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 Premier Credit Card for points - 140,000 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 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 80,000 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, 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 when there’s a promotional offer.

A good 10% cash back credit card is the … read full answerCB2 Credit Card. It offers 10% in Rewards Dollars on purchases at CB2, which can be redeemed for reward certificates.

Here are some good 5% to 10% cash back credit cards on select categories:

• Overall: Blue Cash Preferred - 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
• Travel: Chase Freedom Unlimited - 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)
• Store Credit Card: CB2 Credit Card - 10% back in reward dollars at CB2, 2% on groceries and 1% back on all other purchases
• Top Spending Category: Citi Custom Cash - 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
• Categories of your Choice: U.S. Bank Cash+ - 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

All of these credit cards give 5% to 10% 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 typically 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 an initial bonus of as well as 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).… read full answer

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.

Best Cash Back Credit Cards with No Annual Fee Compared