Did you know that you can actually earn money back when you go grocery shopping, buy gas, make online purchases, or use your credit card for pretty much anything else? Cash back credit cards allow you to earn a percentage of your spending back as rewards, usually ranging from 1% to 2%. Plus, some cards offer even higher cash back rates for specific bonus categories. So, let’s take a closer look at how cash back credit cards work and find out which one might be the best fit for you and your wallet.
Ways to Redeem Cash Back
When it comes to redeeming your cash back rewards, most cash back credit cards offer a few options. You can choose to apply the rewards as a statement credit, which will lower your account balance. Alternatively, you can opt for a direct deposit into your linked checking or savings account, or receive a paper check in the mail. Some cards feature rewards points that can be converted into cash back at a rate of one point to one cent.
The key to making the most of a cash back card is to always pay off your balance in full by the monthly due date and avoid overspending just to earn rewards. As long as you’re responsible with your spending, a cash back card can be a great way to save some extra money.
Flat-Rate Cash Back Cards
Flat-rate cash back cards offer a fixed rewards rate for every dollar you spend. Most cards in this category provide 1% to 2% cash back. Essentially, it’s like getting a discount on everything you buy. While many cards default to a 1% cash back rate, there are some great options that offer higher rates, such as 1.5% or even 2% cash back. It’s worth shopping around to find the best deal.
Here are a few top flat-rate cash back cards to consider:
- Card Name: Earns 1% back on purchases and an additional 1% when paying your credit card bill, for a total of 2% back.
- PayPal Cashback Mastercard: Earns 3% cash back when checking out with PayPal and 2% everywhere else.
- SoFi Credit Card: Earns a flat 2% cash back, with some users eligible for 3% back in the first year.
- Card Name: Earns 1.5% cash back on all purchases.
Bonus Category Cash Back Cards
If you tend to spend heavily in specific categories like groceries, gas, restaurants, travel, or online shopping, bonus category cash back cards might be the best fit for you. These cards offer higher cash back rates for certain spending categories, allowing you to maximize your earnings.
Here are some popular bonus category cash back cards:
- Card Name: Earns 3% back on restaurant and restaurant delivery services, 3% at drugstores, 5% on travel booked through Chase, and 1.5% everywhere else.
- Card Name: Earns 4% back on dining, entertainment, and eligible streaming services, 3% at grocery stores, 8% cash back on entertainment booked through Capital One, and 5% back on hotels and rental cars booked through Capital One. You’ll also earn 1% back everywhere else.
- Card Name: Earns 6% back at U.S. supermarkets (up to $6,000 per year), 6% back on select U.S. streaming subscriptions, 3% back on transit and gas, and 1% everywhere else. There is a $95 annual fee, which is waived for the first year.
Rotating-Category Cash Back Cards
Rotating cash back rewards cards offer bonuses that change every three months. These cards usually require you to register for the bonus categories and keep track of the changes to earn the highest possible cash back.
Here are a couple of top options for rotating-category cash back rewards:
- Chase Freedom Flex: Earns 5% back in quarterly rotating categories (up to $1,500 in quarterly purchases), 3% back on dining and delivery, 3% at drugstores, and 5% on travel booked through Chase. You’ll earn 1% cash back on all other purchases.
- Card Name: Earns 5% back (up to $500 per statement cycle) on your top eligible spending category and 1% on all other purchases.
Choose-Your-Own-Category Cash Back Cards
If you want more control over the bonus categories, there are cash back cards that allow you to pick your favorite category to earn a bonus. These cards typically offer a selection of bonus rewards categories, so you can align your spending with your earning potential.
Here are a few examples of choose-your-category cash back rewards cards:
- U.S. Bank Cash+ Visa Signature Card: Earns 5% back on up to $2,000 in purchases each quarter in two categories of your choice, 2% back on popular categories like gas stations, EV charging, groceries, or restaurants, and 1% everywhere else.
- Bank of America Customized Cash Rewards Card: Earns 3% back on a category of your choice, 2% back at grocery stores and wholesale clubs (up to $2,500 in combined quarterly purchases), and 1% on all other purchases.
- Card Name: Earns 3% and 2% back in two categories of your choice with no limits, and 1% everywhere else.
Maximize Your Cash Back Rewards
When choosing a cash back credit card, it’s essential to focus on the categories where you spend the most. This way, you can maximize your cash back rewards based on your unique budget and lifestyle. Don’t be afraid to consider getting multiple cash back cards to earn higher rewards across different categories, while still enjoying a minimum of 2% cash back on all other purchases.
It’s important to note that your credit score and history will influence which cards you qualify for. Remember to always pay your balance in full by the monthly due date to avoid paying interest. By following this strategy, you’ll be in a good position to make the most of cash back rewards.
Frequently Asked Questions (FAQs)
What is cash back on credit cards?
Cash back on credit cards is a type of reward that you can earn from your credit card company when you make purchases. These rewards are typically a percentage of each eligible purchase.
Which credit cards give cash back?
Many credit cards offer cash back rewards. The availability of top cash back rewards cards will depend on your credit history and the issuing bank. You can check with your bank or refer to our list of the best cash back credit cards for potential options.
Which stores offer cash back on credit cards?
With a cash back rewards card from a popular issuer, you can earn cash back rewards at every store when making regular purchases. Some store cards also offer specific rewards when shopping using their branded credit card. Target, Walmart, and Amazon are among the best store cards to earn cash back. For example, the Amazon card provides 5% cash back on standard purchases at Amazon.com.
Remember, for more tips on personal finances and to stay up to date with the latest financial news, visit Personal Finances Blog.