What to Consider While Choosing a Cash Back Credit Card

Editorial Note:

Updated: November 28, 2022

The draw of a cash back credit card is very appealing. You can earn money back at the end of the month from your purchases, in addition to other benefits. The cash back earned is maximized when you pay off your balance each month. We want you to select the best card available for your needs. Use this article to make sure you’re considering the right factors when choosing a cash back credit card.

Decide on the Type of a Cash Back Credit Card

Not all cash back cards are created equally. There are three main varieties of cash back cards, each of which handles cash back differently. You should pick a credit card that matches your purchasing style.

  • Flat Rate Cash Back Credit Cards

Flat-rate cash back cards are best if you just want your cash back card to work simply. You’re the kind of person who doesn’t want to chase revolving categories or determine which tier a purchase belongs. All you want to do is to make the purchase. For every purchase, a flat-rate cash back card offers the same benefit, usually without an earning cap. The rates may be a little lower on your flat-rate card than on another card. Yet, used for everyday purchases (and paying your bill in full every month), these bonuses can add up.

With a flat-rate card, you should choose a cash back credit card that earns 1.5% or higher. An annual fee would just eat into the cash back benefits, so look for a card without one. Finally, apply for cards which have a sign-up bonus of $100 or more.

  • Tiered Cash Back Cards

Tiered cash back cards are best if you want to get the most out of your frequent purchases. These cards offer higher cash back rates in certain categories while giving lower rates on all other purchases. In many cases, the higher tiers may be capped at a spending limit. If most of your purchases are in a higher rate category, like groceries and gasoline, go for a tiered card. A card that earns 3% on groceries and 2% on gasoline would be more beneficial to you. This would be true up until you hit the spending cap at that level. After this point, all of your purchases in a maxed out category would generate 1% cash back.

If you’re in the market for a tiered card, get one with a top tier of at least 3%. The card’s tiers should match the top two categories that you spend the most in. Your card should either not have an annual fee, or have very high cash back tiers to compensate for it. It should also come with a bonus for signing up of at least $100.

  • Rotating Category Cash Back Cards

Rotating category cash back cards offer high cash back rates for categories that change periodically (usually quarterly). Purchases outside of the specified category qualify for a low flat rate. As is with other high rate cards, the spending in the category is capped. Customers must activate (opt-in) a high rate category before it can be used for the quarter. While this is more work for the customer, it can earn more money.

Rotating category cards work if your annual spending patterns match the featured categories of the cards. This is the only way to maximize the bonuses efficiently. You can boost the effectiveness of the card by using it in conjunction with a flat-rate card for non-featured categories. When selecting a rotating category card, pick a cash-back credit card with no annual fee. Make sure the sign-up bonus is $100 or more. Most importantly, you need to confirm that the feature categories match your spending in terms of type and timing.

Then Consider the Following Factors

Once you have decided which card type(s) you want to apply for, you must assess other factors of the card. This will confirm which card is the most appropriate for your finances and your lifestyle. You should look at:

  • Reward Programs and Rates

What are the requirements of the program? Will your spending in a given category at the top rate be enough to earn substantial rewards? How can you use the remaining cards in your wallet (and their rewards) to strategically increase earnings beyond the cap? These are some of the things you should think about these things before you commit to a card. You must review the credit card terms to see what rules govern the rewards program. In this same agreement, you’ll see the cashback rates stated as well. If the reward program rules are hard for you to follow, choose another program.

  • Annual Fees and APR

While cash-back cards don’t usually charge annual fees, a few of them do. If one of the cards you’re considering charges an annual fee, consider what you’re getting in return. It could be that you’ll use the rewards often enough the fee is barely an inconvenience. You may find the fee is unappealing due to the difficulties you will endure to use the card’s benefits.

Pay attention to the credit card’s APRs. Some cash back cards have 0% or other low APR offers for an introductory period. It is important for you to know what the non-promotional rate is as well. You may not intend to carry a balance, but if you do, it will be subjected to the current APR. Paying interest reduces the effect of cash back.

