Friday, August 19, 2022

Which Is The Best Credit Card For Cash Back

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Should I Get A Cash Back Card Or A Travel Card

The 5 BEST Credit Cards For Cash Back

When deciding between a cash back card or a travel card, it is best to explore the kinds of benefits you would most like to reap. Travel cards provide the opportunity to earn points and miles that you can use for flights, hotels and other travel expenses. Most travel cards also offer sizable sign-up bonuses, though there can be high spending requirements attached. Travel cards can also carry pretty high annual fees. If youre a frequent traveler and can afford to take on an annual fee, a travel card may be for you.

Cash back cards often offer rewards without the annual fees. These rewards are most often redeemable in the forms of statement credits or direct deposits. Spending requirements for sign-up bonuses on cash back cards tend to be lower and easier to meet. Cash back cards can also have more flexibility in terms of rewards earned by spending category. If you spend more in popular high earning cash back categories like gas or groceries, a cash back card may work best for you.

Other Aspects To Consider

Before applying for a rewards credit card, find out the answers to the following questions:

  • How easy is it to earn the reward? Most programs automatically reward you as soon as you’ve spent the qualifying amount. Others allow you to redeem rewards by phone or online whenever you want. Its a good idea to check out how user-friendly a card companys website is before you apply.

  • Is there a caveat? Rewards credit cards may have an annual fee or higher interest rates than other types of cards. There may also be a price to redeem your points, as well as shipping costs to send item prizes. A fantastic program may be worth the extra money, but be sure you understand all of the facts ahead of time.

  • How do the benefits stack up? Think about how many points you get for a dollar, how many you need to get a reward, how many points you can earn each year and when those points will expire. Its usually beneficial to conduct some research on your own.

Bank Of America Customized Cash Rewards Credit Card: Best For Online Cash Back

Sign-up bonus: $200 cash-back bonus after you spend $1,000 within the first 90 days of account opening.

Cash back rate: 3% cash back in the category of your choice and 2% cash back at grocery stores and wholesale clubs on the first $2,500 in combined bonus category purchases each quarter . You can change your 3% category once a month.

Annual fee: $0

Why we chose it: Having the option to get a 3% bonus on online shopping across a wide variety of retailers is terrific. Plus, depending on your banking relationship with Bank of America, that 3% return can go as high as 5.25% back if you qualify for the Preferred Rewards programs top tier Platinum Pro. If your spending habits change throughout the year, the Bank of America Cash Rewards card should definitely be on your radar.

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Advantages And Drawbacks Of Cashback Offers

Weighing up some of the pros and cons could help you determine whether a cashback credit card is right for you.

Pros

  • Money in your pocket. This type of reward offer gives you the chance to get money back for paying with plastic.
  • Pound value. Instead of earning points per £1 spent, cashback credit cards offer a straightforward reward. If you know roughly how much youre going to spend, you can easily calculate the potential benefit of cashback.
  • Other extra features. Credit cards with cashback promotions may offer other features such as complimentary travel insurance, rewards programmes and concierge services.

Cons

  • Annual fees. To access higher earn rates, youll generally have to pay an annual fee. The value you get back from the rewards should be higher than the annual fee if it isnt, the cards not worth your while.
  • Rates of interest. If the cashback offer is a feature of a more premium product, you may find that it comes with higher interest rates. Make sure you can repay the amount youve charged for the cashback before the end of the statement period.
  • Limited rewards. Some cashback credit cards may have a cap on the number of times you can redeem a cashback offer. For example, some many only allow you to receive the cashback once, while others may allow you to take advantage of it up to a capped amount of times in a set period.

How Much Of My Credit Card Should I Use

3 Life Tips For Getting The Best Cash Back Credit Card

The balance you carry on a credit card should be no more than 30 percent of your credit limit if you want to avoid a drop in your credit score. The percent you carry of an open balance, called utilization, gives your credit card company an easy way to track your credit health. For instance, if you have a $10,000 credit limit, its a good idea not to put more than a $3,000 monthly balance on the card. Of course the best idea is to pay the card off every month to avoid interest fees.

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Why You Can Trust Bankrate

At Bankrate, we have a mission to demystify the credit cards industry regardless or where you are in your journey and make it one you can navigate with confidence. Our team is full of a diverse range of experts from credit card pros to data analysts and, most importantly, people who shop for credit cards just like you. With this combination of expertise and perspectives, we keep close tabs on the credit card industry year-round to:

  • Meet you wherever you are in your credit card journey to guide your information search and help you understand your options.
  • Consistently provide up-to-date, reliable market information so you\’re well-equipped to make confident decisions.
  • Reduce industry jargon so you get the clearest form of information possible, so you can make the right decision for you.

At Bankrate, we focus on the points consumers care about most: rewards, welcome offers and bonuses, APR, and overall customer experience. Any issuers discussed on our site are vetted based on the value they provide to consumers at each of these levels. At each step of the way, we fact-check ourselves to prioritize accuracy so we can continue to be here for your every next.

