3 reasons why you want a cash-back credit card in your wallet
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
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.
For more TPG tips delivered each morning to your inbox, sign up for our free daily newsletter.
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.
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.
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.
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.
Maximize your purchases
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:
- 6% cash back on purchases at U.S. supermarkets (on up to $6,000 of spending each calendar year, then 1%) and 6% on select U.S. streaming subscriptions provided by the Blue Cash Preferred® Card from American Express (cash back is received in the form of Reward Dollars that can be redeemed for statement credits)
- 4% cash back on dining and entertainment from the Capital One Savor Cash Rewards Credit Card
- 3% cash back provided by the Bank of America® Customized Cash Rewards credit card in the category of your choice monthly (gas, online shopping, dining, travel, drug stores, or home improvement/furnishings) (on the first $2,500 in combined eligible purchases each quarter; then 1%).
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
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.
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.
Welcome to The Points Guy!
Earn 90,000 bonus miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new card in the first three months of card membership. Offer ends 11/10/2021.
With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.
- Limited Time Offer: Earn 90,000 Bonus Miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new Card in your first 3 months. Offer expires 11/10/2021.
- Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
- Earn 1X Miles on all other eligible purchases.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights.
- Fee Credit for Global Entry or TSA Pre✓®.
- Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees