum returns, the Citi Double Cash or Discover it Cash Back may suit you better. For Costco shoppers, the Costco Anywhere Visa may be a better choice because the Savor won't be accepted there because it's a Mastercard and because the Costco card competes with 3% back at restaurants and 2% back on Costco purchases. Finally, if you don't eat out often, you can benefit more from one of the Blue Cash products, which earn you 3% or 6% on U.S. grocery stores.
Blue Cash Everyday® Card from American Express - Best for cash back on groceries
Blue Cash Everyday offers 3% on U.S. supermarkets year-round on up to $6,000 spend a year makes it one of the best credit cards for groceries. Combined with 2% back at U.S. gas stations and select U.S. department stores, the BCE's everyday categories are more lucrative than most of the flat-rate cards. Add to that, there's no annual fee, unlike the Blue Cash Preferred. There's also a $150 welcome bonus after a $1,000 spend within the first 3 months of card membership.
This card has no annual fee and still offers a high cashback rate on several everyday categories. In fact, with generous rewards for U.S. gas stations and U.S. supermarkets, this is a good choice for the medium-sized family on a budget. This card also offers a full range of benefits, including purchase protection, auto rental insurance and travel accident insurance.
There's a spend limit on U.S. supermarkets of $6,000 a year for the 3% rate, then 1% after that, which can put the damper on larger families that spend more than $500 a month on groceries. Regarding the welcome bonus, you can get a better bonus for the same spend with the Cash Wise. Also, while there's an annual fee with the Blue Cash Preferred, its superior rewards of 6% back on U.S. supermarkets and 3% back on U.S. gas stations and select department stores might make it a better choice if those are your go-to categories.
Citi® Double Cash - Best for 2% total cash back
This card shatters the 1.5% flat rate of other cards with double cash back – 1% when you buy and 1% when you pay. Also, you might be able to get this card with a score as low as 670.
There's a generous 18-month 0% intro APR on balance transfers that's hard to beat (after that the variable APR will be 15.24% - 25.24%). Add to that, there's no annual fee and no caps on cash back. The high flat rate also fares better than competing cards.
This card doesn't offer a sign-up bonus, unlike its competitors, so that can be a deal-breaker if you were looking to get a little upfront cash. Also, the Citi Double Cash has no 0% APR on purchases, which can take the fun away.
HSBC Cash Rewards Mastercard® credit card - Best for anniversary bonus
This card offers the unique feature of a 10% anniversary bonus alongside its 1.5% unlimited cash back on all purchases. It also has a solid sign-up bonus and no annual fee.
Unlimited 1.5% cash back makes this HSBC Mastercard competitive with other top cash back cards like the Chase Freedom Unlimited. Its $150 sign-up bonus is also reasonably easy to attain with a required spend of $500 in the first three months. Additionally, the 10% anniversary bonus, no annual fee and no foreign transaction fee make HSBC's offer a compelling option among flat-rate cash back cards.
Unlike many competing cards, the HSBC Cash Rewards credit card does not carry an introductory offer of 0% interest on purchases (although it does so for balance transfers).
What are cash back cards and how do they work?
Cash back cards are pretty straightforward – they allow you to earn cash for spending on your favorite card. In fact, it's a favorite among consumers, credit card service company TSYS found, even beating out travel.
Type of rewards program on preferred credit card...
- Cash rebate
- Gift card
TSYS 2017 Consumer Payment Study
Once you build your credit and know how to manage your credit cards, it's time to think about rewards. And cash back rewards can be among the most straightforward of the rewards cards out there, making them a great starter product.
Whether you choose a card with a flat rate or a product with rotating categories, this is a great way to earn cash while making purchases. Here's how it works: Let's say you spend $500 a month and the cash back rate is 5% on specific categories. That means you are earning $25 a month just for card loyalty. There are sometimes spending requirements and sign-up rules, though.
Cash back cards will usually also have a sign-up bonus of up to $200 back, so be sure to shop around.
However, as with all rewards cards, you need to be sure to pay in full each month, because otherwise, you'll pay interest charges on the balance each month, and that would defeat the purpose of having a rewards card.
