16 Best Cash Back Credit Cards of 2024
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Cash back credit cards are an easy way to generate income every month. The key is to find cards with the highest rewards that match your spending habits. To help, here is our updated list of the best cash back credit cards.
In 2018 I began saving and investing the cash back rewards we earned from credit cards. In 2019 alone we earned $4,177.83 in credit card rewards. As of February 2020, our balance has grown to $9,306.53. As of 2024, our balance has grown to $42,741.60.
Without sacrificing our lifestyle in any way, we’ve been able to save more than $42,000 by strategically using credit card rewards. To help you maximize your rewards, in this article, we’ll look at the best cash back credit cards available today. We’ll also show you examples of how your rewards for each credit card can grow if you choose to invest them.
Best Cash Back Credit Cards
We divide all rewards credit cards into one of three categories: Daily Driver, Triple Play, and Category King cards. Daily Driver cards should be your first credit card. Daily drivers earn 1.5% to 2% cash back or 2x points or miles on your everyday purchases. Triple Play credit cards earn 3% cash back or 3x points or miles on at least three spending categories. Category King cards earn 5% cash back or 5x points or miles on one or more categories.
Learn more: Introducing the 1-2-3 Cash Back System to Maximize Your Rewards
Daily Driver Credit Cards
The daily driver should be your first credit card and should earn at least 1.5% cash back on your everyday purchases. However, we recommend choosing a card that earns at least 2% on all purchases. If you only want to carry one credit card, make it a daily driver.
Wells Fargo Active Cash® Card
Our Rating: 4.9
Wells Fargo Active Cash® Card
Welcome Offer
Earn a $200 cash rewards bonus
Est. Value
$200
Annual Fee
$0
APR
19.49%, 24.49% or 29.49% Variable
Credit Req’d
Good to Excellent 670 – 850
Rewards: Earn unlimited 2% cash back on purchases.
What Is the Value of Your Wells Fargo Active Cash® Card Rewards Over Time?
We mentioned investing credit card rewards at the beginning of this article. We call it Rewards Stacking. In the example below and the others in this article, we’ll assume an annual spend of $24,000. We’ll also adjust the spending categories in a way that makes the most sense for each credit card. You’ll see an estimate of the total annual cash back and how the value can grow if invested at a 9% return for 10 years and 20 years.
Most of the credit cards in this list do not have an annual fee. But, for the ones that do, we will also adjust the calculation to account for the annual fee. Keep in mind when looking at these numbers, we also assume paying your balance in full each month. Otherwise, paying interest on your balance devalues credit card rewards.
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
All Purchases | $24,000 | 2% | $480 | $7,900 | $26,595 |
Citi® Double Cash Card
Our Rating: 4.9
Citi® Double Cash Card
Welcome Offer
Earn $200 cash back
Est. Value
$200
Annual Fee
$0
APR
18.49% – 28.49%, Variable
Credit Req’d
Good to Excellent 670 – 850
Rewards: Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.
What Is the Value of Your Citi® Double Cash Card Rewards Over Time?
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
All Purchases | $24,000 | 2% | $480 | $7,900 | $26,595 |
Robinhood Gold Card
Our Rating: 4.9
Welcome Offer
None
Annual Fee
$0
APR
19.74% – 32.74% Variable
Credit Req’d
Good to Excellent 670 – 850
Rewards: Earn 3% cash back across the board and 5% cash back on travel when you book through the Robinhood travel portal.
What Is the Value of Your Robinhood Gold Card Rewards Over Time?
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
All Purchases | $24,000 | 3% | $720 | $11,850 | $39,892 |
Bread Cashback™ American Express® Credit Card
Our Rating: 4.6
Bread Cashback™ American Express® Credit Card
Welcome Offer
None
Est. Value
None
Annual Fee
$0
APR
20.24% to 34.74% Variable
Credit Req’d
Good to Excellent 670 – 850
Rewards: Earn an unlimited 2% cash back on purchases. (Terms Apply)
What Is the Value of Your Bread Cashback™ American Express® Credit Card Rewards Over Time?
