Are cash back credit cards worth it?

Cash back 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 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 card 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:

• Best cards: Citi Double Cash for cash back. Chase Sapphire Preferred for points.
• Best initial bonus: Bank of America Cash Rewards for cash back - $200 for spending $500 in the first 90 days. Marriott Premier Plus Credit Card for points - 75,000 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 tops the cash back offerings with 2% cash back on all purchases and an introductory APR of 0% for 18 months on balance transfers. It also chases a $0 annual fee and requires good credit to get.

But if you have excellent credit and you’re a frequent traveler, Chase Sapphire Preferred is a more attractive option. It gives 2 points per $1 spent on travel purchases and 1 on everything else. It has an initial bonus of 50,000 points for spending $4,000 in the first 3 months. Preferred’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, which is waived the first year. The card requires excellent 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’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.

The best way to get 10% cash back from a credit card is by earning an initial rewards bonus. For example, a bonus of $150 cash back for spending $500 within 3 months of opening an account – a deal several cards currently offer – is 10% back three times over. The Capital One Quicksilver and SavorOne cards have that 30% cash back initial bonus offer, as do the Chase Freedom and Freedom Unlimited cards. They all have $0 annual fees.… read full answer

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. For example, the NHL Discover it card offers 10% off ShopNHL.com and NHL.TV purchases. And Discover it Cash Back offers 5% back in bonus categories and gives double rewards the first year, for a total of 10% cash back on some purchases.

In terms of more consistent cash back rates, the highest on the market is Amex Blue Cash Preferred’s 6% cash back on $6,000 spent per year at U.S. supermarkets. For a high rate on all purchases, the best offer is Citi Double Cash, which gives 2% cash back.

Here are the best 2% to 10% cash back credit cards:

• Best for groceries: Amex Blue Cash Preferred. 6% cash back on the first $6,000 per year at U.S. supermarkets, unlimited 3% at U.S. gas stations and select U.S. department stores and 1% on everything else. $200 for spending $1,000 in the first 3 months. In 2016, Blue Cash Preferred and Blue Cash Everyday offered a limited-time promotion for 10% cash back on U.S. wireless telephone service. But it’s long gone now.
• Best for gas: Amex Cashback Rewards Plus. 5% cash back on the first $3,000 per year in gas or military purchases, 2% on the first $3,000 at supermarkets and 1% on everything else.
• 10% first year rate: Discover it Cash Back. 5% cash back on the first $1,500 spent in quarterly categories and 1% on everything else. 10% cash back the first year, because rewards get doubled at the end of the year.
• Best for hockey fans: NHL Discover it. 5% cash back on the first $1,500 spent in quarterly categories, 1% on everything else. Rewards doubled at end of first year only for total of 10% cash back. 10% Discount at ShopNHL.com and NHL.TV.
• Best cash bonus: Chase Freedom. $150 for spending $500 in the first 3 months. 5% cash back on your first $1,500 spent in quarterly categories, 1% on everything else.
• Best for travel: Capital One Venture. 50,000 miles for spending $3,000 in the first 3 months ($500 in travel). 2 miles per $1 on all purchases.
• Best overall cash back rate: Citi Double Cash. 2% cash back on all purchases, 1% at the time of purchase and 1% when the purchase is paid off.
• Best store card rate: Overstock.com Credit Card. 8% back in Club O rewards on Overstock purchases, 2% Club O rewards on gas and groceries, 1% Club O rewards on everything else.

The highest cash back rates all have caps. But you’ll 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, will give more value in the long run.

The best credit card with no annual fee and cash back is the Citi® Double Cash Card, which gives unlimited 2% cash back on all purchases. But there are plenty of other great contenders. Some of them are the Capital One Quicksilver Cash Rewards Credit Card, the Wells Fargo Cash Wise Visa® card… read full answer, the Blue Cash Everyday® Card from American Express and the Discover it® Student Cash Back card.

The price you pay for no annual fee and cash back is a good or excellent credit score needed for high approval odds. The one exception is the Discover it® Secured card, which people with bad credit can get, as long as they’re willing to pony up a $200 refundable security deposit.

Here are the best credit cards with no annual fee and cash back:

• Citi® Double Cash Card: $0 annual fee, unlimited 2% cash back, no initial bonus. 0% for 18 months introductory APR for balance transfers.
• Capital One Quicksilver Cash Rewards Credit Card: $0 annual fee, unlimited 1.5% cash back, $200 cash bonus for spending $500 in 3 months. 0% for 15 months introductory APR for purchases.
• Discover it® Student Cash Back: $0 annual fee, up to 5% cash back in certain categories that change every three months, 1st year’s cash back doubled. 0% for 6 months intro APR for purchases and 10.99% for 6 months for balance transfers.
• Wells Fargo Cash Wise Visa® card: $0 annual fee, unlimited 1.5 - 1.8% cash back, $150 bonus for spending $500 in 3 months. Introductory APR of 0% for 15 months for purchases and 0% for 15 months on qualifying balance transfers.
• Discover it® Secured: $0 annual fee, 1 - 2% cash back, 1st year’s cash back doubled.
• Blue Cash Everyday® Card from American Express: $0 annual fee, 3% cash back on first $6,000 spent on groceries per year, 2% cash back at gas stations and select department stores, and 1% cash back on all other purchases. $100 bonus for spending $1,000 in the first 6 months. 0% for 15 months intro APR for purchases.

Cash back gives flexibility and freedom when it comes to earning rewards. You’ll get a percentage back on every purchase, and you can spend your rewards however you like. Most of these cards offer great financing options as well. So, pick a card based on whatever secondary benefits work best for you.