Hunting for the best cash-back rewards card
Examine your spending habits to reap at least 2 percent rewards
Ask a question.
Dear Cashing In,
What’s the best card for cash back with excellent credit? I don't need airline miles, and I charge about $3,000 a month. – Thomas
With excellent credit, you should be able to receive just about any reward card that you want.
And when it comes to cash-back cards, there are a lot of choices.
People often ask what’s the “best card” for blah blah blah – cash back, airline tickets, spending on groceries, whatever. It’s impossible to answer, because it assumes that there is a single card that is superior for everybody. In reality, different cards are going to be the best for different people, depending on how they spend their money and what type of rewards they like to receive.
However, since you have said that you prefer cash-back cards, that makes the analysis a little easier.
I should start by recommending that you check out CreditCards.com’s WalletUp Web or mobile app, which allows you to enter your monthly spending and other preferences and recommends a card suited to you. It is powered by Wallaby Financial, which offers a similar tool on its website. These are helpful starting points, because this tool gets you thinking about your spending and suggests cards for further evaluation.
As a baseline, I suggest that you consider cards that will give you an average of at least 2 percent back on your purchases. That’s because there are two cards that offer a flat 2 percent back on every purchase: the Citi Double Cash (no annual fee), and the Fidelity Rewards Visa (no annual fee).
So if you are not currently averaging 2 percent back on purchases, just get one of those cards, and you will receive 2 percent back.
Depending on how you spend your money, you could do even better than 2 percent by having a card that gives you extra rewards for spending in certain categories.
There are two types of cash-back cards with category bonuses:
Cards with rotating category bonuses. Typically, cards like this give big bonuses for spending in certain categories, but every quarter the categories change and you have to sign up for the deals. For instance, the Discover It card (no annual fee) gives 5 percent cash back in certain categories every quarter, plus 1 percent back on all else. This quarter, the 5 percent applies to restaurants and movies, and next quarter it is home improvement stores and Amazon. Another popular card like this is Chase Freedom (no annual fee).
Cards with fixed category bonuses. A card like this can make sense if you know you spend a lot on a particular category. For instance, if you spend a lot on groceries, consider a card that gives big bonuses for supermarket spending all year. The American Express Blue Cash Preferred card (annual fee: $75) gives 6 percent at supermarkets (up to $6,000 annually in purchases) and 3 percent at gas stations and certain department stores. There’s also a no-annual-fee version that earns less.
You can see how if you combine a 2 percent card with another card that has category bonuses, you really have a lot of potential to average more than 2 percent back in rewards.
For $3,000 in spending a month, that’s at least $720 back every year on cards that probably have no annual fees. Sounds pretty good to me!
Meet CreditCards.com's reader Q&A experts
Does a personal finance problem have you worried? Monday through Saturday, CreditCards.com's Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.
- Will I lose elite status if I transfer my airline card's balance? – An airline credit card holder won't lose miles earned toward elite status if the card's balance is transferred to a lower interest credit card ...
- When spending big, watch for category bonus limits – If you're planning on spending a lot on a card in a certain category, make sure you know the limit to what you can earn so you can maximize your rewards ...
- 5 times you should call your bank about your card – If you need certain services done with your card or have questions redeeming your rewards, calling your bank might be best ...