Moving parts of a cash back card
- Ongoing rewards. Rewards can vary widely, sometimes with maximum spends and sometimes unlimited.
- Sign-up bonus. Most have a bonus, typically of $150 after a set amount of spend.
- Special features. Some cards have features like damage and loss insurance on cellphones.
- Benefits. Many of these cards offer auto rental insurance, price protection and more. Look at your lifestyle and see if there is a benefit that makes the card worth your while.
How to maximize rewards
Before choosing a card, think through how you spend. If you eat out at restaurants, the Capital One Savor might be a good choice. But if you have a sizeable family and spend hundreds a month on groceries, one of the Blue Cash products might be for you. Look at your past spending to see where you shop and how much.
Which are the best cash back card companies?
Several card issuers offer products with some stand-out qualities, such as:
- Discover – The Discover it cards match your cash back at the end of your first year instead of a sign-up bonus.
- American Express – American Express' Blue Cash Preferred and Everyday cards offer higher rates for U.S. grocery stores that are year-round.
- Chase – The Freedom and Freedom Unlimited can be partnered with Sapphire cards, giving you a boost when you book travel through Chase Ultimate Rewards.
Which cash back card is right for you?
Because there are a number of cash back cards to choose from, and each has its own advantages, it's best to analyze your spending habits before choosing. Are you up for maximizing spending on specific categories every 3 months? Or would you rather set it and forget it, which a flat-rate card allows you to do?
Here are the types of people who best benefit from having a cash back card:
- If you shop often at U.S. grocery stores – A Blue Cash product is a good choice.
- If you like the idea of maximizing rewards – A Discover it Cash Back or Chase Freedom might work best.
- If you want to set it and forget it – With a Chase Freedom Unlimited or Bank of America Cash Rewards, you can earn cash back every time you make a purchase.
- If you eat out often – A Capital One Savor earns you 3% back at restaurants.
- If you are disciplined – Can you only spend what you can afford to pay back? Then a cash back card is a good option.
- If you want practice – If you want to try out rewards, but you are concerned that you aren't ready, the simple features of a flat-rate cash back card is a good choice.
- If you don't need a card for travel – In many cases, cash back cards have foreign transaction fees, so they are best for everyday spending.
What are the different types of cash back cards?
Cash back cards can be a little confusing when you are shopping around, because each one has a slightly different rewards plan. The best plan for you is the one that matches your past spending habits. Here are some different types:
- Flat rate. Flat-rate cards typically offer 1.5% on all purchases, allowing you to not worry about maximum spends or quarterly sign-ups. However, the rewards are lower, which is the tradeoff for not having to think about what and where you are making purchases.
- Multiple tiers. Some cards, such as the Blue Cash cards, offer boosted cash back on specific categories. The rate is year-round in this case, but there may be a maximum spend required. For example, the Blue Cash Preferred earns you 6% at U.S. grocery stores, although there is a maximum of $6,000 a year.
- Rotating categories. This type of cash back card requires the most thinking because select categories reward you with, for example, 5% back for a specific amount of time, typically 3 months. You have to sign up for the categories each quarter and you have to pay attention to when and where you make purchases.
- Hybrid. The U.S. Bank Cash+ Visa Signature offers a unique rewards program that combines the tiered program with the rotating categories program. You earn 5% back on 2 categories of your choice each quarter, and there's the added advantage that you get a slightly higher maximum spend of $2,000 a quarter compared to its competitors. Then, you earn 2% back on your choice of one type of everyday purchase, such as gas and groceries, and 1% back on all other purchases.
Examples of flat rate cash back cards include:
- Capital One Quicksilver
- Chase Freedom Unlimited
- Wells Fargo Cash Wise Visa
- Citi Double Cash
Examples of tiered cash back credit cards include:
- Blue Cash Everyday Card from American Express
- Bank of America Cash Rewards
- Capital One Savor
Finally, examples of cash back cards with rotating categories include:
- Chase Freedom
- Discover it Cash Back
- Discover it Student Cash Back
What are common cash back categories?