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
All Purchases | $24,000 | 2% | $480 | $7,900 | $26,595 |
Alliant Cashback Visa® Signature Credit Card
Our Rating: 4.7
Alliant Cashback Visa® Signature Credit Card
Welcome Offer
None
Est. Value
None
Annual Fee
$0
APR
16.99% to 26.99% Variable
Credit Req’d
Good to Excellent 670 – 850
Rewards: Earn up to 2.5% cash back on your first $10,000 of qualifying eligible purchases per billing cycle, then 1.5% for every purchase thereafter.
What Is the Value of Your Alliant Cashback Visa® Signature Credit Card Rewards Over Time?
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
All Purchases | $24,000 | 2.5% | $600 | $9,875 | $33,243 |
Capital One Quicksilver Cash Rewards Credit Card
Our Rating: 4.5
Capital One Quicksilver Cash Rewards Credit Card
Welcome Offer
One-time $200 cash bonus
Est. Value
$200
Annual Fee
$0
APR
19.74% – 29.74% Variable
Credit Req’d
Excellent, Good
Rewards: Earn 1.5% cash back on all eligible purchases and 5% cash back on hotels and car rentals booked through Capital One Travel.
What Is the Value of Your Capital One Quicksilver Cash Rewards Credit Card Rewards Over Time?
Since this credit card also earns elevated rewards on some travel booked through Capital One Travel, we added a travel spending category in the example below. We also chose a modest spend for that category to avoid inflating the investing estimates.
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
Other Purchases | $22,800 | 1.5% | $342 | – | – |
Travel booked through Capital One Travel | $1,200 | 5% | $60 | – | – |
Total | 24,000 | – | $402 | $6,616 | $22,273 |
Capital One QuicksilverOne Cash Rewards Credit Card
Our Rating: 4.4
Capital One QuicksilverOne Cash Rewards Credit Card
Welcome Offer
Earn unlimited 1.5% cash back
Est. Value
None
Annual Fee
$39
APR
29.99% Variable
Credit Req’d
Average, Fair, Limited
Rewards: Earn 1.5% cash back on every purchase. Earn 5% cash back on hotels booked through Capital One Travel (terms apply).
What Is the Value of Your Capital One QuicksilverOne Cash Rewards Credit Card Rewards Over Time?
This credit card has a small annual fee. For the example below, we’ll subtract the credit card annual fee from the annual cash back total.
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
Other Purchases | $22,800 | 1.5% | $342 | – | – |
Travel booked through Capital One Travel | $1,200 | 5% | $60 | – | – |
Total | $24,000 | – | $363 ($402 – $39 annual fee) | $5,975 | $20,112 |
U.S. Bank Smartly™ Visa Signature® Card
Our Rating: 4.8
U.S. Bank Smartly™ Visa Signature® Card
Welcome Offer
None
Est. Value
None
Annual Fee
$0
APR
18.74% to 28.99% Variable
Credit Req’d
Good to Excellent 670 – 850
Rewards: Earn an unlimited 2% cash back on every purchase, plus earn up to an additional 2% cash back when paired with a U.S. Bank Savings account.
What Is the Value of Your U.S. Bank Smartly™ Visa Signature® Card Rewards Over Time?
This card doesn’t have an annual fee, but you do have the potential to earn more cash back, depending on if you have a savings account with U.S. Bank.
Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|
$24,000 | 2% | $480 | $7,900 | $26,595 |
$24,000 | 2.5% | $600 | $9,875 | $33,243 |
$24,000 | 3% | $720 | $11,850 | $39,892 |
$24,000 | 4% | $960 | $15,800 | $53,189 |
Triple Play Credit Cards
These credit cards earn elevated rewards of at least 3% in three or more categories, and they make an excellent second credit card.
