Cash Back Credit Cards can be one easy way to see free money flow back into your bank account, but different cards offer different benefits. Not one card is best suited for everyone, so read this article to learn what you should consider before applying for a new Cash Back Credit Card.
Credit Cards come with a lot of benefits, like the potential to improve your credit score and the possibility to earn rewards like points or even better, cash back. Many credit cards will offer you points that you can use to obtain rewards, however, a more helpful perk to look for in a credit card is cash back. This way for every dollar you spend, you get a certain percentage back in cash that you can redeem right away for anything you want, instead of saving up points to have to use in the banks rewards system with limited choices.
But with so many options out there, how do you know which credit card has the best cash back benefit?
Certain credit cards will offer cash back that ranges from 1% to 6% and there’s different types: flat rate, tiered, and bonus category.
Flat Rate Cash Back Cards
Flat Rate means that the card will give you the same percentage of cash back for any purchase you make. One great example of a flat rate cash back credit card is the Chase Freedom Unlimited. This card offers a flat rate of 3% back on all purchases in the first year (up to $20,000) and after that, you get 1.5% unlimited cash back. 1.5% back on anything you spend is a pretty great and easy way to rack up some extra cash. Another perk is that this card doesn’t have an annual fee.
Tiered Cash Back Cards
Tiered cash back cards will pay a higher percentage back on certain categories, such as gas or restaurants, and then pay 1% for any other purchase outside of those categories. Take this into consideration if you’re looking into applying for a tiered card, and see if it makes sense for you. If you’re the type of person to eat out at restaurants a lot, you would want to look for a tiered cash back card that pays a higher return on restaurant purchases.
One tiered card option that has great benefits is the Blue Cash Preferred American Express Card. This card offers 6% back at grocery stores in your first year (up to $6000) and 3% back on gas, and 1% back on all other additional purchases. As a welcome bonus, they will give you $200 back after you spend $1000 within the first three months after signing up. There is an annual fee of $95, but if you reach the welcome bonus, it pays the annual fee for 2 years. This card is not good for someone who travels a lot, since there are no travel perks or bonuses, but it’s great for day to day purchases if you spend most of your time in the US.
Bonus Category Cash Back Cards
Lastly, bonus category cash back cards will offer higher cash back bonuses on different categories at different times, and usually 1% back on all other purchases. An great example of a bonus category cash back card is the Bank of America Cash Rewards card. This card offers you 3% back on a category of your choice (like gas, entertainment, travel, online shopping, etc) and offers 2% back on supermarket purchases, and 1% back on all other choices. You’re allowed to change your special 3% bonus category cash back perk once a month. Moreover, it comes with another great welcome bonus of $200 back once you spend $1000 within the first 3 months of opening your account.
While these are just some of the cards that we found to be the best cash back cards, there are tons more out there. When you’re picking and choosing which card to apply for, it’s important to consider what works best for you and your spending habits. Not one card is going to be the best option for everyone.
Take time to do your research and consider the following criteria when making your decision on the best cash back card for you:
- Type of Cash Back Card: figure out if the card is a flat rate, tiered, or bonus category card and see which one makes sense for your typical spending habits
- Annual Fees: can be a deal breaker for some people and you may be able to find a card with the same cash back rates but lower or no annual fees.
- Welcome Bonuses: are another great perk when you sign up for a new credit card. Keep this in mind so you can max out your benefits.
Even though all cash back cards are different and may not be best suited for everyone, they still offer a lot of value and benefits. It’s smart to take advantage of these cards so that you can reap the rewards and build up your credit score.
Resources:
1. https://thepointsguy.com/guide/best-cash-back-cards/
2. https://www.nerdwallet.com/best/credit-cards/cash-back
3. https://creditcards.chase.com/cash-back-credit-cards/chase-freedom-unlimited
4. https://www.thesimpledollar.com/credit-cards/cash-back/best-cash-back-credit-cards/
