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Maximizing Cash Back Credit Cards

by on January 27, 2014 · 9 comments

in Cash Back Rewards, Credit Cards, Maximize Monday

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Update: Some offers mentioned below are no longer available. View the current offers here: Capital One Venture Rewards Credit Card, SimplyCash Business Card from American Express

While I tend to talk most about the best credit cards for earning points and miles towards travel, cash back credit cards can be a great alternative for a lot of folks out there thanks to a few factors.

Some cash back cards like the Chase Freedom offer 5% earning on certain categories of merchants.

Some cash back cards like the Chase Freedom offer 5% earning on certain categories of merchants.

First, instead of just a particular airline or hotel co-branded card where you can only use the miles with a single company (and its alliance/brand partners), cash back cards offer the flexibility to put your points towards statement credits on everyday purchases. Second, many of them offer a fixed rate of return of about 1% because you can redeem your points for a rate of 1 cent each generally, so you know what you’re getting. Third, many of these cards offer versions with no annual fee, which can be a great benefit for folks who don’t necessarily want to shell out $100+ per year on a card.

What’s more – some cash back cards like the Discover It and the Chase Freedom actually offer an even better return on some of your spending with category spending bonuses by offering quarterly rotating merchant categories where you can earn up to 5% back on your spending up to a certain cap per quarter (usually around $1,500). Not only that, but you can up your earning by making purchases through their online shopping portals where you can earn between 5-20% on purchases made through the Discover online shopping mall or multiple points per dollar through the Ultimate Rewards portal with the Freedom.

You can up your earning through shopping portal bonuses as well.

You can up your earning through shopping portal bonuses as well.

Others like the Chase Sapphire earn fixed category spending bonuses of 2X points per $1 on travel (booked through Chase) and dining – making it a great card to keep around for everyday spending (especially with its $0 annual fee) where you can be sure of a good return on your purchases at all times. Plus remember that if you have either the Sapphire and/or Freedom as well as one of the premium Chase Ultimate Rewards cards – the Ink Plus, Ink Bold or Sapphire Preferred – you can combine your Ultimate Rewards accounts and transfer them to any of the program’s 10 travel partners (as an option in addition to cash back). Not only that, but remember, if you have one of those premium cards, your points are worth 1.25 cents each when redeemed specifically for airfare booked through Chase, so they’re sort of like a travel-specific cash back option.

But it’s not just cards that are marketed as cash back that you can take advantage of cash back capabilities on if you still want to redeem specifically for travel. For example, the Barclaycard Arrival is kind of like a cash back and points hybrid card that allots cardholders fixed-value points based on the money that they spend. It earns 2X miles per $1 on all purchases and you can then redeem those miles for statement credits against travel purchases at a rate of 1 cent apiece with a 10% mileage refund – giving you a 2.2% return on your spending. Or you can redeem miles for cash back statement credits, gift cards and merchandise. Cash back statement credits also start at 2,500 miles but for just $12.50 in value, so you’re only getting a value 0.5 cents per mile, so a 1% return on your spending. With the no annual fee Arrival, you earn 2X miles per $1 on travel purchases and 1X miles per $1 on all other purchases, and the redemptions are the same, so your return on spending is the same for travel and half the version with the annual fee’s on other statement credits.

With cards like the Arrival - you can redeem for travel or other purchases.

With cards like the Arrival – you can redeem for travel or other purchases.

The Capital One Venture Rewards Credit Card is a similar product. Cardholders earn 2X miles for every dollar that they spend, which can then be redeemed for travel at a rate of 1 cent per point. So you’re getting 2% cash back to be used on travel booked through Capital One.

Here is my rundown of major credit cards with cash back type rewards and some key points about each. Please feel free to comment, since I’m sure I missed some.

American Express
American Express Blue Cash Preferred: 6% cash back at U.S. stand-alone supermarkets up to $6,000 in purchases per year, 3% cash back on gasoline at U.S. stand-alone gas stations and select major department stores; 1% cash back on other purchases.
American Express Blue Cash Everyday: 3% cash back at U.S. stand-alone supermarkets up to $6,000 in purchases per year, 2% cash back on gasoline at U.S. stand-alone gas stations and select major department stores; 1% cash back on other purchases. No annual fee.
Note: You might get better sign-up offers on the two Blue Cash cards through the Card Match Tool.
American Express TrueEarnings Costco: Earn 3% cash back on fuel purchases and gasoline at U.S. s gas stations, including at Costco, for purchases up to $4,000 per year (1% thereafter), 2% cash back at U.S. restaurants, 2% cash back on eligible travel purchases, and 1% cash back on other purchases, including at Costco.
American Express SimplyCash Business: 5% cash back at U.S. office supply stores,  U.S. wireless telephone service providers; and 3% cash back on gasoline at U.S. stand-alone gas stations up to $25,000 in purchases per year, 1% cash back on other eligible purchases.
American Express Co-Branded Fidelity Cards (Require Fidelity accounts): 2x on everything. No annual fee.