Chase Freedom Unlimited®
Our Rating: 4.9
Chase Freedom Unlimited®
Welcome Offer
Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year)
Est. Value
$200
Annual Fee
$0
APR
19.74% – 28.49% Variable
Credit Req’d
Excellent, Good
Rewards: Earn 5% cash back on travel purchases through Chase TravelSM (after your first year or $20,000 spent). 3% cash back on dining at restaurants, including takeout and eligible delivery services and drugstore purchases. 1.5% cash back on other purchases.
What Is the Value of Your Chase Freedom Unlimited® Rewards Over Time?
This credit card currently has a unique welcome offer that increases the amount of cash back you can earn in the first year. The example below calculates the estimated cash back you can earn if you already carry the card or beginning in year two for new card holders.
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
Travel booked through Chase TravelSM | $1,200 | 5% | $60 | – | – |
Dining | $3,000 | 3% | $90 | – | – |
Drugstores | $600 | 3% | $18 | ||
Other Purchases | $19,200 | 1.5% | $288 | ||
Total | $24,000 | – | $456 | $7,505 | $25,265 |
If you’re curious how much cash back you can earn in your first year with the welcome offer, we did the math. Assuming you earn the max $300 cash back from the welcome offer, you can add that to the $456 total annual cash back in the example below to get $756 cash back in your first year. Consider if you invest that amount in year one and then contribute the $456 estimated annual cash back for 10 and 20 years. We estimate rewards valued at $8,215 after 10 years and $26,946 after 20 years.
Blue Cash Preferred® Card from American Express
Our Rating: 4.5
Blue Cash Preferred® Card from American Express
Welcome Offer (Terms Apply)
Earn a $250 statement credit
Est. Value
$250
Annual Fee
$0 intro annual fee for the first year, then $95.
APR
18.49% – 29.49% Variable
Credit Req’d
Good, Excellent
Rewards: Earn 6% cash back on groceries up to $6,000 per year at U.S. supermarkets and on select U.S. streaming subscriptions, then 1%. Earn 3% cash back at U.S. gas stations and transit. Earn 1% cash back on other purchases. Terms Apply.
What Is the Value of Your Blue Cash Preferred® Card from American Express Rewards Over Time?
For this credit card, the annual fee is $0 intro annual fee for the first year, then $95. We’ll subtract the annual fee from the annual cash back total.
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
U.S. Supermarkets | $6,000 | 6% | $360 | – | – |
U.S. Streaming Subscriptions | $1,200 | 6% | $72 | – | – |
U.S. Gas Stations and Transit | $2,400 | 3% | $72 | – | – |
Other Purchases | $14,400 | 1% | $144 | – | – |
Total | $24,000 | – | $553 ($648 – $95 annual fee) | $9,102 | $30,639 |
Now, imagine if you use this triple play credit card for groceries, streaming, and gas and then use a daily driver credit card for other purchases. You can earn 2% cash back on all your other purchases instead of 1% cash back. Here’s what the value of rewards can look like over time.
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
U.S. Supermarkets | $6,000 | 6% | $360 | – | – |
U.S. Streaming Subscriptions | $1,200 | 6% | $72 | – | – |
U.S. Gas Stations and Transit | $2,400 | 3% | $72 | – | – |
Other Purchases with Daily Driver | $14,400 | 2% | $284 | – | – |
Total | $24,000 | – | $693 ($788 – $95 annual fee) | $11,406 | $38,396 |
Blue Cash Everyday® Card from American Express
Our Rating: 4.4
Blue Cash Everyday® Card from American Express
Welcome Offer (Terms Apply)
Earn a $200 statement credit
Est. Value
$200
Annual Fee
$0
APR
18.49% – 29.49% Variable
Credit Req’d
Good, Excellent
Rewards: Earn 3% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases, then 1%. Earn 3% Cash Back on U.S. online retail purchases, on up to $6,000 per year, then 1%. Earn 3% Cash Back at U.S. gas stations, on up to $6,000 per year in purchases, then 1%. Earn 1% cash back on all other purchases. Terms Apply.
