At Experian, one of our priorities is consumer credit and finance education. This post may contain links and references to one or more of our partners, but we provide an objective view to help you make the best decisions. For more information, see our Editorial Policy.
In this article:
You probably see your credit cards simply as pieces of plastic you can use to make purchases you'll pay for later. But many credit cards offer potentially lucrative rewards for carrying them and using them every day. There are cards that earn airline frequent-flier miles and others that rack up hotel points that folks can redeem for discounted stays. Some of the best rewards credit cards, however, are the ones that offer folks cash back on their purchases.
When you use a cash back credit card, you basically earn a rebate on the purchases you make. There are dozens of cash back credit cards on the market, and choosing the right one will mostly depend on your credit score, your budget, and what you spend the most money on each month. Here's what you need to know to pick the right one for your wallet and to make the most of it once you start using it.
Credit Cards That Offer Cash Back
If you're looking for a card that offers cash back on everyday purchases, and even bonuses on special categories like dining or entertainment, you're in luck. There is an exciting variety of cards to choose from. Here are some of the top options to consider right now.
Blue Cash Everyday® Card from American Express: When you apply through Experian CreditMatch™ and are approved by the issuer, this card can earn you $200 back in the form of statement credits after you spend $1,000 in purchases on the card within the first 3 months. In addition, during your first six months with this card.This card earns 3% cash back at U.S. supermarkets on up to $6,000 in purchases per calendar year (then 1%), 2% cash back at U.S. gas stations and select U.S. department stores, then 1% back on other purchases. The card has no annual fee, and offers a 0% intro APR on purchases for 15 months from the date of account opening, then a variable rate of 13.99% to 23.99%. Terms apply.
Capital One Quicksilver Cash Rewards Credit Card: This card is currently offering new cardholders $200 back after $500 is spent on purchases within 3 months of account opening. In addition, you'll get 0% intro APR on purchases for 15 months, after which the APR becomes a variable 15.49% to 25.49%. The card earns 1.5% cash back on every purchase with no rotating categories, so it's easy to keep track of your earnings. There are no foreign transaction or annual fees.
Chase Freedom Unlimited®: One of the best all-round cards offered by Chase is fielding a lucrative welcome offer unlike any we have seen for it before: Earn a $200 bonus after you spend $500 on purchases in your first 3 months with the card. All eligible non bonus purchases earn 1.5% cash back. New cardholders are also eligible for 0% intro APR for 15 months from account opening on purchases, after which it becomes a variable 14.99% - 23.74%. There is no annual fee. If you maximize the first-year grocery bonus, you could earn up to $600 cash back on just your grocery purchases, while the everyday 1.5% back makes this one of the most solid choices around.
Citi® Double Cash Card - 18 month BT offer: This card from our partner might seem a bit confusing at first, but if you pay your bills off responsibly, you can earn a robust 2% cash back on what you buy. Here are the terms: Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. Right now, the card is also offering 0% intro APR on balance transfers for 18 months, after which it becomes a variable 13.99% to 23.99%. There is no annual fee.
How Do Cash Back Credit Cards Work?
Cash back credit cards work by essentially reimbursing you for a certain percentage of a purchase amount. This percentage may vary based on the type of business you're spending money with (restaurants, gas stations, grocery stores, for example) or by individual retailers (such as Amazon.com). Some cards let you choose which purchases will net you a higher rewards rate.
Usually, this reimbursement is set aside in an account you can either manually redeem or set up to auto-redeem. All rewards calculations are handled automatically by your credit and all you might have to decide is when and how to cash out.
Earning Cash Back Rewards
There are three main ways cash back cards earn you rewards:
- Flat-rate cards: Many cash back credit cards earn a flat rate of around 1% to 2% back on most, if not all, purchases. While this limits their earning potential, it can be nice not to have to put much effort into maximizing your cash back each month.
- Tiered cards: Certain cash back cards offer higher rates of return when you use them for purchases at specific types of merchants. For instance, you might earn 3% back on grocery purchases, 2% back on travel and dining, and 1% back on everything else. Depending on whether most of your expenses tend to be concentrated in one or two categories, getting a card that's structured like this can really up your earnings. You may also choose to have several rewards credit cards and use certain higher-earning cards for certain purchases.
- Bonus category cards: Sort of like tiered products, certain cash back cards earn a flat rate on some things you buy, but a higher rate of between 3% to 5% back on certain spending (up to a certain amount, usually). This increased rewards rate is based on bonus categories that can change every month or quarter. For example, from July through September, your card might earn 5% back at gas stations and restaurants, while from October through December, that might change to Amazon.com purchases and department stores. It can be harder to keep track of your earnings with these cards, and you may have to opt in every couple of months to participate, but doing so can dramatically increase the amount of cash back you are able to earn.
Redeeming Your Rewards
After you make purchases with your cash back credit card, you can typically redeem your rewards in a variety of ways. Depending on the card you carry, you might be able request the following options:
- Statement credits: This type of cash back is applied toward your credit card balance and can save you money on your monthly bill.
- Transfer to a bank account: Some programs will let you transfer the cash back you earn into a linked bank account electronically.
- Check: Feeling old-fashioned? Get your issuer to send you a paper check for the cash back you've earned.
- Gift cards: Certain issuers will let you redeem your cash back rewards directly for gift cards with various merchants.
- Combine and transfer: Depending on your credit card and bank, you might be able to link your cash back rewards to the issuer's own rewards program and then convert them into miles or points with travel partners. For instance, if you have the Chase Freedom Unlimited® as well as the Chase Sapphire Preferred® Card, you can combine the points you earn with both cards and transfer them to the Chase Ultimate Rewards program's airline and hotel partners.
When thinking about how to redeem your rewards, check the specific terms and conditions of your credit card to see if you need to meet a minimum threshold to do so. For instance, you might need $25 worth of rewards to request a statement credit, or just $5 back for a gift card. The details will vary by product.
What Credit Score Do You Need for a Cash Back Card?
With so many cash back credit cards out there, there are options for almost everyone. If you have poor credit, or are new to credit, you might want to opt for a basic card as you build your credit. However, the best cash back cards with the highest rewards rates, such as the Chase Freedom Unlimited®, often require applicants to have excellent credit to qualify.
Before you apply, check your credit report for free through Experian. If you find that you need to improve your score, make sure to pay all your bills on time, keep your credit card balances low, avoid applying for too many new cards at once and be on the lookout for credit card fraud. You could also consider using Experian Boost™† to help improve your score even faster.
How to Maximize Your Credit Card Rewards
There are several steps you can take to get the most out of your cash back rewards card:
- Maximize earning rates. Decide whether you want a card that earns a flat rate of return on every purchase every day, or if you are willing to put in a little extra work and get a card with bonus categories that could increase your earnings.
- Spend strategically. If you do get a card that earns higher rates of cash back at certain merchants, make sure to use the card for the purchases you'd regularly make at those places so that you can rake in as much cash back as possible while still spending responsibly.
- Earn the intro bonus. Cash back cards, like other rewards cards, often come with introductory offers worth hundreds of dollars. Before you open a new card, make sure you can meet any spending requirements necessary (without spending extra) to earn the sign-up bonus so you don't leave money on the table.
- Consider the annual fee. While many excellent cash back cards do not charge an annual fee, there are a few that do. If you're considering one of those, think about whether the cash back you are likely to earn each year will make up for paying an annual fee.
- Pay off balances. Many cash back credit cards offer 0% introductory APR rates on purchases or balance transfers for a short time. After that, the rates can jump up to over 20% in some cases. If you plan to take advantage of an offer like this, make sure you can pay off your balance before the 0% intro APR window closes. Otherwise, the interest you incur will likely wipe out the value of any cash back rewards you might have earned.
Cash back credit cards offer rewards that can save you much-needed money on everyday purchases. With a little planning to take advantage of all a cash back credit card has to offer, including bonus earning opportunities, you might rack up a lot more cash back than you think. To find credit card offers tailored to your needs and habits, you can pull up personalized options through Experian CreditMatch™.