Bank of America
BankAmericard Cash Rewards: Earn 1% cash back on every purchase, 2% on groceries, and 3% on gas up to $1,500 combined per quarter. Plus earn a 10% customer bonus when you redeem into a Bank of America® checking or savings account.
Barclaycard
Arrival: Earn 2X miles per $1 on all purchases. Redeem for travel at 1 cent per mile and a 10% mileage refund. Other redemption rates vary. $89 annual fee waived the first year.
Arrival No Fee: Earn 2X miles per $1 on travel and dining, 1X miles per $1 on everything else. Redeem for travel at 1 cent per mile and a 10% mileage refund. Other redemption rates vary. No annual fee.
Capital One
Capital One Venture Rewards Credit Card: 2X miles per $1 on everything. $59 annual fee, waived for the first year.
Capital One VentureOne Rewards Credit Card: 1.25X miles per $1 on everything. $0 annual fee.
Chase
Chase Freedom: 5X rotating categories on up to $1,500 spend per quarter: currently gas stations, Starbucks and movie theaters. No annual fee.
Chase Sapphire: 2X points per $1 on travel (booked through Chase) and dining, 1X on everything else. $0 annual fee.
Chase AARP Card: 3% cash back on gas stations and restaurants, 1% on all other purchases. $0 annual fee.

Citi
Citi AT&T Universal Business Card: 5X on AT&T Products and services purchased directly from AT&T and 3X on gas station and certain office supplies and professional services. No annual fee.
Citi Forward: 1X points per $1, some promotions offer bonuses on entertainment category spending. $0 annual fee.
Citi Thank You Preferred: 2X points on purchases for dining and entertainment, and 1 ThankYou point for every dollar you spend on other purchases. No annual fee.
Citi ThankYou Premier: 3X on dining and entertainment, 2X on airfare and hotels, 1X on everything else. Redeem points at 1.25 cents each for travel. $125 annual fee, waived the first year.

Pentagon Federal Credit Union:
Visa Platinum Gas/Cash Rewards: Up to 5% cash back on gas. No annual fee.
Premium Travel Rewards American Express: Up to 5% cash back on airfare. No annual fee.

Discover

Discover It: Up to 1% cashback on all purchases, 5% Cash Back Bonus on a rotating selection of merchants (currently restaurants and movie theaters), 5-20% cash back bonuses on purchases through ShopDiscover portal. $0 annual fee.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • aa88

    penfed has devalued its rewards few months ago so 5% points does not directly translate into 5% cash back.

  • Nick

    I am currently using BoA’s Cash rewards card in addition to their travel rewards card. Where the Cash card returns 2% on groceries mad 3% on gas! the travel card sports 1.5% on everything else. Though the reward rates are lower then other cards, neither have an annual fee and using them for everyday spending offers tons of additional cash back opportunities through Bank of America deals, not to mention their shopping portal Add It Up. Lastly being a BoA user, they both offer an additional 10% annually or when redeemed. These bonus factors all work well together it pulling in lots of rewards with no fees.

  • http://patrickstravelogue.blogspot.com/ Patrick McCann

    Hi, I can’t find any mention of the 600$ max at the aarp card link and it offering 3% on gas and restaurants seems like not a bad card for many people.

    http://www.aarpcreditcard.com/Default?CELL=66J9&utm_source=TPG+Daily+Newsletter&utm_campaign=6aa49e4d98-TPG+Daily+Newsletter+MC&utm_medium=email&utm_term=0_2b0b8ee2b7-6aa49e4d98-44192529

  • matt61

    I’m surprised not more people know about the BofA BankAmericard Privileges with Cash Rewards. With certain amount of assets, they waive the $75 annual fee and you get 50% customer bonus when you redeem back to BofA. This actually makes it 4.5% on gas, 3% on groceries, and 1.5% on everything else. This combined with my AMEX BCP rakes in cash back.

  • Josh Cabrera

    Fidelity has an Amex that gives 2% cash back on everything, no annual fee. It’s a nice little simple card for those who don’t want to think too hard about getting the absolute max rewards out of every purchase.

  • Icheckthingsout

    The 25% bonus for hotel booked through Chase Ultimate Rewards is a ripoff. The per night rates are substantially higher than you can get at the hotel website so even after the discount you are often worse off. When I asked a CSR about this she gave me some gobbly-gook about pre-booked rooms. I don’t know whether airline fares are the same as the airline fares or are a similar ripoff.

  • http://www.doctorofcredit.com/ doctorofcredit

    Discover IT also has a $150 sign up bonus when you spend $750 within three months, just make sure you use the targeted link.

  • peter_bc

    5% on $1500 is only $75. this pales in comparison to the bonuses paid for spending $1000 in the first 3 months, which can be $400+

  • Cashbasket

    Why is the VentureOne card on this list. Isn’t Quicksilver better?

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