What Is the Value of Your Blue Cash Everyday® Card from American Express Rewards Over Time?
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
U.S. Supermarkets | $6,000 | 3% | $180 | – | – |
U.S. Online Retail Purchases | $3,000 | 3% | $90 | – | – |
U.S. Gas Stations | $2,400 | 3% | $72 | – | – |
Other Purchases | $12,600 | 1% | $126 | – | – |
Total | $24,000 | – | $468 | $7,703 | $25,930 |
As we did with the previous credit card, let’s look at how the value changes when you use a daily driver card for other purchases. Again, this allows you to earn 2% cash back on other purchases instead of 1% cash back.
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
U.S. Supermarkets | $6,000 | 3% | $180 | – | – |
U.S. Online Retail Purchases | $3,000 | 3% | $90 | – | – |
U.S. Gas Stations | $2,400 | 3% | $72 | – | – |
Other Purchases with a Daily Driver | $12,600 | 2% | $252 | – | – |
Total | $24,000 | – | $594 | $9,776 | $32,911 |
Capital One Savor Cash Rewards Credit Card
Our Rating: 4.5
Capital One Savor Cash Rewards Credit Card
Welcome Offer
$250 Cash Back
Est. Value
$250
Annual Fee
$0
APR
19.74% – 29.74% Variable
Credit Req’d
Excellent, Good
Rewards: Earn 8% cash back on Capital One Entertainment purchases. Earn 5% Cash Back on hotels and rental cars booked through Capital One Travel (terms apply). Earn 3% cash back at grocery stores excluding superstores like Walmart® and Target®. Earn 3% cash back on popular streaming services, dining, and entertainment. Earn 1% cash back on other purchases.
What Is the Value of Your Capital One Savor Cash Rewards Credit Card Rewards Over Time?
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
Grocery Stores (excluding Target and Walmart) | $5,400 | 3% | $162 | – | – |
Dining | $3,000 | 3% | $90 | – | – |
Popular Streaming Services | $600 | 3% | $18 | – | – |
Capital One Entertainment | $250 | 8% | $20 | – | – |
Other Entertainment | $1,200 | 3% | $36 | – | – |
Hotels & Rental Cars Booked through Capital One Travel | $600 | 5% | $30 | – | – |
Other Purchases | $12,950 | 1% | $129.50 | – | – |
Total | $24,000 | – | $485.50 | $7,982 | $26,872 |
Here’s how the value changes if you use a 2% cash back daily driver credit card for other purchases:
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
Grocery Stores (excluding Target and Walmart) | $5,400 | 3% | $162 | – | – |
Dining | $3,000 | 3% | $90 | – | – |
Popular Streaming Services | $600 | 3% | $18 | – | – |
Capital One Entertainment | $250 | 8% | $20 | – | – |
Other Entertainment | $1,200 | 3% | $36 | – | – |
Hotels & Rental Cars Booked through Capital One Travel | $600 | 5% | $30 | – | – |
Other Purchases with a Daily Driver | $12,950 | 2% | $259 | – | – |
Total | $24,000 | – | $615 | $10,122 | $34,074 |
PNC Cash Rewards® Visa® Credit Card
Our Rating: 4.6
PNC Cash Rewards® Visa® Credit Card
Welcome Offer
$250
Est. Value
$250
Annual Fee
$0
APR
19.49% to 29.49% Variable
Credit Req’d
Good to Excellent 670 – 850
Rewards: Earn 4% on gas station purchases, 3% on dining purchases at restaurants, and 2% on grocery store purchases for the first $8,000 in combined purchases in these categories annually. Earn 1% cash back on other purchases.
