When it comes to earning rewards on your credit cards, points and miles can be great, but nothing beats the value of cold, hard cash. As long as you always pay your balances in full and on time, and learn to use credit cards and rewards wisely, the only problem with cash back credit cards is choosing the right one.
Some offer a certain percentage of cash back on all purchases, while others grant different rates of cash back depending on the category of spending. Many cards take this a step further by offering higher cash back rates on categories of spending that change throughout the year. In general, simpler is better, but it is hard to turn down very high return rates even when they do not apply to all purchases.
If you want to use one of these cards, I cannot stress enough how important it is to pay your balance in full and on time every month. Otherwise, your “cash back” will add up to only a fraction of the interest you must pay. People who anticipate the need to carry a balance should be focused on finding a card with the lowest interest rate, not a cash back card. To that end, I have decided not to include information on each card’s APR. Since these cards are best-suited for those who never pay interest, that figure should be irrelevant.
Best Cash Back Credit Cards
I have examined hundreds of different cash back credit card offers. Here are the best cards with the most attractive incentives:
AARP Card from Chase
The introductory offer for the Chase AARP card is truly amazing: 5% cash back on all purchases for 6 months. Look at your annual credit card spending and multiply that by 2.5%. That is essentially your sign up bonus. After six months, the card only returns 1% cash back, which is acceptable for a card with no annual fee.
Despite the name, this card is open to people of any age. All you have to do is become an Associate Member of AARP for $16 a year.
PenFed Visa Platinum Cash Back Rewards Card
The PenFed Visa Platinum Cash Back card offers a very high cash back rate on certain purchases. You will get an outstanding 5% cash back at gas stations, and 1% cash back on all other purchases. This is not an introductory offer; you will actually get 5% back on gas for as long as you have the card.
Considering gas prices rising, you could save hundreds of dollars a year on fill ups. Like the AARP card, there is no annual fee, but you have to be eligible for membership in their credit union. If you, a family member, or someone in your household do not belong to one of the numerous qualifying organizations, you can become eligible by purchasing a lifetime membership in a qualifying group for as little as $15.
PenFed Premium Travel Rewards American Express Card
The PenFed Premium Travel Rewards card is very similar to the PenFed Platinum Cash Back Rewards Card, except the 5% rewards are for airfare. If you travel for business and your company reimburses you for airfare, you can make a healthy extra income from your cash back rewards.
Like other PenFed cards, there is no annual fee. However, you will have to meet the credit union’s membership requirements, which is very easy to do.
Fidelity Investment Rewards American Express Card
The Fidelity Investment Rewards card earns a full 2% cash back on all purchases. Outside of an introductory period, this is the highest rate of return on all purchases you will see. To receive this card, you must first create an account with Fidelity. You do not need a brokerage account; one of their checking accounts will do.
After that, just watch the money roll in as you use this card for daily spending. If you want, have your rewards go to an investment account, such as one for retirement savings.
This card proves you do not have to pay an annual fee to receive an amazing cash back rate of return.
Blue Cash Preferred® Card from American Express
The American Express Blue Cash Preferred card is the most attractive cash back card offered directly from American Express. Like other cards, it offers 1% cash back on most purchases, but it earns 3% cash back at department stores and on gasoline. It’s most outstanding rewards are 6% at grocery stores.
The best way to really leverage a card like this is to purchase gift cards at grocery stores in order to receive the 6% cash back on other purchases. Most groceries have a whole rack of gift cards for other merchants including airlines, cell phone companies, and hardware stores.
However, you may have to take advantage of all of these cash back opportunities to justify the $75 annual fee you will have to pay.
Chase Freedom
The Chase Freedom card is one of the cards that features higher cash back rewards on categories of spending that rotate every three months. Normally, this card returns 1% cash back on all purchases, but will earn 5% on specific spending categories that change four times a year.
Its main limitation is that it only rewards the higher rate to the first $1,500 spent in each category. There is no annual fee and this card is eligible for Chase’s revolutionary Blueprint payment program, which allows you to save money on interest if you must occasionally carry a balance on certain purchases.
See our Chase Freedom Credit Card Review for more information.
Capital One Venture Rewards
Technically, the Capital One Venture Rewards card is not a cash back card. It will return 2% on all purchases, but you will receive your reward as a statement credit towards any previous travel related expense.
Unlike the Fidelity card, you will not need to open another account to get your rewards. You just need to spend money on travel to claim it. Purchases of airfare, hotels, and car rentals are automatically eligible for the statement credit, although Capital One will consider any travel related charge if you call them and ask.
This card does have a $59 annual fee ($0 intro for the first year), but is also one of a handful of cards that does not charge a foreign transaction fee.
See our Capital One Venture Rewards Credit Card Review for more information.
Final Word
Cash back cards are a fantastic way to earn rewards without worrying about finding airline award seats or keeping track of gift cards. Each of these top cards offers unique benefits and drawbacks that you must consider before applying. Make the best choice, and you can be enjoying real returns on your every day purchases.
What is your experience with cash back cards?