All cash back cards are not created equal. While certain kinds are more popular, the choices can range from shopping at department stores or wholesale clubs to frequenting restaurants or gas stations.
We found in a study of cash back cards that cards with a flat percentage rate were the most popular hands down among issuers, while least common were cards with rotating categories.
Of 52 cards surveyed...
- 27 cards
- Have a flat percent on every purchase
- 22 cards
- Have a tiered system
- Have rotating categories
The flat rate cards can be as low as 1% on a credit-builder card and up to 2% back on Citi Double Cash, while the tiered cards can go as high as the Blue Cash Preferred, with 6% back at U.S. supermarkets, up to $6,000 a year. The most common cards with rotating categories are the Discover it Cash Back, which gives double your cash back at the end of your first year, and Chase Freedom, which offers a $150 sign-up bonus after a $500 spend within 3 months. In fact, we found sign-up bonuses to be particularly popular with the cards we reviewed:
Of 52 cards surveyed...
- 32 cards
- Have a sign-up bonus
- 43 cards
- Allow cash back as a statement credit
As you can see, credit statements are a common way to redeem the cash back, but you might also be able to deposit the cash into a bank account or even get a check issued, as in the case of Bank of America cards. There are also often options in which you can redeem for gift cards or merchandise.
What is the average cash back rate?
According to our annual cash back survey, the average cash back card offers a cash back rate of around 1.25 percent per dollar. Here is the spread of cards that we found:
- 1 percent base cash back: 31 cards
- 1.5 percent cash back: 18 cards
- 2 percent cash back: 3 cards
Benefits and drawbacks of cash back cards
While many people prefer cash back cards because of their simplicity, the cards also have their drawbacks. Here are a few advantages and disadvantages of using a cash back rewards card.
Whether you are treating your new cash back card as a starter card or if you want redemption options, a cash back product has a number of benefits:
Easy to work with – Cash back cards may be the simplest way to earn rewards since cardholders know exactly how much they will earn back from each purchase without having to convert a point or mile into an equivalent cash value.
Lots of redemption choices – Cash back rewards can be redeemed in a variety of ways, including statement credits, checks, bank deposits, gift cards and charitable donations.
Good cards for everyday spending – These are good cards for earning rewards on restaurants, groceries, gas and other everyday expenditures.
Can keep building credit – If you pay in full and on time each month, you can continue to build your credit, allowing you to eventually graduate to a premium rewards card.
Makes for good practice – These cards are a great way to practice using a simpler rewards card until you feel ready to move on to a more ambitious rewards product.
No annual fee – Most cash back cards have no annual fee, yet they often have sign-up bonuses of $150 and more.
Choice in benefits – Increasingly, cash back cards offer such benefits as purchase protection and extended warranty.
Cash back cards aren't for everyone. For example, the world traveler may want to look elsewhere, and some cash back cards can have onerous rules.
Lack of travel benefits – When you choose a cash back card over a travel rewards card, you typically lose out on such features as airport lounge access and annual travel credits.
Not ideal for travel – Unlike many travel rewards cards, cash back cards often have foreign transaction fees, making them not ideal for foreign travel or shopping online with companies that use foreign banks.
Limited redemptions – Some cash back cards have limited redemption options. For example, you may not be able to redeem with a check.
Cash back may expire – Some issuers may require you to redeem within a specific amount of time.
Maximum spend requirements – Most cards with rotating categories cap you with a maximum spend.
Sign-ups required – Some cards require you to sign up each quarter to qualify for the increased rewards.
Minimum spend requirement – To earn cards' sign-up bonuses, you are typically required to spend a minimum of up to $1,000 within a set amount of time.
Why you should use a cash back credit card
Cash back cards appeal to customers for a number of reasons, but mainly due to their ease and flexibility: Because they offer cash back rewards, there’s no need to convert points and miles to dollar values. In fact, polls show that people prefer cash back cards by a ratio of 3-to-1.
If you’ve ever considered cash back cards, here are some key reasons to give them a second look:
No annual fee – Cash back cards rarely charge an annual fee. Out of the 52 cards polled in our yearly cash back survey, only four had annual fees.