How Rotating Categories Work

The best way to maximize 5% rewards on a rotating cash back card is to make sure you track the rotating categories your issuer offers each year. Here are all the 2021 quarterly categories for both the Chase Freedom Flex and Discover it Cash Back credit cards:

Chase Freedom Flex
Amazon.com, Walmart.com, and Target.com

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The Motley Fool Canada’s Top Cash Back Credit Card Picks At A Glance:

  • 4% on gas and groceries
  • 2% on transportation, dining, and recurring payments
  • 1% on everything else
  • 3% on eligible grocery, gas, and recurring bill payments
  • 1% on all other purchases
  • 4% at grocery stores, recurring bill payments, and subscription purchases
  • 2% on gas and daily transit
  • 1% on everything else
  • 2% Money-Back Rewards in two categories of choice
  • 0.5% Money-Back Rewards on everything else
  • 2% Money-Back Rewards in two categories of choice
  • 0.5% Money-Back Rewards on everything else
  • Guaranteed minimum 1% cash back across all spending

American Express Gold: Best For Dining

Best Credit Cards for Cash Back

Why its great in one sentence: The American Express Gold Card is a top-notch card when it comes to food, as youll not only get a relatively high return at both restaurants and U.S. supermarkets, but also some incredible baked-in benefits.

This card is right for: People who either eat at restaurants or order food for delivery on a regular basis.

Highlights:

  • Earn 4 points for every dollar you spend at restaurants worldwide and at U.S. supermarkets .
  • Earn 3 points per dollar for flights booked directly with airlines or on amextravel.com.
  • Earn 1 point per dollar on everything else.
  • Up to $120 in annual dining credits.
  • Up to $120 in Uber Cash annually.
  • $250 annual fee .
  • Terms apply.

Welcome bonus: Earn 60,000 bonus points after you spend $4,000 on purchases in the first six months after opening the account.

What we like about the American Express Gold: Its not a cheap card with a $250 annual fee. But hang on, because the perks on the Amex Gold can quickly outweigh its cost thanks to its numerous statement credits.

Aside from earning a lot of points, youll earn up to $10 in statement credits each month with the Amex Gold when you use your card to pay at select food merchants, including Grubhub, Seamless, The Cheesecake Factory, Ruths Chris Steak House, Boxed and participating Shake Shack locations .

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Best No Fee Cash Back Credit Card

  • Earn $25 cash back upon first purchase
  • Plus, earn 1.5% cash back on all purchases
  • Also, earn bonus cash back to offset the foreign transaction fee on USD purchases
  • Minimum income: $80,000 personal or $150,000 household
  • Annual fee: $0

If youre looking for a simple solution, the Rogers World Elite Mastercard is the card for you. While other cards offer better category earn rates, theres no better choice for a budget-conscious spender.

The card earns 1.5% cash back on all purchases. This rate is the de facto benchmark for other World Elite Mastercards, but the Rogers World Elite has the advantage of having no annual fee. If youre primarily concerned about keeping costs down, you wont find another card with a better all-round cash back rate.

Also, the card gives higher rewards on US-dollar purchases to offset the foreign exchange fee. This gives you peace of mind not to fret about extra costs if youre doing any online shopping on US sites or going for a jaunt over the border.

Whether you like the simplicity of only using one card, or a high earn rate on uncategorized spending at no extra cost, theres a place for the Rogers World Elite Mastercard in every wallet. Theres one caveat, though: you do need to spend $15,000 per year on the card to maintain your World Elite tier, so its much better as your primary card than as a backup that only sees occasional use.

Blue Cash Everyday: Best For Us Supermarkets

Why its great in one sentence: The Blue Cash Everyday card earns 3% cash back as a statement credit at U.S. supermarkets and 2% back at U.S. gas stations, while also offering a generous introductory interest rate on purchases for 15 months, all with no annual fee .

This card is right for: People who spend a significant amount of their money at U.S. supermarkets each year and dont want to pay an annual fee for a credit card.

Highlights:

  • Earn 3% cash back at U.S. supermarkets on up to $6,000 per year in purchases .
  • Earn 2% cash back at U.S. gas stations and select U.S. department stores.
  • Earn 1% cash back on everything else.
  • Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit.
  • 0% introductory APR on all purchases for the first 15 months .
  • No annual fee.
  • Terms apply.

Welcome bonus: Earn $200 back as a statement credit after you spend $2,000 in purchases on your new card in your first six months after opening the account.

What we like most about the Blue Cash Everyday: For many Americans, a significant portion of the monthly family budget goes to supermarket expenses. The Blue Cash Everyday card dials up the bonus cash back in that category, as well as at gas stations, creating a go-to in your wallet for two routine purchases.

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Should I Get A Cash Back Credit Card

A cash back rewards card could save you money. If you have good or excellent credit and can qualify for the best cash back cards, then they’re definitely worth checking out. But this type of credit card has its perks and its drawbacks.

