How to choose a cash-back credit card
Editor's Note
Credit cards 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.
However, before you start shopping for a new card, it's a good idea to think about what you want in a cash-back card and which is the best fit for you. Here are four things to consider.
Research 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 (see rates and fees) 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 your bill).
- Tiered-rate cash-back cards: These cards offer higher earn 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% cash back at U.S. gas stations and transit, as well as 1% cash back on everything else. Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit and at Amazon.com checkout.
- 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 nonbonus spending, but some also offer tiered rewards. For example, the Chase Freedom Flex® (see rates and fees) earns 5% back on up to $1,500 spent in quarterly rotating categories (each quarter you activate), 5% back on travel purchased through Chase Travel℠, 3% back on drugstores and dining (including takeout and eligible delivery services) and 1% back on everything else.
Tiered and rotating rewards cards allow you to maximize your cash back through bonus category spending. However, you must keep track of the different bonus categories, and if you're unable to take advantage, most of your purchases will net you the lowest rewards rate.
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.
Related: Are cash-back cards worth it?
Review your budget
To determine which card is right for you, you need to know where you spend most of your money. Then, you can select a card that rewards those purchases the most.
For example, if you have a large family and spend a lot on groceries, a tiered rewards card with outsize earnings on grocery purchases, such as the Amex Blue Cash Preferred Card, should be on your radar.
If you like to spend on entertainment and dining out, you'll benefit from a card that earns bonus cash-back in those categories, like the Capital One Savor Cash Rewards Credit Card.
However, if you find that your spending habits are more spread out or if you spend on categories that don't earn bonus rewards, you'll be better off with a flat-rate rewards card.
With the Citi Double Cash Card, it doesn't matter how you spend. You'll earn 1% cash back on all purchases and another 1% when your balance is paid off.
Related: TPG's 10 commandments of credit card rewards
Evaluate the welcome offer and annual fee
There's more to a cash-back credit card than its earning rate. Many cards offer introductory bonuses, 0% annual percentage rate promotions (which allow you to make purchases or transfer balances and pay them off over a set period, interest-free) and other perks.
As you compare cash-back credit cards, consider the other benefits you may find useful.
For instance, if you have a big purchase coming up, you may want to look for a card with a welcome offer or a 0% APR introductory offer. Some cards, such as the Chase Freedom Flex and the Blue Cash Everyday® Card from American Express (see rates and fees), offer both — making them excellent choices if you have a large expense to cover.
With the Freedom Flex, the 0% introductory APR will be for the first 15 months from account opening on purchases and balance transfers, then a variable APR of 18.24% - 27.74%. The Blue Cash Everyday also has a 0% introductory APR on purchases and balance transfers for the first 15 months from account opening, then a variable APR of 19.49% to 28.49%.
You'll also want to consider whether the card charges an annual fee — fortunately, many cash-back cards don't — and how that will affect your rewards earning power. 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 yearly just to break even on the annual fee.
On the other hand, the Chase Freedom Unlimited® (see rates and fees) earns at least 1.5% back on all purchases with no annual fee, allowing you to earn without worrying about offsetting a yearly cost.
Related: How to choose the best credit card for you
Consider having multiple credit cards
No single cash-back credit card is perfect for everyone, so you may want to use multiple cards for different spending categories in order to maximize your rewards.
For example, you may opt for the Blue Cash Preferred to earn bonus rewards on groceries and gas, the Chase Freedom Flex for travel, dining, drugstores and rotating quarterly categories (each quarter you activate) and the Citi Double Cash Card for everything else (because it gives you a flat 2% cash back; 1% when you buy and 1% when you pay).
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.
Related: How many credit cards should I have?
Bottom line
The best cash-back credit cards offer flexible rewards and the chance to earn on your everyday spending. While picking the right cash-back card can feel daunting, you can easily narrow down your list of options using the tips we've provided.
Related: Best cash back credit cards
For rates and fees of the Blue Cash Everyday, click here.
TPG featured card
at American Express's secure site
Terms & restrictions apply. See rates & fees.
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 5X | New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App. |
| 3X | Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines. |
| 2X | Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com. |
| 1X | Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases. |
Pros
- Valuable dining and food-related credits
- Flexible rewards with airline and hotel transfer partners
- Multiple travel and purchase protections
- No foreign transaction fees
- Access to Amex Offers for additional savings (enrollment required)
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $8,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- New! Earn 5X Membership Rewards® points on prepaid hotel stays booked through AmexTravel.com or the Amex Travel App.
- Earn 3X Membership Rewards® points on flights booked through AmexTravel.com, the Amex Travel App, or purchased directly from airlines.
- Earn 2X Membership Rewards® points on prepaid car rentals booked through AmexTravel.com or the Amex Travel App and cruises booked and paid through AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- Pay It® lets you tap in the American Express® App to quickly pay for small purchase amounts throughout the month and still earn rewards the way you usually do. Plan It® gives you the option to split up big purchases into equal monthly payments with a fixed fee. You’ll know upfront exactly how much you’ll pay.
- Updated! $120 Dining Credit: Earn up to a total of $10 in statement credits monthly when you pay with the Gold Card at Grubhub (including Seamless), Buffalo Wild Wings, Five Guys, The Cheesecake Factory, and Wonder. This can be an annual savings of up to $120. Enrollment required.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year at over 10,000 qualifying U.S. Resy restaurants after you pay for eligible purchases with the American Express® Gold Card. That’s up to $50 in statement credits semi-annually. Enrollment required.
- $84 Dunkin' Credit: Earn up to $7 in monthly statement credits after you pay with the American Express® Gold Card at U.S. Dunkin’ locations. Enrollment required.
- $120 Uber Cash on Gold: Enjoy up to $120 in Uber Cash annually with your Gold Card. Just add your Card to your Uber account and you'll get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an Amex Card for your transaction.
- New! As an American Express® Gold Card Member, you can enjoy complimentary Hertz Five Star® Status. Enjoy benefits like skipping the counter at select locations, adding an additional driver at no additional cost*, and vehicle upgrades**. Benefit enrollment and Hertz Gold+ registration are required. *Additional drivers must meet standard rental qualifications and must be a spouse or domestic partner to qualify as complimentary. Other additional drivers subject to fees. **Benefits are subject to availability and vary by location. Additional Hertz program Terms and Conditions including age restrictions apply.
- Take advantage of a $100 credit towards eligible charges* at over 1,300 upscale hotels worldwide when you book The Hotel Collection through AmexTravel.com or the Amex Travel App **. *Eligible charges vary by property. **The Hotel Collection requires a two-night minimum stay.
- Book your travel through the Amex Travel App with added peace of mind – backed by American Express® service and support. Only for American Express® Card Members.
- Whenever you need us, we're here. Our Member Services team will ensure you are taken care of. From lost Card replacement to statement questions, we are available to help 24/7.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.