If you’re a sensible consumer with a somewhat reasonably good credit profile, then you will have a plethora of credit cards offers at your disposal. With hallmark financial institutions now getting more and more competitive with that they are prepared to throw at you for obtaining their card, there are plenty of deals to be had.
At the forefront of this credit revolution is that of cash back credit cards. In a nutshell, you stand the chance of receiving cashback every time you make an eligible purchase. As long as you make a purchase that you were going to make anyway – and you’re prepared to pay your statement balance off in full every month, then stand the chance of reducing your everyday expenses by 1-3% – sometimes more.
If this sounds like something that you would like to explore further, then we welcome you to read our comprehensive guide on cashback cards. Within it, we’ll cover everything you need to know – such as what cashback are, how they work, how much you stand to get back, and more.
Compare Cash Back Cards: Top 5
- 1 Compare Cash Back Cards: Top 5
- 2 What are cashback cards?
- 3 How to Choose a Cashback Card?
- 4 How to Manage a Cashback Card
- 5 Compare Cash Back Cards
Here’s a breakdown of the best 5 cashback cards currently available in the US market.
Capital One® Quicksilver® Cash Rewards Credit Card
If you’re looking for the ultimate cashback card of 2019 and beyond, then look no further than the Capital One Quicksilver Cash Rewards Credit Card. The hallmark offer than comes with the credit card is its 1.50% cashback on all purchases. While this might not sound like an over-competitive amount to receive, it really is when you consider that there are no limits to the amount of cashback you can claim.
This isn’t the case with some of the other providers on our list, which, although might offer a higher percentage rate, will limit the amount that you can claim. Moreover, the Capital One Quicksilver Cash Rewards Credit Card does not place any restrictions on your spending categories. In other words, you will receive an unlimited amount of cashback on every purchase that you make. Whether it’s on gas, retail, online purchases, or travel – you’ll always get 1.5% cashback!
On top of the proprietary 1.5% cashback rate, the provider also offers a super-competitive introductory bonus for first-time customers. This amounts to a $150 cash bonus when you spend $500 on your card within the first three months. Once again, you can use the card on any spending categories to obtain the bonus, which is great.
If the above benefits weren’t tempting enough, the Capital One Quicksilver Cash Rewards Credit Card also comes with zero-fee transactions when you use the card abroad. Moreover, you won’t be required to pay any annual fees – period!
We should also note that the card comes with a very generous 0% interest period on both balance transfers and purchases for 15 months. In terms of the fundamentals, the card comes with a variable APR between 15.74% and 25.74%. However, this will only kick-in once your 15 months have expired. If you are looking to obtain the card, you will need to have a credit rating of at least ‘Good’, so do bear this in mind.
Capital One® SavorOne® Cash Rewards Credit Card
Capital One also makes our number two spot with its SavorOne Cash Rewards Credit Card. In a nutshell, the card is absolutely perfect if you find yourself spending a lot of money on food, which is likely to be the case if you have a larger family. The reason for this is that the SavorOne Cash Rewards Credit Card will award you with 2% cashback every time you use the card at a grocery store.
On top of grocery rewards, the card will also offer you 3% cashback when you use the card in a restaurant or on entertainment-related purchases. For everything else, the card will come with a 1% cashback rate. In even better news, there are no limits to the amount of cashback that you can claim each month/year, which is a massive bonus.
Much like in the case of the Quicksilver Cashback Card, the SavorOne comes with an introductory offer of $150 when you spend $500 in the first 90 days of activating the card. Moreover, you will also get a super-long 15 months worth of 0% interest on purchases and balance transfers.
Take note, if you do take Capital One up on the balance transfer offer, you will be required to pay a 3% transfer fee. As such, a $10,000 transfer would end up costing you $300. Once the 15 months has concluded, you will then move to the standard variable APR rate of between 15.74% and 25.74%. You will not be required to pay any annual fees on the card, and you will also benefit from 0% fees on transactions made outside of the US.
In this sense, the card is very similar to the Quicksilver Cash Rewards Card. However, the key difference centres on the long-term cashback rate. As such, you need to determine whether you want 1.5% on all purchases or target the 2% rate on grocery purchases.