What Is the Value of Your PNC Cash Rewards® Visa® Credit Card Rewards Over Time?
Keep in mind, there is a cap on the elevated rewards with this card. So, while we did keep an overall spend of $24,000 in our calculations below, this card is best for a modest spender or paired with a daily driver credit card.
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
Gas | $1,800 | 4% | $72 | – | – |
Dining | $3,600 | 3% | $108 | – | – |
Groceries | $2,600 | 2% | $52 | – | – |
Other Purchases | $16,000 | 1% | $160 | – | – |
Total | $24,000 | – | $392 | $6,452 | $21,719 |
Here’s what the value of rewards can look like when you combine this card with a 2% daily driver.
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
Gas | $1,800 | 4% | $72 | – | – |
Dining | $3,600 | 3% | $108 | – | – |
Groceries | $2,600 | 2% | $52 | – | – |
Other Purchases with a Daily Driver | $16,000 | 2% | $320 | – | – |
Total | $24,000 | – | $552 | $9,085 | $30,584 |
Category King Credit Cards
We call these Category King credit cards because they earn excellent rewards in at least one category. These cards are excellent third credit cards. Use this card for the one category, the triple play card for the select categories, and the daily driver for everything else.
U.S. Bank Cash+® Visa Signature® Card
Our Rating: 4.8
U.S. Bank Cash+® Visa Signature® Card
Welcome Offer
$200 bonus
Est. Value
$200
Annual Fee
$0
APR
18.74% to 28.99% Variable
Credit Req’d
Good to Excellent 670 – 850
Rewards: Earn 5% cash back on prepaid hotels, air travel, and car reservations booked in the Rewards Center. 5% cash back on your first $2,000 in combined eligible purchases each quarter on two categories of your choice. 2% cash back on one everyday category, like gas stations and EV charging stations, grocery stores or restaurants, and 1% cash back on other purchases.
What Is the Value of Your U.S. Bank Cash+® Visa Signature® Card Rewards Over Time?
In the example below, we chose dining and groceries for the two 5% categories. Since there’s a $2,000 quarterly cap on those purchases, we also divided that cap between those two categories. Then, we chose gas for the 2% category.
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
Travel Booked in Rewards Center | $600 | 5% | $30 | – | – |
Dining | $4,000 | 5% | $200 | – | – |
Groceries | $4,000 | 5% | $200 | – | – |
Gas | $1,800 | 2% | $36 | ||
Other Purchases | $13,600 | 1% | $136 | – | – |
Total | $24,000 | – | $602 | $9,908 | $33,354 |
Below is a look at how the value increases when you combine this card with a daily driver credit card.
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
Travel Booked in Rewards Center | $600 | 5% | $30 | – | – |
Dining | $4,000 | 5% | $200 | – | – |
Groceries | $4,000 | 5% | $200 | – | – |
Gas | $1,800 | 2% | $36 | ||
Other Purchases with a Daily Driver | $13,600 | 2% | $272 | – | – |
Total | $24,000 | – | $738 | $12,147 | $40,889 |
Citi Custom Cash® Card
Our Rating: 4.7
Citi Custom Cash® Card
Welcome Offer
Earn $200 in cash back
Est. Value
$200
Annual Fee
$0
APR
18.49% – 28.49% Variable
Credit Req’d
Good 670 – 739, Excellent 740 – 850
Rewards: Earn 5% cash back in your top eligible spend category each billing cycle up to the first $500 spent, then 1%. Unlimited 1% cash back on other purchases.
What Is the Value of Your Citi Custom Cash® Card Rewards Over Time?
In the example below, we assume groceries for the top spend category earning 5% rewards up to the cap of $500 per billing cycle.
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
Groceries | $6,000 | 5% | $300 | – | – |
Other Purchases | $18,000 | 1% | $180 | – | – |
Total | $24,000 | – | $480 | $7,900 | $26,595 |
Here’s how the value increases when you use this card with a daily driver.