  • Redemption Options and Flexibility

You can redeem your cash back; it will just be at the convenience of the credit card company. They may only allow you to redeem cash back once it accumulated to a certain amount like $25. You may have to redeem cash back in specific increments. Consider how you’d like to receive cash back. It can come as a statement credit, a bank deposit, a gift card or a check. As the card user, you need to decide if you’re okay getting your cash back on these terms. If not, find a card that allows you to redeem your cash back how you want it.

  • Sign-Up Bonus

You should aim for the highest amount that you can afford to earn. The sign-up bonus should not cost more than you can pay off comfortably during each month of the introductory period. It should not exceed your preplanned spending limit. While the sign-up benefit is more cash in your wallet, remember that it is a one-time payment. Instead, you should consider your long-term card usage and what categories best fit your lifestyle and financial habits.

Choosing a Cash Back Card

List Of Cash Back Credit Cards

All of most cash back credit cards come with $0 annual fee.
Card namePurchase APRGood for
Uber Credit CardUber Credit Card17.24%, 23.24% or 27.99%Uber Purchases
Apple CardApple Card13.24% to 24.24%Apple Store Apple Pay
Amazon Rewards Visa Signature Credit CardAmazon Rewards Visa Signature Credit Card15.74% to 23.74% Stores
Chase United℠ TravelBank Credit CardChase United℠ TravelBank Credit Card17.49% to 24.49%Travel All Purchases
Chase Freedom® Credit CardChase Freedom® Credit Card14.99% to 23.74% Gas
Chase Freedom Unlimited® Credit CardChase Freedom Unlimited® Credit Card14.49% to 26.24%
Capital One® Spark® Classic for Business: 1% Cash Back with No Annual FeeSpark® Classic from Capital One®24.74%
Capital One® Spark® Cash Select for Business: No Annual Fee & 0 % introductory APR for 9 monthsCapital One® Spark® Cash Select for Business14.74% 18.74% or 22.74%
Capital One® Spark® Cash for Business: No Annual Fee & 0 % introductory APR for 9 monthsCapital One® Spark® Cash for Business18.74%
Capital One® Journey® Student Credit CardCapital One® Journey® Student Credit Card26.99%
Capital One ®QuicksilverOne® Card Rewards - 1.5% Cash Back & No LimitsCapital One®QuicksilverOne® Card26.99%
Quicksilver® Credit Card From Capital One®Quicksilver® Credit Card14.74% 22.74% or 26.74%
SavorOne℠ Rewards from Capital One®SavorOne℠ Rewards from Capital One®15.49% - 25.49%Groceries
Savor® Rewards from Capital One®Savor® Rewards from Capital One®15.99% - 24.99% Groceries
Wells Fargo Cash Back College Visa® CardWells Fargo Cash Back College Visa® Card13.15% to 23.15%Groceries Gas
Wells Fargo Cash Wise Visa® CardWells Fargo Cash Wise Visa® Card15.99% to 26.99%
USAA® Preferred Cash Rewards Visa Signature® Credit CardUSAA® Preferred Cash Rewards Visa Signature® Credit Card13.15% to 27.15%
USAA® Cashback Rewards Plus American Express® CardUSAA® Cashback Rewards Plus American Express® Card13.65% to 27.65%Groceries Gas
REI Co-op World MasterCard®REI Co-op World MasterCard®12.99% to 24.99%
U.S. Bank Cash 365™ American Express® CardU.S. Bank Cash 365™ American Express® Card15.99% to 24.99%
SunTrust Travel Rewards Credit CardSunTrust Travel Rewards Credit Card13.24% - 23.24%
SunTrust Prime Rewards Credit Card With Low APR on Balance Transfers & Sign Up Bonus $100SunTrust Prime Rewards Credit Card13.24% - 23.24% 
SunTrust Cash Rewards Credit CardSunTrust Cash Rewards Credit Card13.24% - 23.24%Groceries Gas
PNC CashBuilder® Visa® Credit CardPNC CashBuilder® Visa® Credit Card14.99% to 24.99%
HSBC Cash Rewards Mastercard®HSBC Cash Rewards Mastercard®14.74% 18.74% or 24.74%
First Hawaiian Bank Cash Rewards Credit CardFirst Hawaiian Bank Cash Rewards Credit Card17.99% for Personal Platinum and Personal World Accounts 15.99% for Priority Banking Platinum and Priority Banking World AccountsGroceries Gas
Fidelity® Investments 529 College Rewards® Visa Signature® CardFidelity® Investments 529 College Rewards® Visa Signature® Card15.99%
Fidelity® Rewards Visa Signature® CardFidelity® Rewards Visa Signature® Card15.99%
Discover it® Secured Credit Card: Build Credit and Earn 2% Cash BackDiscover it® Secured Credit Card24.99% Gas
Discover it® Chrome for Students Credit Card - 2% Cash BackDiscover it® Chrome for Students Credit Card14.99% to 23.99% Gas
Discover it® Chrome Gas & Restaurant Credit CardDiscover it® Chrome Gas & Restaurant Credit Card13.99% to 24.99% Gas
Special Connections® MasterCard® with RewardsSpecial Connections® MasterCard® with Rewards11.99% to 21.99% Gas
KC Royals™ Mastercard®KC Royals™ Mastercard®15.99% to 21.99% Gas
Citizens Bank Cash Back Plus™ World MasterCard®Citizens Bank Cash Back Plus™ World MasterCard®16.24% 20.24% or 24.24%
Citi® Double Cash CardCiti® Double Cash Card15.49% to 25.49%
AARP® Chase Credit Card (Up To 3% Cash Back) & Sign Up Bonus $100AARP® Chase® Credit Card17.74% to 24.49% Gas
Deserve® Pro Mastercard®Deserve® Pro Mastercard®17.99% to 24.99%
Deserve® Edu Mastercard® for StudentsDeserve® Edu Mastercard® for Students20.74%
Apply for BMO Harris Bank Cash Back MasterCard®BMO Harris Cash Back Credit Card15.74%17.74% 20.74% or 23.74%Groceries Gas
Bank of the West Cash Back World Mastercard®Bank of the West Cash Back World Mastercard®17.74% to 24.74%Groceries Gas
MLB™ Cash Rewards Mastercard® from Bank of America®MLB™ Cash Rewards Mastercard® from Bank of America®15.24% to 25.24%Groceries Gas
Bank of America® Cash Rewards Credit CardBank of America® Cash Rewards Credit Card13.99% to 23.99%Your Selected Category Groceries Wholesale Clubs
Susan G. Komen® Cash Rewards Visa® Credit Card from Bank of America®Susan G. Komen® Cash Rewards Visa® Credit Card from Bank of America®15.24% to 25.24%Groceries Gas
Blue Cash Preferred® Card from American Express®Blue Cash Preferred® Card from American Express®13.99% to 23.99%Groceries Streaming Services
Blue Cash Everyday® Card from American Express®Blue Cash Everyday® Card from American Express®14.99% to 25.99%Groceries Gas Stores