Wells Fargo Cash Wise Visa® Card
The Wells Fargo Cash Wise Visa Card is looking to challenge the Quicksilver card being offered by Capital One, insofar that its proprietary offer is also an unlimited amount of cashback at 1.5%. To clarify, there are no restrictions on the specific spending categories, meaning that you will get the 1.5% cashback each and every time you use the card.
Moreover, the cashback will never expire, so you are not pressured into redeeming your rewards quickly. Interestingly, if you currently have a loan with Wells Fargo, you also have the choice of using your cashback rewards to help with your payments. Furthermore – and just as notably, you can even withdraw your cashback from a Wells Fargo ATM, as long as you currently have an account with them.
Alternatively, you can use your cashback as a statement credit, or on gift cards. In this sense, we really like the redemption flexibilities that Wells Fargo offer. The Cash Wise Visa also comes with a similar introductory offer to that of the Quicksilver card, insofar that you will receive $150 in rewards when you spend $500 in the first 90 days.
We should also note that for the first 12 months, the card will give you 1.8% cashback when you use it to make purchases via Apple Pay or Google Pay. As such, try to put all of your online and mobile purchases through your chosen provider.
In terms of the fundamentals, the card comes with a variable interest rate of between 15.49% and 27.49% APR, which is pretty standard. However, you will get 0% interest for the first 15 months on all purchases and balance transfers made. If you make your purchases within the first 120 days you will pay a transfer fee of 3%, and 5% thereon.
Bank of America® Cash Rewards credit card
If you find yourself spending a lot of money throughout the month on a certain spending category, then it might be worth considering the Bank of America Cash Rewards Credit Card. The reason for this is that the card allows you to choose one spending category, whereby you will get 3% cashback on your purchases. This could be anything from dining, to gas, to online shopping. However, it is important to note that the 3% cashback rate is capped to $2,500 per year.
After this, your purchases will then be paid at 1%. You will be paid 2% cashback on purchases made on groceries, however, this will also revert down to 1% once you hit the $2,500 annual limit. On the flip side, there is no limit to the amount of rewards you can earn at the 1% rate, which is great.
In terms of its introductory offer, we really like the $200 cashback that you will earn when you make $1,000 worth of purchases in the first 90 days of obtaining the card. This can be purchases made on any spending category.
Unfortunately, the Bank of America Cash Rewards Credit Card does not come with a 0% interest period on either balance transfers or purchases, which is a shame. This means that you will instantly be put on to its standard variable APR rate of between 15.74% and 25.74%.
Nevertheless, the card does not come with any annual fees, and the minimum redemption rate is low at just $25. In terms of redeeming your cashback, you can either use it as a statement credit against your outstanding balance, or alternatively, have the cash paid into your Bank of America bank account. Regarding the latter, you will, of course, need to be a customer of Bank of America to be eligible for the cash deposit option.
Blue Cash Preferred® Card from American Express
If you’re looking for some of the highest cashback percentage rates currently in the market, then look no further than the Blue Cash Preferred Card from American Express. First and foremost, you will get a whopping 6% cashback when you use the card at US supermarkets. Take note, this is capped at $6,000 per year, with the rate dropping down to 1% thereon.
Nevertheless, you will also get 6% cashback when using the card on US streaming subscriptions, and a super competitive 3% cashback on gas purchases. Outside of the above parameters, you will get 1% on all other purchases. As is the case with most credit card providers in the US, American Express will also offer you an introductory bonus.
This consists of a $250 bonus when you spend $1,000 in the first 90 days, which just out-pips the Bank of America offer we discussed above. As great as all of the aforementioned benefits are, there are a couple of drawbacks to the card that we must briefly discuss. Firstly, the card comes with a super-high annual fee of $95.
As such, you need to ensure that you will be able to earn at least $95 in cashback rewards before taking the card out. Secondly, you also need to remember that the card is backed by American Express. This is because the issuer is less prevalent in comparison to the likes of Visa and Mastercard, so do bear this in mind.
We should also note that the Blue Cash Preferred Card comes with a generous 0% interest period for 12 months, which covers both purchases and balance transfers. The latter will attract a balance transfer fee of 3% or $5 – whichever is greater. After this, the card comes with a standard APR variable rate of between 14.49% and 25.49%.
What are cashback cards?
In its most basic form, a cashback card is a type of credit card that rewards you for making purchases. Putting the specific reward system to one side momentarily, the overarching concept of the credit card remains constant with any other credit-based product. By this, we mean that you if eligible, you will give a pre-defined credit limit that will allow you to make purchases on the card online or in-store.
At the end of each month, you will then receive a statement that allows you to pay some, or all of what you owe. However, when it comes to cashback-specific credit cards, you stand the chance of paying less than what you actually spent. This is because eligible purchases will come with a certain amount of cashback that is paid in the form of statement credit.
Let’s take a look at a quick example in order to set the scene.
- You obtain a cashback card that gives you 3% cashback every time you purchase something at the gas station.
- Throughout the month, you end up spending $300 on gas – all of which you paid for with your credit card
- Taking into account your 3% cashback rate, you will have earned $9 in cashback.
- When you receive your statement at the end of the month, you will only need to pay the credit card company $291 – even though you actually spent $300.
As you will see from the above example, you successfully reduced your cost of living – at least in terms of your gas expenditure. In fact, you didn’t have to do anything out of the ordinary, apart from ensure that you paid for your gas with your cashback credit card, as opposed to cold-hard cash as you normally would.
The good thing is that the above example is just one spending category of many. You see, credit card cashback schemes will normally give you a plethora of spending categories to earn points on, some of which will pay more than others.
For example, while you might get 5% back on gas purchases, restaurant purchases might get you 2%. Moreover, the credit card company might state that anything outside of its proprietary categories come with a simple 1% cashback – subsequently giving you the opportunity to cashback on each and every purchase that you make!
Most importantly – and as we will discuss in much greater later on, the only way that the above cashback opportunities remain valid is if you avoid paying any interest on your purchases. If you do – and the interest APR is higher than the cashback amount you receive (which it always will be), then you will actually be losing money. As such, you need to ensure that you always pay-off your balance in full every month.
Note: While it is true that a lot of cashback credit cards will also come with a prolonged period of 0% interest on purchases, you should still pay your balance off in full every month. The reason for this is that you will eventually need to repay the money you borrowed, and if you let it build up over time, you might be able to do this comfortably.
So now that you have a basic understanding of what a cashback credit card actually is, in the next section of our guide we are going to explore what you need to look out for when choosing a card.
Other Types of Credit Cards
- What Are the Best Secured Credit Cards?
- What Are the Best Balance Transfer Credit Cards?
- Best Credit Cards for People With No Credit
- What Are the Best Credit Cards for Students?
- Best Reward Credit Cards
How to Choose a Cashback Card?
The US consumer market is now overloaded with cashback credit card offers. While this is great for you as the borrower, this can make it somewhat difficult to know which credit card to go with. Moreover, if you’re also looking to engage in a debt consolidation plan concurrently with your cashback endeavours, you’ll need to look at other attributes of the card other than just the cashback itself.
With that being said, we have listed some of the most important metrics to look out for when choosing a cashback card that is right for you.
One of the first things that you need to look out for is what purchases you can actually make to be eligible for a cashback reward. This is pretty easy to find, as most credit card companies will clearly highlight this alongside the offer. For example, the provider might state that you will receive 4% on purchases made on flights and hotels, 3% on gas, 2% on restaurants, and 1% on everything else.
Most importantly, you need to ensure that you are obtaining a cashback credit card that covers spending categories that you will actually find useful. For example, if the cashback card offers a super competitive 5% cashback on gas purchases, but you don’t drive, then the offer is pretty much worthless!
Ultimately, a sensible cashback strategy will see you use your credit card on everyday purchases at every given opportunity. This is because you will need to pay your balance off in full every month if you are to avoid incurring interest and thus, you need to ensure you have the cash available. As such, make a list of your common expenses and then target cashback cards that offer this as an eligible spending category.