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
Groceries | $6,000 | 5% | $300 | – | – |
Other Purchases with a Daily Driver | $18,000 | 2% | $360 | – | – |
Total | $24,000 | – | $660 | $10,863 | $36,568 |
Chase Freedom Flex®
Our Rating: 4.7
Chase Freedom Flex®
Welcome Offer
$200
Est. Value
$200
Annual Fee
$0
APR
19.74%–28.49% Variable
Credit Req’d
Good to Excellent 670 – 850
Rewards: Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate and on travel purchased through Chase TravelSM. Earn 3% cash back on dining at restaurants, including takeout and eligible delivery services, and on drugstore purchases. Earn 1% cash back on other purchases.
What Is the Value of Your Chase Freedom Flex® Rewards Over Time?
For the example below, we assume groceries for the 5% category and also assume a max spend in that category.
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
Groceries | $6,000 | 5% | $300 | – | – |
Dining | $3,000 | 3% | $90 | ||
Drugstore | $600 | 3% | $18 | ||
Other Purchases | $14,400 | 1% | $144 | – | – |
Total | $24,000 | – | $552 | $9,085 | $30,584 |
Below is a look at how the value changes when you combine this card with a 2% daily driver card.
Spending Categories | Annual charges | Cash back rate | Estimated annual cash back | Estimate after investing rewards at 9% return for 10 years | Estimate after investing rewards at 9% return for 20 years |
---|---|---|---|---|---|
Groceries | $6,000 | 5% | $300 | – | – |
Dining | $3,000 | 3% | $90 | ||
Drugstore | $600 | 3% | $18 | ||
Other Purchases with a Daily Driver | $14,400 | 2% | $288 | – | – |
Total | $24,000 | – | $696 | $11,455 | $38,562 |
See More: Best Credit Cards for Everyday Spending
What Is a Cash Back Credit Card?
A cash back credit card is a type of rewards credit card that offers cash rewards for making purchases with the card.
With a cash back credit card, a percentage of the purchase amount is credited back to the cardholder’s account as a cash reward. The cash back rewards can typically be redeemed as a statement credit, a deposit to the cardholder’s bank account, or as a check. Cash back credit cards may offer a flat rate of cash back for all purchases, or higher cash back rates for specific categories of spending, such as groceries or gas. Some cash back credit cards also offer sign-up bonuses and other perks, such as no annual fee or zero percent introductory APR periods.
3 Types of Cash Back Credit Cards
As you map out your own cash back strategy, keep in mind that there are three broad types of cash back cards.
- Flat-rate “Daily driver” credit cards: The most simple approach is a card that pays the same reward percentage on all purchases. The industry standard is 1%, but for those with good credit, you can nab 1.5% or even 2% on every purchase. This should be the first type of cash back card you get and serve as your everyday card. If you only want to carry one credit card, this one should be it.
- Tiered cash back or “Triple Play” credit cards: These cards offer different rates of cash back depending on the category of spending. For example, a card may offer 3% cash back on gas and 2% cash back on groceries, but only 1% cash back on all other purchases. The bonus rates can vary based on the categories, with some cards offering multiple bonus categories. Purchases outside of the bonus categories typically pay 1%. These cards should supplement your everyday card if you want to maximize your rewards. You could use a triple play card on the elevated rewards categories and use the daily driver for everything else.
- Rotating category or “Category King” cash back credit cards: These cards offer bonus cash back in rotating categories throughout the year, typically every three months. For example, a card may offer 5% cash back on dining and entertainment from January to March and then switch to 5% cash back on groceries from April to June. There are spending caps eligible for the 5% cash back, typically $1,500 each quarter. All other purchases typically earn 1% cash back.
Here at allcards.com, we’re all about maximizing credit card rewards. Our 1-2-3 Cash Back System explains how to maximize your rewards depending on whether you carry one, two, or three credit cards.
