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.
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
The best way to redeem the cash back from a credit card is usually via statement credit, but it depends on the card and its issuer.
Other ways you can redeem the cash back are as a check, in the form of gift cards, merchandise, charity or special experiences.
You can usually do this online, on your bank's website or by phone once you have enough cash back available. Most credit cards will have you redeem it in certain denominations (e.g. multiples of $25).… read full answer
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 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 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 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.
Yes, cash back credit cards are worth it if the value of the cash back is greater than the cost of the card. 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 surethat what you earn will offset the cost of the annual fee (and then some). For cards that have … read full answerno annual fees, the cash back is free money as long as you don’t get charged interest.
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. There are also cash back cards that will reward you more for bonus categories, like gas, groceries, or dining. The highest flat cash back rate is 2.5%. 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. The better your credit is, and the more income you have relative to your debt, 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 worth it for you. But remember, as with any card, you need to be 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.
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