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3 reasons why you want a cash-back credit card in your wallet

Aug. 04, 2021
7 min read
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My family has circled the globe and taken numerous memorable trips that were earned by swiping our rewards-earning credit cards to rack up points and miles -- and we don't plan to walk away from that strategy anytime soon.

However, the pandemic has taught us and reinforced lots of hard lessons. One of those lessons is that nothing is ever certain. Few of the points and miles-fueled trips we originally planned and booked actually happened over the past year.

Instead, we were at home more, transforming the backyard to somewhere we wanted to spend time, and even made a few forays to closer-in cabins and home rentals. Traditional airline miles and hotel points won't help cover most of those expenses. What we needed instead was old-fashioned cash. Or perhaps even better, we wanted a credit card that earned cash-back rewards we could use however we wanted.

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Last year, the only card I applied for was a cash-back credit card. And after taking it out for a spin, I'd argue that just about everyone needs a cash-back credit card in their wallet.

Related: Best cash-back credit cards

For when you need cash

A few decades ago, I was graduating from grad school, moving to a new city, starting a new job and in serious need of cash. The rewards credit card I had at the time allowed me to cash out points for $25 Target gift cards, and that's exactly what I did. I needed groceries, light bulbs, paper towels and other very non-exciting items more than a flight or hotel stay.

Related: How to use points and miles for non-travel redemptions

I may have thought I was saving those points for a trip, but I ended up using them to bridge the gap when my expenses were high and my income was low.

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Having a true cash-back card to shop wherever I wanted would have been even better than just Target gift cards. While of course, everyone should have an actual cash savings account for rainy days, it is nice to have a cash-back rewards balance that you can dip into when you need it, too.

The threshold to redeem your cash-back rewards doesn't feel like it needs to be quite as high a dollar amount as you might have in mind when turning to your actual emergency cash savings. In fact, you could even use cash-back rewards to pay for parts of a trip that can't be covered with regular points and miles. You can basically use cash back rewards for almost anything you'd pay for with cash, though. That's what makes them so useful.

For instance, with 100-degree temperatures and public pools closed due to the pandemic last summer, I'd argue that using cash-back rewards for a backyard stock tank pool and DIY deck was the type of cash-back redemption I'd feel good about. No planes, trains, or automobiles required.

Related: Is it better to earn points or cash back

(Photo by Summer Hull/The Points Guy)
(Photo by Summer Hull/The Points Guy)

For when you want to keep things simple

I like complicated multi-stop, open-jaw, international airline award redemptions using airline award chart sweet spots. But sometimes when life gets a bit crazy, simple is best. Having a cash-back credit card means you really can't ever go wrong when cashing out.

While every cash-back card works a bit differently, typically you can use the rewards to offset charges on your credit card statement, or perhaps even have the rewards deposited right into your checking account.

You don't need to be a points-and-miles pro to click a few buttons and use cash-back rewards to cover the cost of a charge, all while keeping your cash safe and sound.

Screenshot courtesy of Bank of America
(Screenshot courtesy of Bank of America)

Maximize your purchases

(Photo by John Gribben for The Points Guy)

If you want to make the most of all your everyday purchases, then sometimes a cash-back card may be helpful in maximizing those dollars spent. For example, I applied for the specific card I did -- the Bank of America® Premium Rewards® credit card -- as it helped me earn a 2.625x rate on everyday charges since I met the criteria for a 75% bonus thanks to my banking with Bank of America. It even earns me up to 3.5% back (again, because I qualify for a 75% bonus through Bank of America's Preferred Rewards program) on specific categories like dining and travel.

The Citi® Double Cash Card (earn 2% cash back; 1% back when you make purchases, 1% when as you pay your bill) is another very solid cash-back option on everyday purchases.

Some other examples available in the cash-back arena are:

The information for the Capital One Savor card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

And while some cash-back credit cards do come with an annual fee, many don't , allowing you the opportunity to maximize purchases while potentially avoiding the expense of paying an annual fee each year.

Related: Best cash-back credit cards of 2021

Bottom line

A couple of years ago, we had to replace our gas line, with no notice, to the tune of $3,800 (with our gas and hot water cut off until we got it done). That was a painful amount of cash to spend on a gas line, but because I had a card that gave me a 2.625x rewards rate, that very unexciting expense got me $99.75 closer to whatever I wanted.

Hopefully, I'll spend that cash toward something fun, such as a future high-end vacation home rental or maybe even splurge on a short private jet flight, but you never know.

It's also possible I'll end up needing to use that cash back for groceries and light bulbs, just as I've done before. That's the beauty of cash-back rewards -- they are there to be used however you want and need.

Featured image by Rattanakun Thongbun / EyeEm/Getty Images.

Featured image by Getty Images/EyeEm
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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How we chose these cards

Our points-obsessed staff uses a plethora of credit cards on a daily basis. If anyone on our team wouldn’t recommend it to a friend or a family member, we wouldn’t recommend it on The Points Guy either. Our opinions are our own, and have not been reviewed, approved, or endorsed by our advertising partners.
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TPG featured card

Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards

2 - 10X points
10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day

Intro offer

75,000 bonus miles
Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

Annual Fee

$395

Recommended Credit

740-850
Excellent
Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023
Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
5X5X miles on flights booked through Capital One Travel.
2X2 Miles per dollar on every purchase, every day
  • Intro Offer
    Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

    75,000 bonus miles
  • Annual Fee

    $395
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
    Excellent

Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023