Cash back on every purchase – Some cards offers a bonus rate on certain purchases, but virtually all of them offer a standard rate of cash back on all other purchases. The Savor card from Capital One, for example, offers 3 percent back on dining, 2 percent back on groceries and 1 percent back on all other purchases.
Sign-up bonuses – More than 60 percent of the cards surveyed offered sign-up bonuses – of up to $200 cash back – after spending a certain amount within a specific timeframe.
Limited expiration dates – Although some cards place restrictions on the amount of time you have to redeem your cash back rewards, the vast majority do not. Only eight out of 52 cards had expiration dates.
Rewards on everyday purchases – Cash back cards, whether a simple, tiered or bonus category card, offer cash back on the items that you buy everyday, such as gas, groceries, department stores and wholesale clubs.
Added bonus: If you load your cash back rewards back onto your credit card, it will earn its own cash back when you spend it.
How you can use a cash back card effectively and maximize rewards
1. Use credit cards for most of your spending
To quickly bulk up rewards earnings or meet the minimum spend requirement for a sign-up bonus, you should use your cash back cards for as many of your everyday purchases as possible. A large purchase -- such as a down payment on a car, furniture or other major purchase -- can help you meet a spending threshold and score a large amount of cash back in one swoop.
However, using cards for your everyday spending – including groceries, gas and utility bills – is the best way to go if you want to earn a large amount of cash back over time. Note that you need to watch out for merchants that tack on a convenience fee, since this can negate the value of your cash back.
2. Use multiple cash back cards
If you sign up for multiple cash back cards that offer bonuses in different spending categories and rotate them to earn bonuses in each of the spending categories, you can increase the rate of cash back that you earn.
For instance, you can pair the Citi Double Cash card with the Blue Cash Preferred card from American Express. With the Blue Cash Preferred, you earn 6 percent back on up to $6,000 (then 1 percent) in U.S. supermarket purchases per year, 3 percent back at U.S. gas stations and select U.S. department stores, and the Citi Double Cash card can get you 2 percent back on the remainder of your spending.
3. Keep a close eye on deadlines and fees
You need to take care to pay your card by the due date, since the late fees and penalties from a missed payment can quickly negate any cash back that you earn. For instance, a late payment on a $500 balance can add up to more than $40 in penalties and interest.
4. Never carry a balance
Even if you make your minimum payment on time, the interest that you own on a rotating balance can easily outmatch the cash back that you earn. Over time, you may find yourself owing more cash back than you earn.
5. Use online shopping portals to stack rewards
For online shopping, you can use shopping portals, such as Ebates and Swagbucks, to earn extra rewards on top of the cash back from your credit.
6. Maximize your cards’ spending categories
If you have a card with 5 percent rotating quarterly categories – such as the Discover it Cash Back card or the Chase Freedom card – there are a few tricks you can use to reach the $1,500 spending cap each quarter:
- Stock up on larger quantities of items that won’t spoil
- Pay your annual bills in advance
- Do your Christmas shopping early
- Buy gift cards at a retailer that falls within a bonus category to earn a bonus on purchases that wouldn’t otherwise qualify for a bonus
7. Keep track of spending categories and payment due dates
Getting organized can really help maximize your credit card rewards and minimize losses due to late payments and missed spending thresholds. Put all of your card details into a spreadsheet, including payment due dates, rewards balances and spending thresholds. Add sticky notes to your cards to help you keep track of their spending categories.
Or download an app that tracks all this information for you. Our Wallet app helps you manage all your credit card accounts and tells you which card to use at the time of purchase.
These 7 tips are esential when it comes to taking full advantage of your cash back credit cards. In addition to these best practices, check out our favorite cash back "hacks":
How to choose the right cash back card
In general, you want to pick the cash back card that’s going to earn you the most cash back possible, but there’s more to it than that. Choosing the right card will depend on your spending habits and how much maintenance you want to put into a credit card. Here are the criteria that you should consider:
Required credit rating
The most generous cash back cards will usually have a high barrier to entry. While you want to get the best card possible for your credit rating, you also want to minimize inquiries into your credit history, which can lower your credit score. You should check the required credit rating for a card and make sure you can qualify before you apply.
