Are cash back credit cards worth it?

The difference between cash back and points is that the former is the most versatile type of credit card rewards, as it can be redeemed for anything, and there’s never any doubt about how much it’s worth. Points, on the other hand, have a value set by the credit card company and tend to be worth the most when redeemed for travel. Credit card companies won’t always clearly disclose points values, and those values can change over time. It’s possible that points could be worth 1 cent apiece one day and 0.8 cents each the next.… read full answer

You can spend points for many different things. Usually, you can trade them for travel, gift cards, unique experiences, charitable donations or even cash. There are no restrictions on what you can use cash for. You can typically redeem cash back for a statement credit, paper check, or direct deposit to a bank account. One thing credit card shoppers should watch out for are cards advertised as offering cash back that really provide points. For example, the Chase Freedom Flex℠ offers “5% cash back” in certain bonus categories. But what it actually gives is 5 Chase Ultimate Rewards points per $1, which cardholders can then trade for cash back at a rate of 1 cent each.

Cash Back vs Points:

• Good cards overall: Citi® Double Cash Card – 18 month BT offer for cash back. Chase Sapphire Preferred® Card for points.
• Initial bonus: Bank of America® Customized Cash Rewards credit card - $200 for spending $1,000 in the first 90 days. IHG® Rewards Club Premier Credit Card for points - 150,000 points for spending $3,000 in the first 3 months.
• Earning rate: Usually at least 1% cash back or 1 point per $1 spent.
• Devaluation: Points can be devalued by the issuer, while cash back can’t.
• Redemption options: Statement credit, check or deposit for cash. Travel, merchandise, gift cards, cash and more for points.
• When it’s the best choice: Points for frequent travelers. Cash back for everyone else.

Let’s take a look at two high-profile cards in a battle of cash back vs. points.

Citi Double Cash Card tops the cash back offerings with 2% cash back on all purchases and an introductory APR of 0% for 18 months on balance transfers, with a 3% (min $5) balance transfer fee. It also chases a $0 annual fee and requires good credit to get.

But if you’re a frequent traveler, Chase Sapphire Preferred is a more attractive option. It gives 2 points / $1 spent on travel and dining purchases and 1 point / $1 on everything else. It has an initial bonus of 100,000 points for spending $4,000 in the first 3 months. This card’s points are worth 1 cent each toward cash back or gift cards or 1.25 cents each toward travel. There’s a $95 annual fee and the card requires good credit.

For both cash back and points cards, you can expect to lose your rewards if your account closes for any reason. Most cards don’t let your rewards expire over time. But Citi Double Cash Card’s cash back expires if you don’t use your card for 12 months. And on points cards alone, your points can be devalued if the issuer decides to charge more points for its rewards. So, frequent redemption is essential.

So, the bottom line is that frequent travelers should check out points cards. Otherwise, cash is king.

There aren’t any 10% cash back credit cards, at least none offering that much back on all purchases. But you can get 10% cash back from some credit cards in specific spending categories or thanks to promotional offers.

A good 10% cash back credit card is the CB2 Credit Card; it offers 10% in Rewards Dollars on purchases at CB2, that can be redeemed for reward certificates.… read full answer

The best way to get 10% cash back from a credit card is by earning an initial rewards bonus. For example, many cards offer cash back bonuses for spending a certain amount in a given time and that often amasses to more than 10% of the spending requirement. But there are plenty of credit cards with good sign-up bonuses, especially if you don't limit yourself to cash back.

In terms of more consistent cash back rates, the highest on the market is the Blue Cash Preferred® Card from American Express’s 6% cash back on select U.S. streaming subscriptions and at U.S. supermarkets. For a high rate on all purchases, the best offer is the Citi® Double Cash Card – 18 month BT offer, which gives up to 2% cash back cash back (half when you buy and the other half as you pay for those purchases).

Here are some good 2% to 10% cash back credit cards on select categories:

• Good for groceries: Blue Cash Preferred® Card from American Express. 20% cash back on Amazon.com purchases for the first 6 months (up to $200 back), 6% cash back at U.S. supermarkets (up to $6,000 spent per year), 6% back on select U.S. streaming subscriptions, 3% back at U.S. gas stations and on transit, and 1% back on all other purchases, earned as statement credits. $150 statement credit for spending $3,000 in the first 6 months.
• Good for gas: USAA® Cashback Rewards Plus American Express® Card. 5% cash back on gas and military base purchases (up to $3,000 spent per year), 2% cash back at supermarkets (up to $3,000 spent per year), and 1% back on all other purchases.
• Good cash bonus: Chase Freedom Flex℠. $200 for spending $500 in the first 3 months. 5% cash back on grocery store purchases for the first year (up to $12,000 spent), 5% cash back on up to $1,500 spent per quarter in bonus categories (which change every quarter and require activation), 5% cash back on travel through Chase, 3% back at restaurants and drugstores, and 1% back on all other purchases.
• Good overall cash back rate: Citi® Double Cash Card – 18 month BT offer. 2% cash back on all purchases, half at the time of purchase and the other half when you pay off the purchase.
• Good store card rate: CB2 Credit Card. 10% back in reward dollars at CB2, 2% on groceries and 1% back on all other purchases.

The highest cash back rates all have caps. But you’ll almost always earn at least 1% back when you make a purchase.

Also note that some cards with high cash back earning rates have bonus categories that change every few months. Others have bonus categories that stay the same. In many cases, cards with lower but unlimited rates, like Citi Double Cash Card, will give more value in the long run.

The best cash back credit card with no annual fee is Chase Freedom Unlimited®. In addition to a $0 annual fee, Chase Freedom Unlimited offers an initial bonus of $200 for spending $500 in the first 3 months as well as 1.5 - 5% cash back on purchases. More specifically, cardholders earn 5% cash back on grocery store purchases for the first year (up to $12,000 spent), 5% cash back on travel through Chase, 3% cash back at restaurants and drugstores, and 1.5% back on all other purchases.… read full answer

Best Credit Cards with No Annual Fee and Cash Back

• Best for Travel: Chase Freedom Unlimited®
• Best for Flat Rate Rewards: Citi® Double Cash Card – 18 month BT offer
• Best for Dining: Capital One SavorOne Cash Rewards Credit Card
• Best for Fair Credit: Upgrade Visa® Card with Cash Rewards
• Best for No Credit: Petal® 2 Visa® Credit Card
• Best for Bad Credit: Bank of America® Customized Cash Rewards Secured Credit Card
• Best for Students: Bank of America® Customized Cash Rewards Credit Card for Students
• Best for Business: Ink Business Cash® Credit Card

Cash back gives flexibility and freedom when it comes to earning and using rewards. You’ll get a percentage back on every purchase, and you can spend your rewards however you like. Below, you can get an even better sense of how much the top cash back credit cards with no annual fee could save you.

Best Cash Back Credit Cards with No Annual Fee Compared