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 Credit 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.
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% 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.
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. $200 bonus for spending $1,000 in the first 3 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.
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 2 points / $1 spent on travel and dining purchases and 1 point / $1 on everything else. 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.
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 sure the cash back that you earn will offset the cost of the annual fee (and then some). For cash back cards that have no annual fees, the cash back is free money as long as you don’t get charged interest.… read full answer
Many cash back credit cards let cardholders earn more cash back 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 cash back 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% cash back.
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. If you’re looking for a new cash back 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.
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