Type of cash back card
Recall that there are three primary types of cash back cards: flat-rate, tiered, and rotating category. The type you choose will depend on whether you prefer simplicity or the ability to maximize your cash back through bonus categories.
You should take a look at a cash back card’s bonus categories to make sure they match your spending habits. For instance, if you have a family that eats at home most of the time, you may be best off with a card that offers a bonus on grocery purchases, whereas if you dine out often you may prefer a card with a bonus on restaurant purchases. Or, you may get a higher cash back rate with a card that offers the same flat rate on all your purchases.
Many cash back cards offer a $100 to $200 sign-up bonus to new cardholders that manage to meet a spending threshold within a certain time limit. You should factor this into your overall card rewards – depending on whether you plan to hold the card for the short term or the long term – it could put you ahead of a card with a higher cash back rate, but no sign-up bonus.
Cash back cards usually don’t include an annual fee, but a few do – such as the Blue Cash Preferred card from American Express. Don’t be deterred by a card with an annual fee. Depending on your spending habits, you can often earn more cash back, even once you subtract the fee.
How hard do you want to work to get your cash back? You should consider the flexibility of the card’s redemption options, including how often you can redeem your cash back (some cards only allow you to redeem once a year), how many options you have for redeeming your cash back, how much cash back you need to collect before you can redeem it and whether you can set your account to redeem automatically to save yourself some work.
0-percent introductory offers
Do you intend to transfer a balance onto the card or do you want to finance a new purchase with the card for a few months? If so, you should factor the interest that you can save with a 0-percent introductory APR into the overall value of the card.
Interest rates and penalties are probably not the top priority for consumers who are considering a cash back card. Of course, you should avoid carrying a balance on the card, but you should also apprise yourself of a card’s interest rate before you apply and keep an eye out for rates that a far above average.
Foreign transaction fees
If you are planning to use your cash back card outside of the U.S., you should look for a card with no foreign transaction fee, to spare yourself a 2 to 3 percent fee on all your charges.
In addition to cash back on all your purchases, cash back cards often include benefits that can add to a card’s value depending on how you use them. Common benefits on cash back cards include travel and purchase protections, such as car rental insurance and extended warranties.
How to compare two cash back cards
With the above factors in mind, here is how to compare two cash back cards using the Citi Double Cash vs. American Express Blue Cash Preferred as an example. In comparing the two cards, we need to consider these three questions:
- How much do you spend on credit cards on average?
- Which categories of purchases do you spend the most on?
- How long do you plan to actively use the card?
Comparing rewards values
In comparing two cash back cards, you need to calculate the rewards value for the card. You need to add together the amount that you are likely to spend in the cards’ bonus categories and the sign-up bonus, minus any annual fees. You should use the following formula:
Rewards value = Spend in each category x Rewards rate + Sign-up bonus - Annual fee
For example, in the following table we compare the cash back earned on two cards – the Citi Double Cash card and the American Express Blue Cash Preferred card – for a cardholder who spends $15,900 in a year, with $3,657 allocated to U.S. supermarket purchases and $2,385 allocated to U.S. gas stations and select U.S. department store purchases:
Cash back in the first year ($15,900 spend)
Citi Double Cash
American Express Blue Cash Preferred
|2% x $15,900 = $318||(6% x $3,657) + (3% x $2,385) + (1% x $9,858) + $200 sign-up bonus - $95 annual fee = $494.42|
As you can see, annual fees can be deceiving. Even with a $95 fee, the cardholder comes out ahead with the Blue Cash Preferred card in the first year, thanks to the card’s generous bonus on U.S. supermarket purchases and $200 sign-up bonus.