Pros

  • Most cash back cards don’t charge an annual fee

Cons

  • Usually have smaller sign-up bonuses
  • Fewer travel perks and other extras
  • Can’t get any extra value on cash back redemptions

The great thing about cash back cards is how simple and affordable they are. Anyone can benefit from cash back, and there’s no learning curve involved like there can be with travel credit cards. You can find plenty of no-annual-fee cards that earn cash back. Even the ones with annual fees usually cost less than $100 per year.

There is a tradeoff to those benefits. Cash back cards are affordable, but they also generally have smaller bonuses and fewer features than you could get from a higher-priced travel rewards card. And while cash back means rewards redemptions are a breeze, there’s no way to get more value out of cash back. With rewards credit cards that earn points, it’s sometimes possible to extract more value from those points if you know how to use them.

Petal 2 Cash Back No Fees Visa Credit Card

The Best Reward Credit Cards for Cash Back and Travel

Best for no credit history

  • This card is a good fit for: People with no credit history who want to earn cash back and avoid fees.
  • This card is not a great choice for: Someone seeking additional perks or a sign-up bonus.
  • What makes this card unique? With some credit-builder cards, you run the risk of being surprised with fees and receiving few benefits. Not so with the Petal 2. Youll earn cash back and build your credit without the fear of lurking annual fees, foreign transaction fees, late fees or returned payment fees.
  • Is the Petal 2 card worth it? A cash back rate of 1 percent on eligible purchases is OK for a credit-builder card, especially considering the fact that theres no annual fee. Other credit-builder cards might offer a higher rate in some categories, but that may come at the expense of an annual fee or security deposit. In other words, the Petal 2 is likely worth it for the fee-averse.

Read our Petal 2 Cash Back, No Fees Visa Credit Card review.

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Best Cash Back Mastercard

  • Minimum income: $80,000 personal or $150,000 household
  • Annual fee: $100

The Desjardins Cash Back World Elite Mastercard makes our list as an unsuspecting contender. Even though it has no welcome bonus, its a great all-round workhorse if it fits your spending profile.

With elevated earn rates on groceries, restaurants, transit, and entertainment, this card is a great alternative to the Scotiabank Gold American Express Card. While the rewards arent quite as high, youll benefit from a lower annual fee and no limits to the amount of bonus cashback you can earn.

Also, as the card runs on the Mastercard payment network, youll find that its accepted more widely. If you frequently shop at grocery stores or restaurants that dont take Amex, you may often find yourself excluded from the highest cash back rates on the Scotia Gold Amex. If thats the case, this card is a fantastic solution.

Pros And Cons Of Cash Back Credit Cards

  • Simple rewards with straightforward value
  • Many cash back cards have no annual fee
  • Often have easy-to-earn sign-up bonuses
  • Can offset the cost of your purchases by redeeming cash back as a statement credit
  • To offset travel costs, a travel card earning points might be better
  • Cash back cards dont typically offer premium travel protections

Cash back credit cards are incredibly popular and for good reason. They offer straightforward rewards and can help you earn anywhere from 1% to 6% back when you make a purchase with the card.

Well examine our top pick, the Wells Fargo Active Cash Card, in greater detail, as well as consider eight other cash back cards that excel in various categories.

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Rewards And Bonus Categories

How you earn can be just as important as what you earn. Travel rewards credit cards usually offer a very wide breadth of spending categories to earn in, while cash-back cards can be more restrictive.

Aside from a few exceptions, the majority of cash-back credit cards offer the same limited selection of bonus categories . In comparison, travel credit cards have a far larger selection of bonus categories , which means you can potentially earn more points on more types of purchases.

Bottom line: Youre likely going to earn more points or miles, in more spending categories, with a travel rewards card than cash with a cash-back card.

Winner: Bmo Cashback World Elite* Mastercard*

the BEST credit cards for beginners | cash back travel strategy 2022

The BMOCashBackWorld Elite*Mastercard* allows you to earn 5% cash back on groceries, 4% cash back on transit, and 3% cash back on gas. The cash back rewards and welcome bonus can potentially net you $745, according to our Best of Finance methodology.

Additional benefits include complimentary roadside assistance, discounts at select car rental companies, as well as travel and medical insurance.

$120

Limited time offer/bonus

  • Get up to 10% cash back in your first 3 months and the $120 annual fee waived in the first year*.

Offer expiry date: December 6, 2022

Rewards

With this card, you can earn the following:

  • 5% cash back earn spent on groceries
  • 4% cash back earn spent on transit
  • 3% cash back earn spent on gas
  • 2% cash back earn spent on bills
  • 1% cash back earn spent on other eligible purchases

Earning potential

How does this card stack up to other rewards credit cards? We crunched the numbers using ourBest of Finance methodologyto see how much an average Canadian could earn over a 12-month period.

Rewards earned over a 12-month period + Welcome bonus = $594 + $151 = $745 Annual fee = $120 Total earned over a 12-month period =$745

You can redeem your points for:

  • Redeem your rewards annually as a statement credit.
  • Have your rewards deposited into your BMO InvestorLine account.
  • Deposit your rewards into your BMO chequing or savings account.

Benefits

Insurance

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