Cashback Rates and Limits
Once you have explored what spending categories are eligible for cashback, you then need to explore how much the credit card company is willing to give you for each purchase that you make. In this sense, you want to be choosing a card that pays the highest percentage rate for the spending category that you think is most relevant to.
On top of the specific cashback rate itself, it is also important to assess whether or not any limits are in place regarding the amount of cashback you can earn. If they are, this will typically be expressed per month or annually. For example, while you might be able to get 2% on all supermarket purchases, this might be capped at $5,000 per year. This would mean that as soon as you reached $100 in cashback, you wouldn’t be able to earn any more for the remainder of the year.
This is where things get really confusing, not because you will need to compare cards on both metrics. Take a look at the following examples to see why a higher rate might not always be the best option to go with when factoring in limits.
Example 1: 5% Cashback on Gas – Limit of $5,000 per Year
- You spend $1,000 on gas per month, amounting to $12,000 per year.
- After five months, you have spent the maximum allowance of $5,000.
- At a cashback rate of 5%, this gets you $250
- For the remaining 7 months of the year, you spend a further $7,000 on gas.
- However, you do not earn any more cashback as you have already reached your $5,000 limit.
Example 2: 3% Cashback on Gas – No Limits
- As with the above example, you spend $1,000 per month on gas.
- Only this time, you will receive just 3% cashback on your gas purchases.
- As the cashback card does not come with any limits, you get to earn cashback for the entire year.
- With $12,000 being spent on gas throughout the year, your 3$ cashback earns you $360.
As you will see from the above two examples, although the second card came with a 3% cashback offer as opposed to the 5% available on the first card, you actually received $110 more. This highlights the importance of taking the cashback limit into account.
As is the case with any financial product that centres on credit, you will, of course, need to assess whether or not you will be eligible for your chosen cashback card. As we briefly noted earlier, the very best cashback deals are typically only available for consumers with a credit rating or ‘Good’ or ‘Excellent’, so you should make some considerations regarding your overall credit profile before applying.
On the other hand, we find that the vast majority of cashback credit card providers will now allow you to make an application on a soft inquiry basis. In layman terms, this means that the provider won’t report the application to the main three credit bureaus. Instead, they will be able to give you a pre-approval decision by extracting data from secondary sources. Ultimately, you’ve got nothing to lose by at least finding out if you are eligible – as if you are denied, it won’t impact your credit score!
You also need to check whether or not the cashback credit card comes with an annual. While some credit card companies do charge an annual fee, others don’t. Moreover, those that do charge a fee might waive this during the first 12 months of using the card.
Ultimately, you need to make sure that the annual fee doesn’t wipe out any potential cashback rewards that you are likely to get. For example, let’s say that you are taking out a specific cashback card because it pays 3% on hotel purchases. However, the card also comes with an annual fee of $50, so we need to factor this into our calculation.
In basic terms, we know that we need to earn at least $50 in cashback to make the exercise worthwhile. As such, we need to figure out how much we need to spend on hotels to earn the all-important $50. By doing the calculation, it turns out that we need to spend at least $1,665 on hotels to make it worthwhile.
If you are looking to maximize your potential earnings, then it is wise to assess whether or not the cashback credit card comes with an introductory. In its most basic form, an introductory offer is a means for the credit card company to make their card stand out from the crowd, and thus, entice you in. This can come in a range of different forms, but in the case of cashback cards, you will often get bonus cash when you spend a certain amount in a certain period of time.
The introductory offer usually operates independently from its main cashback offer. For example, while the card might focus on 1% cashback for all purchases, you might get 5% in the first 30 days up to $500. Alternatively, you might get $200 cashback when you spend $1,000 in the first three months. Either way, if an introductory offer is available, you should attempt to maximize it.
What would a credit card be without a rate of interest? With that said, your cashback credit card will, of course, come with an APR rate. As we will cover shortly, the APR rate could be irrelevant if you manage your card wisely. This is because you should be attempting to clear your monthly balance in full each and every month. If you do, you’ll never have to pay any interest on your purchases.
