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How to choose a cash-back credit card

Aug. 21, 2022
7 min read
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Credit cards can often provide opportunities to rack up travel rewards like airline miles or hotel points. But if simplicity and a solid return on spending are your top priorities, you can’t go wrong with a cash-back credit card.

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Before you start shopping for a new card, though, it’s a good idea to think about what you want in a cash-back card and which one is the best fit for you. Here are four things to consider.

Look at the earning rates

Not all cash-back cards work the same, and it’s important to know which approach you want to take with how you earn rewards. There are three main ways cash-back credit cards structure their rewards programs:

  • Flat-rate cash-back cards: With this type of card, you get the same rewards rate on every purchase you make. The Citi® Double Cash Card is a top option in this category, giving you 2% back on every purchase (1% back as you make purchases and another 1% back when you pay them off).
  • Tiered-rate cash-back cards: These cards offer higher rewards rates on select categories, then typically 1% — 1.5% back on everything else. The Blue Cash Preferred® Card from American Express is a solid example, giving you 6% cash back at U.S. supermarkets (up to $6,000 spent each calendar year, then 1%) and on select U.S. streaming subscriptions. You’ll also earn 3% back at U.S. gas stations and on transit and 1% back on everything else.
  • Rotating-category cash-back cards: A handful of cash-back cards earn elevated cash-back rates on everyday spending categories that rotate every quarter. They typically offer 1% back on non-bonus spending, but some also offer some tiered rewards. For example, the Chase Freedom Flex earns 5% back on up to $1,500 spent in quarterly rotating categories, 5% back on travel purchased through Chase Ultimate Rewards, 3% back on drugstores and dining (including takeout and eligible delivery services), and 1% back on everything else.
(Photo by John Gribben for The Points Guy)

With tiered and rotating rewards, you’ll have a better chance to maximize your cash back with certain bonus categories. But in a lot of cases, most of your purchases will net you the lowest rewards rate, and you’ll need to keep track of the different bonus categories.

On the flip side, flat-rate rewards cards can give you a consistent earning rate on all of your spending, but they lack the flexibility to maximize your rewards in some of your top spending categories.

Think about how you want to earn rewards on your new card, and which one you can maximize on your major purchase categories each month, quarter or year.

Review your budget

Depending on which type of cash-back credit card you choose, you’ll want to get an idea of where you spend most of your money and focus on cards that reward those purchases the most.

For example, if you have a big family and spend a lot on groceries, a tiered rewards card with outsized earning on grocery purchases, such as the Blue Cash Preferred Card from American Express, should be on your radar. The same goes for other top spending categories like gas, dining and entertainment.

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Crunch the numbers to see which card offers the best rewards based on your monthly spending. (Photo by Sam Edwards/Getty Images)

The only exception here is if you prefer the idea of a flat-rate rewards card. With the Citi Double Cash Card, for instance, it won’t matter what your spending looks like because you’re getting 2% cash back on everything (as long as you are paying off your balance).

Related: TPG’s 10 commandments of credit card rewards

Consider the intro offer, annual fee and other features

Cash-back credit cards are more than just their rewards rates. Many of them also offer sign-up bonuses, introductory 0% APR promotions (which allow you to make purchases or transfer balances and pay them off over a set period, interest-free) and other perks that can add value to your experience. As you compare cash-back credit cards, think about other benefits that are a good fit for what you want.

If you have a big purchase coming up, for instance, a solid 0% annual percentage rate (APR) promotion may be a top priority. For example, the Chase Freedom Unlimited offers an introductory 0% APR on both purchases and balance transfers for 15 months. After that, the variable APR is 18.74% – 27.49%.

Meanwhile, the Blue Cash Preferred Card from American Express currently offers a $250 statement credit after you spend $3,000 in purchases on your new card within the first six months. For some, the chance at $50 more cash back is worth the extra spending.

(Photo by John Gribben for The Points Guy)

You’ll also want to consider whether the card charges an annual fee — fortunately, many don’t — and how that will affect your rewards earning power, as well as how much flexibility you have with redeeming your rewards. For example, the Capital One QuicksilverOne Cash Rewards Credit Card earns 1.5% cash back on all purchases but charges a $39 annual fee. This means you’d need to spend at least $2,600 each year just to break even on the annual fee.

If you can qualify for the Capital One Quicksilver Cash Rewards Credit Card instead (and yes, the names are confusing), you can still earn 1.5% back on purchases but with no annual fee and a potential sign-up bonus. This means you can start earning cash back right from the start without having to worry about offsetting a yearly cost.

Consider having multiple credit cards

There’s no cash-back credit card that’s best for everyone, and even if one card gives you more value than another, the best way to maximize your rewards is to use multiple cards for different spending categories.

If you’re open to it, having more than one cash-back card can be a great way to maximize your rewards. (Photo by Isabelle Raphael/The Points Guy)

For example, you may opt for the Blue Cash Preferred for groceries and gas thanks to its higher earning rates on these categories, the Chase Freedom Flex for travel, dining, drugstores and its rotating categories, and the Citi Double Cash Card for everything else (because it gives you a flat 2% cash back).

This approach may take some getting used to, and you’ll need to keep track of your due dates and balances to avoid interest and late fees. However, it’s a great way to make the most of your daily expenses.

Bottom line

The best cash-back credit cards offer flexible rewards and the chance to rack up a lot of value on your everyday spending. While picking the right cash-back card can feel daunting, you can easily narrow down your list of options using these four tips to choose the right card (or cards) for you.

Additional reporting by Emily Thompson

Featured image by ADRIATICFOTO/SHUTTERSTOCK.COM
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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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