You also need to consider how long you will hold the card. You can see in our second table that the rewards value drops significantly for the Blue Cash Preferred card in the second year. For the cardholder in our example, the Citi Double Cash card is the better card in the long run:
Cash back in the second year ($15,900 yearly spend)
Citi Double Cash
American Express Blue Cash Preferred
|5 years x (2% x $15,900) = $318||(6% x $3,657) + (3% x $2,385) + (1% x $9,858) - $95 annual fee = $294.55|
Comparing other features
Don’t forget to compare the card’s other features before you choose your cash back card.
You need to consider how easy it is to manage and redeem your cash back with each card. As you can see from the table below, the Citi Double Cash card and the Blue Cash Preferred card are both fairly flexible cash back cards. The Citi Double Cash card’s main drawback is that its rewards can expire if you don’t use the card. The Blue Cash Preferred card, on the other hand, is more limited on redemption options – mostly, you are restricted to redeeming your cash back for statement credits:
Comparing redemption flexibility
Citi Double Cash
American Express Blue Cash Preferred
- Category enrollment required? No
- Do awards expire? Yes, if card isn’t used over 12 months
- Redemption options: Check, statement credit, gift card, deposit into a bank account
- Limits on cash back? No
- Minimum redemption amount: $25
- Category enrollment required? No
- Do awards expire? No
- Redemption options: Statement credit, gift card, merchandise
- Limits on cash back? $6,000 annual cap on 6% and 3 percent bonus categories
- Minimum redemption amount: $25
Also, you should compare benefits – such as travel and purchase protections – that can add significant value to the cards. As you can see, the Citi Double Cash and the American Express Blue Cash Preferred card both offer a large list of additional benefits.
Citi Double Cash
American Express Blue Cash Preferred
- Free concierge service
- Presale for entertainment events
- Car rental insurance
- Purchase protection
- Extended warranty
- Worldwide travel accident insurance
- Price protection
- Damage and theft protection
- Trip cancellation and interruption protection
- Pass on first late fee
- Lost card service
- Lost wallet service
- Travel assistance
- Presale for entertainment events
- Car rental insurance
- Purchase protection
- Extended warranty
- Travel accident insurance
- Return protection
- Travel discounts
- Car purchase discount
Final thought: Consider pairing cards
Who says you have to sign up for just one cash back card? You can sign up for multiple cash back cards and rotate them to earn additional cash back in the bonus categories. Cards such as the Citi Double Cash card and Blue Cash Preferred card make great companions to one another – you can use the Blue Cash Preferred card to earn 6 percent back on your U.S. supermarket purchases, 3 percent back on your U.S. gas purchases and then use the Citi Double Cash card to earn 2 percent back on the remainder of the purchases.
Ways to redeem cash back
The most common redemption options for cash back cards are statement credits, checks mailed to you, bank deposits, prepaid gift cards and charitable donations. To redeem your cash back, you can go online or call the issuer directly to specify in what form you want to receive the cash back. Some issuers will allow you to opt to have the rewards automatically applied each month, while others require you to request the rewards each time you want to use them.
The amount of cash back needed to redeem your rewards varies depending on the specific card and the redemption option. Read on to see what options are available for Discover, Citi, Chase and American Express cardholders.
Redeeming Discover cash back
Discover allows the following redemption options:
- Redeem for gift cards from more than 100 popular brands, starting at $20. At least $5 free will be added to each gift card.
- Pay with rewards at Amazon checkout with no minimum.
- Make a charitable donation, starting at a penny.
- Deposit any amount into your bank account or apply to your Discover bill as a statement credit, starting at a penny.
Discover rewards never expire; however, if your account is closed or not used within 18 months, Discover will credit your account with your rewards balance.
Redeeming Citi cash back
Once your Citi rewards balance equals $25 or more, you can redeem your cash rewards as follows:
- Request a check for at least $25 up to the total cash rewards balance at the time you redeem.
- Redeem for a statement credit to your card account for at least $25 up to the total cash rewards balance at the time you redeem.
- Get a gift card in preset denominations from the available inventory.
- Redeem for a credit to your linked Citi savings or checking account or to a checking account from which you have paid a Citi credit card bill at least two times.