Some folks want the simplicity of using just one card for every purchase. Some are comfortable switching between two credit cards, one for the elevated category and the daily driver for everything else. If you want to add a third credit card, make it a rotating category credit card.
How Does Cash Back Work on a Credit Card?
Cash back on a credit card works by providing a percentage of the amount spent on the card back to the cardholder as a reward. This percentage can vary depending on the credit card and the spending category. For example, a card may offer 1% cash back on all purchases, but 5% cash back on groceries and gas.
The cash back rewards are usually accumulated over a period of time and can be redeemed in different ways, such as a statement credit, a deposit into the cardholder’s bank account, or a check. Some cash back credit cards may have a minimum threshold for redemption, such as $25 or $50.
To earn cash back rewards, the cardholder needs to make purchases with the cash back credit card. The cash back is then automatically credited to their account based on the percentage earned for each purchase. To maximize cash back earnings, cardholders can use their credit card for everyday purchases, such as groceries, gas, and dining out.
It’s important to note that some cash back credit cards may have restrictions or limitations on earning and redeeming rewards, such as expiration dates or spending caps. It’s important to read the terms and conditions of the credit card before applying to fully understand how the cash back rewards program works.
Pros and Cons of Using Cash Back Credit Cards
Cash back credit cards offer several benefits, but there are also some potential drawbacks to consider. Here are some of the pros and cons of using cash back credit cards:
Pros:
- Rewards: Cash back credit cards provide an opportunity to earn rewards for purchases you are already making, which can be a great way to save money or earn cash.
- Flexibility: Cash back rewards can typically be redeemed in multiple ways, such as statement credits or cash deposits, giving you flexibility in how you use your rewards.
- Sign-up bonuses: Some cash back credit cards offer sign-up bonuses, which can provide a large amount of cash back or rewards for meeting certain spending requirements.
- Promotional offers: Cash back credit cards may offer promotional offers, such as 0% introductory APR periods, which can be beneficial for people who want to make large purchases and pay them off over time.
Cons:
- High interest rates: Cash back credit cards often come with higher interest rates compared to other credit cards, which can offset the value of rewards earned if you carry a balance.
- Spending temptation: Cash back credit cards may tempt people to overspend in order to earn more rewards, which can lead to debt and financial problems.
It’s important to carefully consider these pros and cons when deciding whether or not to use a cash back credit card and to choose a card that aligns with your spending habits and financial goals.
How to Find the Best Cash Back Credit Card for You
When looking for the best cash back credit card for you, there are several factors to consider. Here are some tips to help you find the right card:
- Evaluate your spending habits: Look at your current spending habits and identify the categories where you spend the most money. This can help you choose a card that offers the highest cash back rewards for your biggest expenses.
- Consider the cash back rate: Look for a card that offers a high cash back rate in the categories where you spend the most money. Consider both flat-rate and tiered cash back credit cards to find the best fit.
- Check for sign-up bonuses: Look for cards that offer sign-up bonuses that can help boost your rewards earnings. Make sure you understand the requirements to earn the bonus and whether it’s worth the effort.
- Review redemption options: Make sure the card you choose offers redemption options that align with your preferences. For example, if you prefer to receive cash back, choose a card that offers statement credits or direct deposits.
- Consider annual fees and other costs: Look for cards with no annual fee or with an annual fee that is offset by the cash back rewards you’ll earn. Also, consider other costs such as foreign transaction fees, balance transfer fees, and late payment fees.
- Check for additional perks: Some cash back credit cards offer additional perks, such as travel insurance or purchase protection. Consider these perks when choosing a card.
- Compare multiple cards: Finally, compare multiple cash back credit cards to find the one that offers the best rewards program, fits your spending habits, and meets your financial needs.
By considering these factors, you can find the best cash back credit card for your specific situation and maximize your rewards earnings.
