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I love to travel, so I tend to focus on credit cards that specifically offer travel benefits. However, diversification is critical to a successful points strategy, and that includes considering the cash-back options out there. Today, TPG Senior Points & Miles Correspondent Jason Steele looks at the best cash back cards to earn a return on your spending, travel or otherwise.
Travel rewards are great, but there’s a lot to be said for earning cash back rewards from your credit cards as well. Cash back rewards can be used to pay for the taxes and fees not covered by your points or miles, or just to pay bills or save money.
In addition, the market for cash back reward credit cards is nearly as competitive as it is for travel rewards, with all of the major card issuers fighting for a share. So today, I want to look at the top cash back cards, as well as their close cousins (credit cards that offer rewards in the form of travel statement credits), and see which products offer the best value.
Fidelity Investments offers one of the top cash back cards, with rewards distributed to a qualifying account, including a Fidelity cash management account, brokerage account, fidelity-managed 529 savings account, or retirement account. All purchases earn 2% cash back with no limits and no annual fees. There is no sign-up bonus for this card. For more info, see Nick Ewen’s review of the Fidelity Amex from November.
The Double Cash card earns 1% cash back when you make a purchase, and another 1% when you pay your balance. Cash rewards are available once you earn $25 in rewards. There’s no annual fee for this card, but unfortunately there’s no sign-up bonus either. For more info, read TPG’s post on Citi Double Cash from when the card was first released.
Barclaycard Arrival Plus World Elite Mastercard
This card is not explicitly a cash back card, but it’s very close. You earn double miles for each purchase, and miles are worth one cent apiece as statement credits toward a wide range of travel expenses. So while these rewards don’t go directly to your bank account, statement credits are as good as cash if at least 2% of your spending is on travel. Furthermore, this card offers a 5% rebate on all redemptions, which effectively increases your return to 2.11% of spending.
Arrival Plus offers a sign-up bonus of 40,000 miles (worth about $400) after you make $3,000 in purchases on the card within 90 days of account opening. The annual fee of $89 is waived for the first year, and the card has no foreign transaction fees, making it a strong option for international travelers.
Capital One Venture Rewards Credit Card
Like the Barclaycard Arrival Plus, this card earns double miles for each purchase, and miles are worth one cent apiece as statement credits toward travel purchases. New cardholders also earn a sign-up bonus of 40,000 miles after spending $3,000 on purchases within three months of account opening; however, Venture Rewards doesn’t offer the 10% rebate that you get on Arrival Plus, so the bonus is worth $400.
On the other hand, Venture Rewards also charges no foreign transaction fees, and has a lower annual fee of just $59, (also waived for the first year). For more on both Capital One Venture Rewards and Barclaycard Arrival Plus, check out TPG’s side-by-side comparison from last year.
While the other cards listed here offer the same percentage of cash back on all purchases, this card offers some serious bonus categories that make it well worth considering. You’ll receive an impressive 6% cash back from spending at US supermarkets (on up to $6,000 spent each calendar year; then 1%), 3% cash back at US gas stations and at select US department stores, and 1% cash back everywhere else.
Blue Cash Preferred offers a welcome bonus of $200 cash back when you make $1,000 in purchases within three months of account opening. The card comes with a $95 annual fee. The bonus is relatively easy to earn, and effectively covers two years of annual fees. It’s clearly one of the top options for US supermarket purchases, and a worthy contender for gas purchases.
Which card is best?
In terms of sheer return for the dollar spent, the Barclaycard Arrival Plus comes out on top for the first year with its 2.22% effective rate of return. The Capital One Venture Rewards card is competitive with a slightly lower rate of return, and a correspondingly lower annual fee. These cards both offer generous sign-up bonuses as well.
The miles earned on both cards are pretty flexible, and since you redeem for purchases made with your card, you can book airfare, hotel, rental cars, and other reservations the way you normally would. So unlike other award redemptions, you can earn points or miles, qualify for elite status, and be eligible for upgrades like normal, all while using your rewards to pay for your travel.
Close behind is the American Express Blue Cash Preferred, which really gets your attention with 6% cash back at US supermarkets, even with its $6,000 annual limit (then 1% after the cap is reached). 3% back at US gas stations and US department stores is also more lucrative than what you’ll get from many travel rewards cards, but I wouldn’t bother earning 1% cash back on everything else.
Finally, you can’t beat the Citi Double Cash and Fidelity Amex cards for sheer value and simplicity with no annual fees. Fidelity works as a “use it and forget it” savings vehicle, while Double Cash doesn’t require you to have an investment account with Fidelity, or anyone else for that matter.
By considering the top cash back credit cards, you can supplement your travel rewards with the most valuable currency of all. The American Express Platinum card has some of the best perks out there: cardholders enjoy the best domestic lounge access (Delta SkyClubs, Centurion Lounges, and Priority Pass), a $200 annual airline fee credit as well as up to $200 in Uber credits, and mid-tier elite status at SPG, Marriott, and Hilton. Combined with the 60,000 point welcome offer -- worth $1,140 based on TPG's valuations -- this card is a no-brainer for frequent travelers. Here are 5 reasons you should consider this card, as well as how you can figure out if the $550 annual fee makes sense for you.
The American Express Platinum card has some of the best perks out there: cardholders enjoy the best domestic lounge access (Delta SkyClubs, Centurion Lounges, and Priority Pass), a $200 annual airline fee credit as well as up to $200 in Uber credits, and mid-tier elite status at SPG, Marriott, and Hilton. Combined with the 60,000 point welcome offer -- worth $1,140 based on TPG's valuations -- this card is a no-brainer for frequent travelers. Here are 5 reasons you should consider this card, as well as how you can figure out if the $550 annual fee makes sense for you.