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What’s the best low-hassle cash-back card?

Summary

If you travel a lot by car, airline reward cards won’t do you much good. You’ll be better off with cash-back cards that offer rewards in driver-friendly categories

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Dear Cashing In,

I’m looking for a great generic or cash-back credit card. I have excellent credit and travel frequently but mostly by car, so I think I’d prefer a card that earns rewards for all spending, not just travel. I know the airline credit cards give good bonuses but I don’t fly much, so the reward that makes the most sense for me seems to be cash. With cash back you’re never limited in how you spend your points and right now, I need to save money and don’t want to jump through hoops or pay steep fees to do it. What are the best cash-back cards out there now? — Cash Strapped

Dear Cash Strapped,

A consistent 1 percent cash back is a solid return for a low- or no-fee card, but before we get into those, I should add that cards with revolving categories can earn up to 5 percent back. You do have to remember to register for the new categories every quarter though, and you may (understandably) consider that a hoop. On the other hand, 5 percent on ordinary expenses such as gas and groceries is a return on investment that’s hard to ignore if you’re truly cash-strapped. So it might be worth setting up an alert on your smartphone if you have one.

Chase Freedom and Discover are two well-known no-fee cards that offer 1 percent cash back on all purchases and 5 percent (up to $1,500) on rotating categories. Right now, both cards are focusing on summer road trips. You can get 5 percent cash back at gas stations, theme parks and Kohl’s on the Freedom card. Discover is offering 5 percent back at stand-alone gas stations through September.

If you don’t want to keep track of rotating categories, a couple of no-fee cards give you bonus points all the time for groceries and gas. The BankAmericard Cash Rewards Visa offers 3 percent cash back on gas and 2 percent back on groceries for the first $1,500 of combined grocery and gas purchases you make each quarter. You earn 1 percent back on other purchases. The American Express Blue Cash Everyday card has no annual fee and also earns 3 percent on groceries (within limits, which I’ll get to in a moment), 2 percent on gas and select department store purchases and 1 percent on everything else.

The premium version of that card, Blue Cash Preferred, has a $75 annual fee and earns a generous 6 percent cash back on supermarket purchases, 3 percent back on gas and select department store purchases and 1 percent on everything else.

If you’re looking for a card to use for those kinds of purchases on a regular basis, you might want to do a quick calculation to see if that $75 fee will pay for itself. If you spend at least $50 per week on groceries ($2,600 in a year), for example, the extra 3 percent cash back amounts to $78 for the year — enough to cover the annual fee. Be aware, however, that American Express has a cap of $6,000 on groceries eligible for rewards, which means any supermarket purchases you make over that limit will only earn 1 percent cash back.

See related: Chart: Compare and find the best gasoline rewards card for you, Keep things simple with a cash back credit card, Cash back or miles? Ask yourself these 6 questions first

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Published: April 30, 2013

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Credit Card Rate Report Updated: April 23rd, 2019
Business
15.32%
Airline
17.50%
Reward
17.56%
Cash Back
17.60%
Student
17.79%

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