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Choosing the Perfect Cash Back Credit Cards: Turning Everyday Spending into Real Savings

Last Updated on October 21, 2023 by SPN Editor

Cash back credit cards are the preferred choice for many consumers, frequently outpacing other credit card types. How do these cards function, and are they superior to reward credit cards?

Cashback serves as an enticing feature that significantly influences our purchasing decisions. This incentive rewards users when they make purchases or settle their bills. Cashback, as a feature of both credit and debit cards, enables cardholders to earn a percentage of their eligible expenditures, typically ranging from 0.25% to 5%.

You can then redeem these rewards as checks, bank deposits, or statement credits, providing you with a way to save money on your purchases. For instance, if your card offers 1% cash back on all your transactions, making $1,000 in purchases could mean getting $10 back, just for using the card.

Different Types of Cash Back Credit Cards

There are three main categories of cash back credit cards, each with its unique features:

  1. Flat-Rate Cash Back Credit Cards: These cards offer a consistent cash back percentage on all types of purchases. You can typically redeem your cash back as statement credits, checks, bank deposits, or even for travel bookings, gift cards, or shopping deals. Some popular flat-rate cash back cards include:
    • Citi Double Cash Card: It earns 1% cash back when you make a purchase and another 1% when you pay it off, with an introductory 0% APR on balance transfers for 18 months (APR: 19.24% – 29.24% variable).
    • Capital One Quicksilver Cash Rewards Credit Card: This card provides a flat cash back rate of 1.5% and offers a 0% introductory APR on purchases and balance transfers for 15 months (APR: 19.99% – 29.99% variable).
  2. Tiered Cash Back Credit Cards: These cards offer different cash back rates for specific categories of purchases. Common categories include travel, dining, gas, grocery, and department stores. While these cards can yield higher cash back percentages, they may have category limits and restrictions. Examples of tiered cash back cards are:
    • Chase Freedom Unlimited: It offers 5% cash back on travel purchases through Chase, 3% back at restaurants and drugstores, and 1.5% back on all other purchases.
    • Blue Cash Everyday® Card from American Express: This card provides 3% cash back on up to $6,000 in annual spending at U.S. supermarkets and 3% back at U.S. gas stations.
  3. Rotating Category Cash Back Credit Cards: These cards have 5% bonus categories that change every quarter. Popular categories include groceries, gas stations, home improvement stores, and even Amazon and Uber purchases. It’s important to activate these bonus categories quarterly to earn the additional rewards, but keep in mind they often have spending limits. Notable rotating category cards include:
    • Discover it® Cash Back: It features 5% cash back on everyday purchases at different places each quarter, such as Amazon.com, grocery stores, restaurants, and gas stations.
    • Bank of America Customized Cash Rewards credit card: This card lets you pick a 3% cash back category monthly and earn 2% back on up to $2,500 in quarterly purchases at grocery stores and wholesale clubs.

How to Compare Cash Back Credit Cards

Choosing the right cash back credit cards can be overwhelming, so follow these steps to make the process easier:

  1. Calculate Your Earning Potential: Consider your spending habits and find a card that matches where you spend the most. Different cards offer various cash back rates based on categories and types of purchases. For example:
    • Flat-rate cards: They typically offer 1% to 2% cash back on all purchases, although you may occasionally find promotions with higher rates. A flat-rate card can be valuable if your spending is evenly distributed across various categories or if you prefer not to keep track of which card offers the most cash back for specific purchases.
    • Tiered cash back cards: These credit cards provide different cash back rates on specific categories, such as travel, dining, gas, and grocery stores.
    • Rotating bonus category cards: Most of these cards offer a base 1% cash back rate, along with bonus categories that change every quarter, usually providing 5% cash back. This is one of the highest cash back rates available on a credit card. Keep in mind that these categories often have limits on how much you can earn each quarter.
  2. Factor in Sign-Up Bonuses: Look for cards with sign-up bonuses, but be mindful of the spending requirement to earn them. Ensure that the bonus aligns with your normal spending habits.
  3. Subtract Annual Fees: Some cash back cards have annual fees, so weigh whether the rewards and benefits justify the cost. If not, you might be better off with a no-fee card.
  4. Understand Cardholder Benefits: Beyond rewards, some credit cards offer additional perks like purchase protection, extended warranty coverage, concierge service, and travel insurance. Familiarize yourself with these benefits to maximize your card’s value.

Some of the Best Cash Back Credit Cards in the US:

Credit CardBest FeatureCredit NeededIntro BonusAnnual FeeAPR Range
Discover it®Cash back on everyday purchases670-850Discover will match all the cash back you’ve earned at the end of your first year$017.24% – 28.24% Variable
Discover it® ChromeGas cash back670-850Discover will match all the cash back you’ve earned at the end of your first year$017.24% – 28.24% Variable
Instacart Mastercard®Grocery rewards670-850Get a free year of Instacart+ and a $100 Instacart credit automatically upon approval. Membership auto-renews.$020.24% – 28.99% Variable
Chase Freedom Unlimited®Flexible cash back rewards670-850Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year) – worth up to $300 cash back. That’s 6.5% on travel purchased through Chase Ultimate Rewards®, 4.5% on dining and drugstores, and 3% on all other purchases$020.49% – 29.24% Variable
Capital One SavorOne Cash Rewards Credit CardCash back on dining with no annual fee670-850$200 Cash Back after you spend $500 on purchases within 3 months from account opening$019.99% – 29.99% (Variable)
Blue Cash Everyday® Card from American ExpressCash back on everyday purchases670-850Earn a $200 statement credit after you spend $2,000 in purchases on your new Card within the first 6 months.$019.24% – 29.99% Variable
Capital One SavorOne Cash Rewards Credit CardCash back on dining with no annual fee670-850$200 Cash Back after you spend $500 on purchases within 3 months from account opening$019.99% – 29.99% (Variable)
Citi Custom Cash® CardSimple bonus category redemption580-850Earn $200 in cash back after you spend $1500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® points, which can be redeemed for $200 cash back$019.24% – 29.24% (Variable)
Capital One Quicksilver Cash Rewards Credit Card1.5% flat-rate cash back on purchases670-850One-time $200 cash bonus after you spend $500 on purchases within 3 months from account opening$019.99% – 29.99% (Variable)
Bank of America® Customized Cash Rewards credit cardGrocery and gas spending670-850$200 online cash rewards bonus after you make at least $1,000 in purchases in the first 90 days of account opening$018.24% – 28.24% variable
The credit score ranges are provided as an indicator of the credit eligibility typically required for each card. The actual credit approval may vary based on individual circumstances.

How to Maximize Your Cash Back Credit Cards Rewards

To get the most out of your cash back credit cards, follow these tips:

  • Avoid Carrying a Balance: Always pay your credit card balance in full each month. Carrying a balance will lead to paying more in interest than you earn in cash back, potentially resulting in credit card debt.
  • Choose a Card That Aligns With Your Spending: Select a card with bonus categories that match your typical expenses. This can significantly boost your cash back earnings.
  • Look for Achievable Sign-Up Bonuses: While sign-up bonuses are enticing, ensure you can meet the spending requirements without overspending.
  • Earn Extra Cash Back: Some cards offer additional cash back for referring new cardholders or adding an authorized user.
  • Utilize Cardholder Benefits: Many credit cards provide benefits beyond their rewards program, such as extended warranty coverage, purchase protection, and more.
  • Ask for a Retention Offer: If you’re considering canceling your card, contact your issuer to inquire about potential retention offers. These could include waiving or reducing the annual fee, but they often require negotiation. Having a higher credit score can improve your chances of success.

Cash back credit cards offer an opportunity to earn rewards on your everyday spending. To make the most of these cards, choose one that aligns with your spending habits, pay your balance in full each month, and leverage additional benefits.


Q1: How does a cash back credit cards work?

Cash back credit cards are a type of credit card that rewards you with a percentage of the money you spend. When you make purchases or pay bills using the card, you earn these rewards, typically a small fraction of your spending. You can later redeem these earnings as cash. For instance, if your card offers 1% cash back and you spend $1,000, you’ll receive $10 as a reward.

Q2: How can I maximize my cash back rewards without spending more?

You can increase your cash back rewards without increasing your spending:

  • Always pay your balance in full to avoid interest charges.
  • Choose a card that matches your typical spending habits for maximum rewards.
  • Look for sign-up bonuses that you can achieve without overspending.
  • Some cards offer extra cash back for referring friends or adding an authorized user.
  • Make the most of other card benefits, such as purchase protection and extended warranty coverage.
  • If you’re considering canceling your card, try negotiating with your issuer for retention offers. Your success may improve with a higher credit score.

Q3: What options do I have for redeeming cash back rewards?

Cash back rewards are commonly redeemable as statement credits, checks, or bank deposits. Some cards offer alternative redemption choices like travel bookings or gift cards. However, each card comes with its unique rewards program, so read the terms thoroughly to understand your redemption options.

Q4: What are the advantages of cash back credit cards?

  • Cash back rewards are straightforward to comprehend, e.g., 1% back means $1 for every $100 spent.
  • Redeeming cash back is typically uncomplicated, often requiring a specific reward amount.
  • A variety of bonus categories offer opportunities for additional rewards.
  • Referring friends can earn you sign-up bonuses, and cardholder benefits add value.

Q5. What are the disadvantages of cash back credit cards?

  • The best cash back credit cards usually require good to excellent credit.
  • Sign-up bonuses may come with spending requirements.
  • Monitoring bonus categories and their rates can be time-consuming.
  • Cash back card cards rewards may have a fixed point value, limiting their potential.
  • These cards may offer fewer perks compared to travel rewards cards, and some have annual fees.

Q6: Are cash back credit cards worth considering?

Cash back credit cards can be worthwhile if you pay off your balance in full each month. Evaluate annual fees, bonus category rates, and sign-up bonuses when selecting a card, and ensure that the rewards program aligns with your spending habits.

Q7: Do cash back rewards have an expiration date?

The rules regarding cash back rewards expiration may vary, so it’s essential to review your account’s terms and conditions. Some issuers allow you to retain rewards as long as your account remains active. However, redemption guidelines may differ, so it’s wise to use your rewards promptly to preserve their value.

Q8: Can I obtain a credit card with poor credit?

Cash back credit cards typically require good to excellent credit. If you have poor credit, consider a secured credit card as a means to rebuild your credit. Maintain timely bill payments and a low balance to improve your credit score.