Be Careful in Choosing a Cash Back Card

Choosing a cash back credit card should be done with careful thought. You let all the factors listed above guide you in selecting a card that meets your needs. The card’s highest rewards categories should match what you purchase most. If they do not match, or if you want to keep the rewards process simple, get a flat-rate card. Your cash back card can be either your primary credit card or a specialty card to help maximize rewards. With your cash back credit card, keep using your good spending habits. Pay off your monthly bill on time, and keep your utilization low.

Roman Zelvenschi

I started a digital marketing agency Romanz Media Group Inc. 12 years ago. Running my own business quickly taught me the importance of cash flow. Making sales was not enough, I had to have money in the bank to pay the vendors, staff and personal bills.

During those early stages of the company I learned how to get creative with debt and to save on interest cost. I paid for everything I could with a credit card to both get more points and to extend the payment date by 25 days (credit card grace period). I then utilized a 0% balance transfer offers to rotate this debt.

I learned a lot during this process and made a lot of mistakes. My key lesson is that the most important part of being financially independent is how much I managed to save, rather than how much I earned. Staying disciplined with savings and tracking spending is not easy and I tried many different methods to stay on track.

FinancialFreedom.Guru is a side project where I and my staff are trying to share the practical knowledge on how to understand finances and to build wealth.

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