The best first credit card for cash back is the Capital One QuicksilverOne Cash Rewards Credit Card because it offers 1.5% cash back on all purchases and is available to applicants with limited credit. This means the odds of approval are good even for people who are new to credit. Capital One QuicksilverOne does come with a modest $39 annual fee, so be sure you’ll spend enough on the card every year for rewards earnings to cover the cost.
Your first cash back credit card can be an asset, if you don’t carry a balance from month to month. Cash back cards for first-time cardholders rarely offer introductory 0% APRs on purchases, and the regular interest rates tend to be pretty high. That means interest charges could easily wipe out any rewards earned and quickly diminish the card’s value.
The best first credit card for students is the Bank of America® Customized Cash Rewards Credit Card for Students because it reports to the main credit bureaus monthly, has a $0 annual fee, and only requires limited credit for approval. Plus, Bank of America Cash Rewards for Students gives 1 - 3% cash back on all purchases. And its intro bonus of $200 for spending $1,000 in the first 90 days is the cherry on top for students getting their first credit card.… read full answer
The biggest feature to look for on your first credit card is credit bureau reporting because that will help you build your credit score, assuming you use the card responsibly. Fortunately, nearly all credit cards from major issuers report to credit bureaus. You’ll also want to look for a card with no annual fee because newcomers to credit shouldn’t need to pay for the right to build their credit history.
All of these credit cards give 3% cash back, or more, on some types of purchases. There is no credit card currently on the market that gives 3% cash back on all purchases. The best flat-rate cash back credit cards typically give 2% cash back on all purchases.
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 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.
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