On the other hand, this might not always be the case – especially if you run into an unexpected financial emergency. As such, you will need to assess the APR rate that comes with the card. Although card providers will display its APR range (for example between 14.42% and 22.43%), you won’t know what specific rate you will get until you are pre-approved.
It is also important to note that a lot of cashback credit cards now come with prolonged periods of 0% interest on purchases. This means that you will not need to pay any interest foon your purchases for as long as the introductory period is in place for.
So now that you know what to look out for when choosing a cashback credit card that meets your individual requirements, in the next section we are going to give you some handy tips on how to manage your card correctly.
How to Manage a Cashback Card
If you want to stand the best chance possible of using your cashback credit card to reduce your cost of living, we would strongly suggest reading through the following guidelines.
- All Eligible Purchases Apply
First and foremost, it is crucial that you constantly remind yourself that you are only obtaining the cashback credit card for the purpose of earning rewards. As a result, never use your credit card unless the purchase is an eligible category. This is why it is sometimes more beneficial to obtain a cashback card that offers you a reward for every purchase that you make – irrespective of the spending category.
Nevertheless, if you are about to make an everyday purchase and the spending category is eligible, then you should always use your cashback card. At the end of the day, the more transactions that you able to put through your card, the more cashback that you will earn.
- Don’t Purchase Non-Required Items
One of the biggest mistakes that you can make when engaging in a cashback card program is to make purchases simply for the purpose of earning points. This is potentially the worst thing that you can do, as you will eventually get to the point where you are unable to repay the money back.
Instead, you should only focus on purchases that you were going to make anyway with cash. This would include items such as groceries, commuting to work, paying for lunch, and any other daily essentials that you typically incur. The deciding factor should be whether or not you have the required cash to pay for the purchase. If you that isn’t the case, don’t make the purchase!
- Never Carry a Balance on Your Card
The most important tip that we can give you is to ensure that you never carry a balance on your monthly statement. By this, we mean always paying your monthly balance in full each and every month – as we have repeatedly noted throughout this guide. Failure to do this will all-but certainly result in your balance having interest applied to it.
If it does, then the entire cashback exercise would have been made in vain. Think of it like this. It is all good and well going through the month and obtaining 1%-3% cashback rewards here and there. Sure, at the end of the month you will have reduced your cost of living in the form statement credit.
However, if you then decide to make the minimum payment rather than clearing your balance in full, what happens when the 24.2% APR kicks in on your purchases? That’s right, you will be paying more in interest than what your cashback rewards are worth. This means that the entire exercise has actually ended up losing you money!
- Set up an Automatic Monthly Payment
Following on from the above point, you are strongly advised to install an automatic monthly payment on your credit card. Known as an ‘Electronic Debit Agreement’, this will permit the credit card company to deduct your monthly payments directly from your checking account. This is highly beneficial, as it will ensure that you never miss a payment.
Most importantly, it will motivate you to ensure you always have enough in your bank account to cover the payment. When you set up the Electronic Debit Agreement via your account dashboard, the credit card provider will ask you how much you want to pay. There should be a box that allows you to select something along the lines of ‘Pay Statement in Full’.
In order to help you along the way, you might want to consider putting the cash equivalent of your credit card purchases to one side. For example, if you find that you have spent $100 on your credit card over the past seven days, then you should transfer this amount to the checking account linked to your Electronic Debit Agreement. Although at first glance this might feel somewhat cumbersome, once you get in the habit of doing it every week it will ensure that you always remain on top of your repayments.
- Don’t Carry too Many Cashback Cards
With so many competitive cashback credit cards now in the market, some consumers will hold more than one card. For example, if credit card A offers a headline cashback rate of 5% on gas, and credit card B offers 5% on groceries, you might be tempted to obtain both cards. Although there is nothing wrong with this per-say, you do need to be careful not to apply for too many cards.
Whether it’s cashback credit cards, loans, or lines of credit – the main three credit bureaus don’t like to see consumers apply for too many credit-based products. Although you might be doing this to engage in a super-shrewd cashback exercise, in the eyes of credit bureaus it appears that you are in desperate need for credit. As a result, just make sure that you don’t make too many applications!