7 Best Cash Back Credit Cards

A cash back credit card is one of the easiest way to earn rewards. They’re a useful tool to get paid for the things you’re already buying everyday.

Sounds like a good deal, right?

Well it is! It’s just a matter of identifying which is the right card for you and making sure your application is approved.

So, let’s look at some of the factors you should consider when selecting the best cash back credit card. Then, we’ll introduce you to the 7 best cash back credit cards so you can make a decision.

We’re going to cover:

What Is A Cash Back Credit Card?

Cash back credit cards are pretty simple. You’ll earn cash back on your card when you use it to make purchases.

It’s a great way to get some money back on things you’d be purchasing anyway.

How Cash Back Credit Cards Work

There’s 3 different kinds of cash back cards:

Flat Rate Cards
Bonus Category Cards
Rotating Bonus Cards

Flat Rate Cards

A card with a flat rate means you’ll receive the same cash back rate, regardless of where you’re making your purchases.

These rates are usually between 1-2%. However, you may be able to find a card that will offer a higher cash back percentage.

This type of card is a great option for people who spend evenly across all categories.

Bonus Category Cards

This type of card will reward you when you use the card for purchases relating to the introductory offer.

Let’s say that you spend hundreds of dollars each month on groceries. You’ll want to look for a card with an intro offer like:

Earn $150 when you purchase $500 in grocery stores within the first 3 months of opening the card.

Rotating Bonus Cards

Cards with a rotating bonus will offer these on a quarterly basis, and the category that it applies to will vary.

These cards typically come with a 1% cash back base rate. However, some categories of spending may offer up to 5% cash back. Make sure you check if there’s a limit on how much you can earn each quarter.

You’ll usually be notified a few months in advance of the next category eligible for bonus rewards.

So, what areas should you expect to save extra money in?

Department stores
Supermarkets
Gas stations
Traveling
Restaurants

If you spend hundreds in any of these categories, it’s probably a good idea to apply for one of these cards.

The next upcoming category is chosen strategically. For example, it’s more likely that you’ll be rewarded for shopping in a department store during the winter because of holiday shopping.

Let’s say that you spend $1,000 a month and you secure a card with a cash back rate of 5%.

This means that you will be earning $50 back a month on your everyday purchases.

Pros and Cons of a Cash Back Credit Cards

Pros

Easy to understand and track rewards.
Redeeming your cash back reward is very easy.
You may get additional cash back when you get a card that offers a sign up bonus. In some cases, these bonuses could be worth hundreds of dollars.
Cardholder benefits might offer you options of insurance coverage that could come very handy to you, without any additional cost.

Cons

Most cash back credit cards have a credit requirement of a FICO score of 670 and above.
Some sign up bonuses will require you spend thousands of dollars before you actually receive your bonus money. And in some cases, there’s a time frame in which you must complete the signup offer. That means you might have to spend thousands of dollars in the first 30-90 days of having the card just to qualify for the bonus.
Depending on how often you use the card, you might find that you’re spending more on annual fees than you are earning in cash back rewards.

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Is a Cash Back Rewards Card Right for You?

There are certain things need to know about these cash back credit cards before you go ahead and apply for one.

Your credit needs to be in the range of good to excellent in order to qualify for the best cash back credit cards. If your credit is not in that range, you may want to reconsider applying right now as the inquiry will lower your score. Spend the time to raise your credit score, before you submit the application.
Certain cards give you cash back for purchases made within a specific category like gas stations, supermarkets, traveling, or dining. It’s important to determine which card has the right benefits based on your spending habits.
Many reward credit cards come with a high APR. If you will not be able to pay your balance in full every month, you should consider applying for a card with a lower APR as the interest will continue to accumulate every month otherwise.

How To Make The Most Of Your Cash Back Card

Avoid carrying a balance on your card as it can lead to interest payments higher than your cash back rewards.
Choose a card with offers that match your spending habits. This will boost your cash back rewards.
Look for a signup bonus promotion that doesn’t not require you to spend money.
Earn extra cash back by looking into the additional benefits of the card. Sometimes you can get money just for referring your family and friends.
Did you signup for a card with an annual fee that was waived for the first year? Call them close to your anniversary date and ask about any retention offers. It’s worth the shot to see if you can get a second year of annual fees waived.
Are you looking to a card that offers rewards in the form of miles and points? If you are, check to see if redeeming the points for cash will diminish the value.