How to Make the Most of Your Cash Back Credit Card
If you have a cash back credit card, there are several strategies you can use to make the most of your rewards:
- Choose the right card: Make sure you have a cash back credit card that matches your spending habits. Look for a card that offers bonus cash back in categories where you spend the most, such as groceries, gas, or dining out.
- Pay your balance in full each month: To avoid paying interest charges, make sure you pay your credit card bill in full each month. This will also help you avoid the temptation to overspend and negate the benefits of your cash back rewards.
- Maximize bonus categories: If your cash back card offers bonus cash back in certain categories, be sure to take advantage of those offers by using your card for those purchases.
- Use your card for everyday expenses: Use your cash back credit card for everyday purchases, such as groceries, gas, and utility bills. This will help you accumulate cash back rewards quickly.
- Redeem your rewards strategically: Consider redeeming your rewards for statement credits or bank deposits, rather than merchandise or gift cards, to maximize their value. Additionally, some cash back credit cards may offer bonuses for redeeming rewards in certain ways, so be sure to check for those opportunities.
Also, as I noted above, we save and invest all of our credit card rewards. Over time, we’ve built a 5-figure portfolio just from credit cards. I’m confident it will soon be 6-figures. Here’s the strategy we follow:
Do Cash Back Cards Actually Give You Cash?
Yes and no. It’s not cash, as in $100 bills – but it is money, versus say, travel rewards or gift cards. With a cash back credit card, you earn a percentage of your purchases back in the form of cash rewards. This can typically be redeemed for a statement credit, a deposit into your bank account, or a physical check mailed to you.
The exact redemption options and procedures will depend on the specific cash back credit card you have, so it’s important to read the card’s terms and conditions to understand how the rewards program works. Additionally, some cash back credit cards may have minimum redemption thresholds or restrictions on when you can redeem your rewards.
Is Cash Back from a Credit Card Taxable?
In most cases, cash back rewards from a credit card are not taxable. The IRS considers credit card rewards to be rebates or discounts on purchases, rather than taxable income. This means that you typically don’t need to report cash back rewards as income on your tax return.
However, there are some exceptions. For example, if you receive cash back rewards in exchange for opening a new credit card account, the issuer may report the value of the reward to the IRS as taxable income. Additionally, if you earn rewards through business purchases, the IRS may consider those rewards to be taxable income for your business.
It’s always a good idea to consult a tax professional if you’re unsure about how to report credit card rewards on your tax return.
Why Do Credit Cards Give Cash Back?
Credit card companies offer cash back rewards as a way to incentivize customers to use their credit cards more frequently and to attract new customers. By offering cash back, credit card companies hope to encourage customers to spend more money on their credit cards, which in turn generates more revenue for the credit card issuer through transaction fees and interest charges.
Additionally, cash back rewards can be a way for credit card companies to differentiate themselves from competitors and build customer loyalty. Customers who feel like they’re getting something in return for using their credit card may be more likely to continue using that card and recommend it to others.
Overall, offering cash back rewards can be a win-win for credit card companies and customers. Customers can earn rewards for their purchases, while credit card companies can increase their revenue and customer loyalty.
List of Cash Back Credit Cards
We track dozens of cash back cards. Below you’ll find a list of those cards, ordered by signup bonus, if any. You can click the card name to get more details about each offer. Remember that signup bonuses have spending requirements you must meet to qualify. Sometimes, the signup bonus is in the form of increased cash back rates the first year, subject to spending caps.
1% to 4% cash back
$0 (requires Costco membership)
1% cash back
Program fee of up to $95.00 (one-time fee). Annual fee of $75 for first year, after that, $48 annually. Plus a Monthly Servicing Fee of $0 for the first year, then $99 annually ($8.25 per month).
1% - 1.5% cash back, or 5x points, or 1x miles
$0
1%-6%
$0 intro annual fee for the first year, then $95.
1% to 5% cash back
$0 intro annual fee the first year, $95 thereafter