The best way to compare cash back credit cards is to focus on 5 factors: initial cash back rewards bonuses, regular cash back earning rates, annual fees, account approval requirements, and redemption rules. Other features, such as APRs, should be a secondary concern in most people’s cash back credit card comparison. It’s usually best to pay a rewards card’s bill in full every month, unless there is a 0% APR promotion for a limited time.
When comparing cash back credit cards, it’s also important to keep your actual spending habits top of mind. Knowing what you spend the most money on will help you make the best cash back choice for your lifestyle.
How to do a cash back credit card comparison, step-by-step:
Pick a few cash back credit cards that suit your lifestyle and spending habits. If you spend more on groceries than restaurants, for example, you’ll want a credit card that gives a high cash back rate on groceries. If you don’t want to bother with categories, look for a flat-rate cash back credit card.
Consider each credit card’s signup perks. Lots of rewards credit cards have initial cash bonuses of $100 or more for spending a certain amount (usually $500 or more) in a limited time. Also, lots of credit cards have intro 0% APR periods. If you plan on making a big purchase and/or carrying a balance for a while with the card, then factor these perks into your decision.
Evaluate each card’s annual fee. Annual fees can eat into your cash back earnings, so you may want to think twice about paying one unless you’re a big-spender looking for a premier option with lots of bonus rewards. At the very least, make sure you are getting better rewards and perks in return for the added cost. After all, there are many cash back credit cards that don’t have annual fees.
Don’t forget about approval requirements. Most of the best cash back credit cards require good credit or better. But there are usually limited options for people with less-than-good credit, too, especially students. Credit requirements are important to consider because you don’t want to waste time on cards that you have very little chance of being approved for.
Read each credit card’s cash back earning and redemption rules carefully. Find each card’s rewards program rules, which are usually on the card issuer’s website. Get familiar with how earning and redeeming works with each card, including what you can redeem for, whether you need a minimum amount of cash back to redeem, and whether some redemption methods are a better value than others. Also, make sure to check when, if ever, the cash back rewards you have earned but not redeemed yet will expire.
If you really want to make things easy for yourself, you can always reference our editors’ picks for the best credit cards on the market at any given time. Plus, if you sign up for a free WalletHub account, you can get personalized recommendations based on your specific financial profile.
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