You cash rewards balance will expire if you have not earned cash back from purchases or payments for 12 months. If you close or convert your card account, you must redeem any eligible cash rewards prior to account closure to avoid forfeiting your rewards. If your card account is closed by Citi, you cannot redeem cash rewards and you will forfeit any accumulated cash rewards.
Redeeming Chase cash back
Chase cardholders can redeem cash back rewards at a 1:1 value for gift cards, travel and more through Chase Ultimate Rewards.
- Redeem for cash at any time, for any amount.
- Redeem cash back for a wide variety of gift cards.
Your cash back will not expire as long as your account remains open. However, if Chase closes your account due to fraudulent activities, failure to pay or other reasons, you will immediately lose all rewards.
Redeeming American Express cash back
American Express offers cash back in the form of Blue Cash Reward Dollars, which can be redeemed in the following ways:
- Redeem as statement credits in increments of $25 whenever your available balance is $25 or more.
- At times, AmEx may offer alternative redemption options, such as gift cards or merchandise.
We recommend that you familiarize yourself with the terms and conditions of your credit card’s rewards program. To avoid losing any rewards, be sure to use rewards before they expire or prior to closing your credit card account and pay your bill on time each month.
What is a statement credit?
A statement credit is money issued to your credit card account either, either as a rewards redemption or a reimbursement. While cash back cards typically allow cardholders to redeem their cash back as a statement credit, several cards also offer bonuses in the form of statement credits.
Types of statement credits:
- Rewards redemptions – Cards may let you redeem your cash back, points or miles in the form of statement credits.
- Travel credit – Cards sometimes offer annual travel credits that reimburse cardholders for purchases made directly through the airline or hotel.
- Annual bonus – Several credit cards offer a bonus – sometimes worth $100 or more – each year on your card member anniversary.
- Returns – When you return an item to a store or merchant, you will receive a refund to your credit card account in the form of a statement credit.
Are cash back rewards taxable as income?
Depending on how you acquire the rewards, cash back may be taxable. It basically boils down to whether you spent money to earn the rewards or if you received them for simply opening a bank account.
When your rewards are based on the purchases you make, the Internal Revenue Service considers them nontaxable rebates. They are, in the IRS’ eyes, simply a reduction in the price you paid for goods or services. This has been the IRS’ position since 2002.
However, if you are awarded rewards as an incentive to switch or open a new bank account, those may be taxable. For example, in 2014, a Tax Court judge ruled that a couple who received airline miles for opening a new Citi bank account must count as income the value of the airline ticket they received for redeeming their rewards. According to the court, something was given in exchange for depositing money into the bank, and in this case, the points were equivalent to interest for the money. Subsequently, the receipt of interest, whether as cash or as redeemed mileage rewards, constitutes as taxable income.
Recap & Comparison: Best Cash Back Credit Cards of 2018
|Credit Card||Best For:||Cash Back %||CreditCards.com Rating||Annual Fee|
|Capital One® Quicksilver® Card||Flat-rate cash back||1.5%||N/A||$0|
|Chase Freedom Unlimited®||Cash back with no annual fee||1.5%||3.4 / 5||$0|
|Discover it® Cash Back||Cash back at Amazon.com||5% on rotating categories||4.1 / 5||$0|
|Chase Freedom®||Cash back on rotating categories||5% on rotating categories||3.4 / 5||$0|
|Wells Fargo Cash Wise Visa® Card||Sign-up bonus||1.5%||3.5 / 5||$0|
|Bank of America® Cash Rewards Credit Card||Cash back on gas||3% on gas||3.8 / 5||$0|
|Capital One® Savor® Cash Rewards Credit Card||Restaurants||3% on dining||3.5 / 5||$0|
|Blue Cash Everyday® Card from American Express||Cash back on groceries||3% at U.S. supermarkets||3.3 / 5||$0|
|Citi® Double Cash Card||2% total cash back||2%||4.0 / 5||$0|
|HSBC Cash Rewards Mastercard® credit card||Anniversary bonus||1.5%||3.6 / 5||$0|
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Interested in learning more about each card? We’ve reviewed several cash back credit cards – check them out in our reviews section.
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