Cash Back Credit Cards

Compare the Best Cash Back Credit Cards

Cash back credit cards are among the most popular types of rewards cards. And for good reason—the card issuer offers cash back as an incentive for your spending, so you’ll be getting money back with every purchase. Moreover, the money you earned from this incentive is tax-free. Even better, a majority of cash back cards have no annual fee—so you won’t pay for the privilege of earning rewards.

Cash back credit cards don’t pay the returns in physical cash. Instead, you’ll have your rewards paid out in forms like electronic bank deposits.

Find the Right Cash Back Credit Card for You

When it comes to finding the right cash back credit card, it pays to do your homework. Picking the right card and using it strategically could earn you hundreds of dollars annually and probably thousands over a lifetime. Cash back credit cards fall into three categories:

  • Flat-rate. A flat-rate cash back credit card gives you a single cash back rate for all the purchases you make, irrespective of the category. This card may come in handy if your spending is distributed evenly throughout multiple categories, or you don’t want the hassle of multiple reward rates.
  • Tiered-rate. With tiered cash back credit cards, you receive different cashback rates for various categories. They offer higher cash back rates in specific categories while also giving a flat cash back rate on other purchases. High-earning categories in tiered-rate cards include groceries, dining, gas station or travel purchases.
  • Rotating category. Rotating category cash back credit cards offer higher reward rates for specific categories during certain periods of the year. Reward rates are often rotating, and cash bonuses must be activated quarterly. You must keep an eye on the card’s cashback calendar to maximize your earnings.

Benefits of Cash Back Credit Cards

Cash back credit cards can help you earn rewards on spending, simplify your finances and enjoy perks that debit cards don’t offer. Check out some of the benefits of cash back credit cards.

Cash Rewards

Different cash back cards have different earning schemes, but the principal is easy to understand—cash back for every dollar spent. Some cards will give rewards at a flat rate, like 2% back on all purchases. While others will give you higher levels of cash back on specific categories.

No Annual Fee

Most cash back credit cards don’t charge an annual fee, so you won’t sacrifice your earned rewards. Your card also remains fee-free even when you choose to use a different card in the future.

Sign-Up Bonuses

Most cash back credit cards provide sign-up bonuses if you meet certain minimum spending requirements within the first few months of activating your card.

0% APR Offers

Some cash back credit cards offer a 0% annual percentage rate (APR) on balance transfers or purchases for a limited period. You can easily pay down existing debt or large purchases without paying interest.

Cash Back Credit Cards FAQ

What is a cash back credit card?

A cash back credit card is designed to let you earn a mini refund on every dollar spent. This rebate ranges from as low as 1% to as high as 6%. The percentage you earn will depend on the types of purchases you make.

How do cash back credit cards work?

You will earn a certain amount of cash back each time you use your card for eligible purchases. Each time you make a purchase, your rebate accumulates in your account at a specific rate. So, if your card offers a 3% rebate, you’ll earn $3 for every $100 spent on purchases made with the card.

What rate can I get with cash back credit cards?

Your cash back is typically expressed as a percentage, and what you earn will depend on the rates set by the credit card provider. Flat-rate cash back credit cards offer a standard cash back rate of 1.5–2%. The rate for tiered cards ranges between 3% and 4%, but it could go as high as 6% on cards with an annual fee. Rotating category cards typically rebate at 5%.

To understand how much you might earn, take the amount you spend in a certain category and multiply by the cash back rate.

Can anyone get a cash back credit card?

You’ll typically need good credit to get approved for a cash back credit card. This means that you need at least 700 or more out of 850 to bag higher payback percentages and lower interest rates.

You may also consider a cash back credit card if you have predictable spending patterns. A cash back credit card can help you  rack up savings, especially if you are a creature of habit, returning to the same stores and  gas stations.

How do I compare different cash back credit cards?

Comparison shopping is the key to picking the right cash back card for your needs. You should understand your spending habits and how much attention you’re ready to devote to the reward-earning structures. Here are attributes to consider when comparing credit cards that offer cash paybacks.

  • Earning rates. Compare credit cards by how much rebate you will earn. Check whether the cash back is consistent across purchases or whether the best rates are restricted to specific purchases.
  • Annual fee. Some cash back credit cards won’t charge an annual fee while others will. Be sure to crunch the numbers to assess whether the earning rates offset the annual fee.
  • Ease of use. You’ll need to check whether there are obstacles to get through, like the need to be a specific bank’s member.
  • Your spending habits. Evaluate your annual spending to see the categories it falls into. Some cash back credit cards will reward you more for certain purchases.