Yes, cash back credit cards are worth it if you pay off your balance each month. It is also worth noting that the best cash back credit cards with the highest rewards rates and signup bonuses sometimes have annual fees. In that case, you need to be sure that what you earn will offset the cost of the annual fee (and then some). For cards that have no annual fees, the cash back is free money as long as you don’t get charged interest.
Here’s what you should know before getting a cash back credit card:
Many cash back credit cards let cardholders earn more than the cost of the annual fee. However, what you really want is a card that allows you to earn cash back as efficiently as possible.
Some credit cards give a flat cash back rate for all purchases. The highest flat cash back rate is 2.5%.
There are also cash back cards that will reward you more for bonus categories, like gas, groceries, or dining. For bonus categories, you can earn up to 6%.
The best cash back credit cards usually require good credit or better for approval, but there are strong offers for people across the entire credit score spectrum.
Wherever you spend the most money on your credit card will determine whether a flat-rate cash back card is better for you, or a card that’ll earn you bonus cash back in specific categories.
How many credit cards you want to have in total matters, too, as does your credit standing. Your credit score and debt-to-income ratio play an important part on the credit card offers you’ll be able to get. The better your credit standing is,the more credit card options you’ll have and the more worthwhile they’ll be.
If you’re looking for a new card, check out the best cash back credit cards and find the one that’s most suitable for you. However, make sure to use a cash back credit card responsibly for it to be worthwhile in the long run. No credit card, regardless of the cash back rate, is worth it if you overspend and find yourself in debt with a damaged credit score.
You can also use WalletHub’s free CardAdvisor tool to find a card that best suits your needs.
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.
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 balance transfer fee of 3% intro fee ($5 min) for each transfer in first 4 months, after that 5% ($5 min) for each transfer. 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 5 points per $1 spent on travel purchased through Chase, 2 points per $1 on all other travel purchases, 3 points per $1 on dining and online grocery purchases, 3 points per $1 on select streaming services, and 1 point per $1 on all other purchases. It has an initial bonus of 60,000 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.
No, there aren’t any 10% cash back credit cards currently, at least none offering that much back on all purchases. From time to time, it’s possible to find a credit card offering 10% cash back in specific spending categories or when there’s a promotional offer. But this is extremely rare. However, there are several credit cards on the market that offer high cash back rates. … read full answer
Here are some good credit cards with high cash back rates:
Blue Cash Preferred offers 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. With this card, you also earn $350 statement credit for spending $3,000 in the first 6 months.
Chase Freedom Unlimited offers 5% cash back on travel through Chase, 3% back at restaurants and drugstores, and 1.5% back on all other purchases (plus an additional 1.5% cash back on everything, up to $20,000 spent the first year).
Citi Custom Cash offers 5% cash back in your top eligible spend category each billing cycle (up to $500 spent, 1% back thereafter), as well as 1% back on all other purchases. Plus, this card gives you $200 for spending $1,500 in the first 6 months.
U.S. Bank Cash+ offers 5% cash back on two categories of your choice (up to $2,000 each quarter), 5% back on prepaid air, hotel and car reservations booked in the Rewards Travel Center, 2% on your choice of one everyday category (like gas stations, grocery stores or restaurants) and 1% on all other purchases. Plus, this card gives you $200 cash back for spending $1,000 in the first 120 days.
CB2 Credit Card offers 10% back in reward dollars at CB2, 2% on groceries and 1% back on all other purchases.
All of these credit cards give at least 5% cash back on certain expenses. Some of those categories may change quarterly or yearly, require activation and usually have a cap. However, 10% cash back credit card offers are extremely rare and they’re usually available for a limited time only. There’s never been a general-purpose credit card that rewards users with 10% cash back on all purchases.
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 1.5 - 5% cash back on purchases. More specifically, cardholders earn 5% cash back on travel through Chase, 3% back at restaurants and drugstores, and 1.5% back on all other purchases (plus an additional 1.5% cash back on everything, up to $20,000 spent the first year).
Best Credit Cards with No Annual Fee and Cash Back
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.… read full answer
Best Cash Back Credit Cards with No Annual Fee Compared
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