How To Pick the Best Cash-Back Credit Card That Saves Money Whenever You Shop

Flat rate or tiered? Annual fee or no annual fee? Here's everything you need to know about your next cash-back credit card.

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You work hard for your money, so it is not unrealistic to want your money to work a little harder in your favor. One way to make your budget go a little farther is to make sure you are always getting a percentage back on your purchases. You need to buy gas and groceries regardless, so why not get rewarded for doing so? That is where the best cash-back cards come in.

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woman is excited to earn cash back with a credit card

How Cash-Back Cards Work

Unlike travel rewards credit cards, you don’t have to be a pro at playing the credit card game to benefit. Cash-back cards are easy to keep track of and user-friendly. These types of cards typically fall in one of the following categories:

  • Flat Rate: A flat-rate card usually offers 1.00–2.50% back on all purchases, whether you buy a trip to Italy or a gallon of milk. The benefit of flat-rate cash back is that you can keep a minimal wallet and have an easier time keeping track of your credit card spending.
  • Tiered: Tiered cards vary the cash-back rewards based on what you purchase. A tiered card might offer a flat 1% cash back on the majority of purchases and 3% back on gasoline spending. Many times, the higher-earning tier is capped. A tiered card can help you earn more, as long as you select a card that rewards you the most for what you spend the most on.
  • Rotating Categories: Credit cards with rotating cash-back categories usually have a set 1% cash-back rate and then a higher rate, like 5% back on select categories. These categories rotate with the quarters of the year. For example, you might earn 5% back on all grocery purchases in the first quarter of the year.

Common Cash-Back Categories

New credit cards are released frequently and some like to gain attention with attention-grabbing cash-back offers, like offering 6% back for your favorite streaming service. Most cards, however, offer cash-back perks in the same core categories:

  • Supermarkets
  • Restaurants
  • Gas stations
  • Transportation
  • Wholesale
  • Entertainment

To find the best cash-back credit card, you need to keep track of your spending. Where do you spend the most money? If you spend more money on restaurants than groceries each month, then look for cards that will give you more back for dining out. If your spending is even throughout the cash-back categories, then a higher, unlimited flat cash-back rate card might be a better choice for your finances.

Cash-Back Credit Cards Versus Travel Credit Cards

Cash-back credit cards and travel cards are very similar. With travel-branded credit cards, you will earn more back when you spend on travel-related purchases, such as airfare or hotels. Most travel cards also offer the best reward rate when you redeem your rewards toward travel, either through the credit issuer’s travel platform or by transferring points to a travel partner.

>>EARN: Best Travel Credit Cards: Compare Offers, Rewards and Perks

Many times, redeeming travel rewards card points for cash means you are getting a lower cash-back rate. It is wise to know how far points will go toward travel versus cash before redeeming them. Travel credit cards can also come with more travel perks, such as access to airport lounges or travel insurance. With these perks can also come annual fees, so it is best to weigh the fee with the perks before signing up.

When trying to decide which card is best for you, consider how much travel you plan on doing. If you love the idea of traveling but aren’t gung-ho to explore the world just yet, a cash-back card might be an easier card to start with.

two people pose back to back
Credit: Twenty20

How To Compare Cash-Back Credit Cards

Not all cash-back credit cards are the same. The card that your friend can’t stop raving about might not be a good fit for your spending habits. Here’s what you need to look at before deciding which card is for you:

  • Annual Fee: If the card has an annual fee, is it worth paying? Some annual fees seem expensive up front, but when you consider how much cash back you receive, along with other perks, you might realize it is worth paying. Remember, even if a card has $1,000 worth of perks that make a $250 annual fee seem worth paying for, it is only worth it if you actually use those perks.
  • Bonus Offer: Sign-up bonuses sweeten the pot. However, make sure you can afford to meet the sign-up bonus. If spending $4,000 in three months will put you into financial hot water, look for a card with a lower bonus offer spending requirement.
  • Redemption: How easy is it for you to redeem your cash back? Look for cards that make it easy to transfer your rewards back to your bank account or that allow you to spend them on Amazon for the same redemption rate.
  • Intro APR: Looking to make a big purchase upfront? A 0% intro APR can save you money on interest and give you more time to pay off your purchases.
  • Special Features and Benefits: Do the cards come with special perks that will save you money throughout the year?
  • Ongoing Rewards: Look for cards with regular opportunities to earn more back rather than choosing a card that only has amazing rewards during the first year.

Pros and Cons of Using a Cash-Back Card

Everything in life has its pros and cons, and cash-back cards are no different. Consider these points before making your decision:

Pros:

  • Simplicity: Cash-back cards are easy to keep track of and it is quick to convert your rewards to cash back in your bank account
  • No or Low Annual Fees
  • Low Bonus Requirements: You won’t have to dish out a lot of cash to get the sign-up bonus
  • Builds Credit

Cons:

  • Lack of Travel Benefits
  • Cash Back Can Expire: Some cards say cash back never expires but this is only true if you use your card regularly
  • Low Sign-Up Bonuses: While you won’t have to spend a lot up front to earn the bonus, the sign-up bonus is also a lot smaller than what popular travel cards offer
  • Fewer Perks
children use a shopping cart at the grocery store
Credit: Twenty20

How To Make the Most of a Cash-Back Card

Once you have decided on the right cash-back card for your wallet, you want to make sure you get the most out of the card. Here are a few tips to increase your perks after approval:

  • Plan to get the bonus. Divide the spending requirement by the sign-up bonus time frame to ensure you are spending enough each month. For example, if you must spend $3,000 in 90 days, plan how you will spend $1,000 each month without messing with your budget.
  • Use the shopping portal. Don’t forget to browse the card issuer’s shopping portal to increase how much cash back you can receive on a purchase. If you were already planning to send your mom flowers for Mother’s Day, you might as well use a vendor through the shopping portal that is offering 10-15% cash back when you use your card.
  • Look for rewards bonuses and multipliers. Keep your eye on special rewards bonuses offered throughout the year. For example, some cards were giving a $100 credit for spending $500 on select cruises.
  • Take advantage of rotating bonus categories. If your card offers rotating bonus offers, then spend a few minutes of planning to capitalize on them each year. For example, if your first quarter bonus category is 5% for groceries, consider spending more on groceries during those first three months. Buy extra pantry staples and meat to deep freeze, so you can shop less in the months to come.

>>EARN: The Best Credit Cards for People Struggling With Bad Credit

Best Cash-Back Credit Cards

Regardless if you’re new to earning cash back or you’re a seasoned credit card veteran, you’ll find your next cash-back credit card at Slickdeals. Our Credit Card Hub has dozens of the best credit card offers, and we make it easy to compare cards by cash-back percentage, issuer, sign-up bonus and more. Below you’ll find some of the most popular cash-back credit cards within our Slickdeals community.

Continue scrolling for more details about each of the above credit cards, or visit our guide to the best cash-back cards to compare even more popular offers.

1. Best for EveryDay Spending: Citi® Double Cash Card

2.Best for Earnings Flexibility: Bank of America® Cash Rewards credit card

3. Best for Gas and Groceries: Blue Cash Preferred® Card from American Express

4. Best for No Annual Fee: Chase Freedom Unlimited®

5. Best for Small Purchases: Citi Rewards+℠ Card

>>NEXT: The Best Rewards Credit Cards of 2020: Compare Current Offers, Benefits and Sign-Up Bonuses

We want to make sure you get the best deal! Our editors strive to ensure that the information in this article is accurate as of the date published, but please keep in mind that offers can change. We encourage you to verify all terms and conditions of any financial product before you apply. Also, please remember this content wasn’t provided, reviewed or endorsed by any company mentioned in this article.

Ryan Tronier

Ryan Tronier is a personal finance editor and writer. He has worked in journalism and publishing for nearly two decades before becoming Slickdeals' Personal Finance and Credit Card Editor. Ryan's work has appeared in publications like USA TODAY, NBC News, Sapling and Techwalla. Find him online at ryantronier.com.

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