Banking

The best cash-back credit cards of 2021

This post contains links to products from our advertisers, and we may be compensated when you click on these links. Our recommendations and advice are ours alone, and have not been reviewed by any issuers listed. Terms apply to offers listed on this page.

Cash-back credit cards earn points on your spending that can be redeemed as cash, either transferred to your bank account or applied as credit to your bill.

Depending on the card you use and the purchase you’re making, cash back credit cards can earn anywhere from 1% to 6% back. Even better, many cash back cards have no annual fee, so you don’t have to pay for the privilege of earning rewards.

If you’re new to rewards credit cards and aren’t interested in earning travel points or miles, a cash back card is the best option for you. With cash back cards, 1% back will always be 1 cent back, no matter what, and you can use your cash back to lower your monthly bill or transfer it to your checking account, among other options.

We’re focused here on the rewards and perks that come with each card. These cards won’t be worth it if you’re paying interest or late fees. When using a credit card, it’s important to pay your balance in full each month, make payments on time, and only spend what you can afford to pay.

Best cash back credit card overall

Regular APR

13.99% – 23.99% (Variable)

2% cash back on all purchases

Intro APR

0% intro APR on Balance Transfers for 18 months. After that, the variable APR will be 13.99% – 23.99%, based on your creditworthiness.

Balance Transfer Fee

Either $5 or 3% of the amount of each transfer, whichever is greater.

Chevron iconIt indicates an expandable section or menu, or sometimes previous / next navigation options.

  • Pros & Cons
  • Details

  • Pros
    • No annual fee
    • Simple earning structure without confusing bonus categories
    Cons
    • Some cards earn higher rates of cash back on rotating categories
    • No sign-up bonus
    • If you don’t have any account activity for 12 months, unredeemed rewards can expire
    • While it offers a 0% introductory APR for 18 months, that’s only on balance transfers, not purchases, so you can’t use it to fund a major expense without interest. After those 18 months, it’s a 13.99% – 23.99% (Variable) APR.
    • Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.
    • To earn cash back, pay at least the minimum due on time.
    • Balance Transfer Offer: 0% intro APR on Balance Transfers for 18 months. After that, the variable APR will be 13.99% – 23.99%, based on your creditworthiness.
    • Balance Transfers do not earn cash back.
    • If you transfer a balance, interest will be charged on your purchases unless you pay your entire balance (including balance transfers) by the due date each month.
    • There is a balance transfer fee of either $5 or 3% of the amount of each transfer, whichever is greater.
    • The standard variable APR for Citi Flex Plan is 13.99% – 23.99% based on your creditworthiness. Citi Flex Plan offers are made available at Citi’s discretion.


    Read Our Review
    Read Our ReviewA looong arrow, pointing right

    In terms of spending rewards, the Citi® Double Cash Card is the best single cash back card, with 1% back as you spend, and 1% back when you pay your bill. Since you should be paying your bill in full each month, you should earn 2% back on purchases each billing cycle. 

    Note that the Citi® Double Cash Card has a minimum redemption amount of $25, and if you don’t have any account activity for 12 months, unredeemed rewards can expire. Still, 2% across the board is a good earning rate, and the $0 annual fee is attractive, if not uncommon. Whether that’s worth passing on a sign-up bonus is up to you.

    Best cash back card for lower credit scores

    Regular APR

    22.99% Variable

    Credit Score

    No Credit History

    Featured Reward

    earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter, then 1%

    Chevron iconIt indicates an expandable section or menu, or sometimes previous / next navigation options.

  • Pros & Cons
  • Details

  • Pros
    • Offers cash-back rewards, which isn’t a given for secured credit cards
    • Discover matches cash back after your first account year
    Cons
    • Other secured cards let you start with lower minimum security deposits
    • You must fund the security deposit from a bank account
    • No Annual Fee, earn cash back, and build your credit with responsible use.
    • It’s a real credit card. You can build a credit history with the three major credit bureaus. Generally, debit and prepaid cards can’t help you build a credit history.
    • Establish your credit line with your tax return by providing a refundable security deposit of at least $200 after being approved. Bank information must be provided when submitting your deposit.
    • Automatic reviews starting at 8 months to see if we can transition you to an unsecured line of credit and return your deposit.
    • Earn 2% cash back at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter. Plus, earn unlimited 1% cash back on all other purchases – automatically.
    • Get 100% U.S. based customer service & get your free Credit Scorecard with your FICO® Credit Score
    • Intro Offer: We automatically match all the cash back you’ve earned at the end of your first year.
    • Get an alert if we find your Social Security number on any of thousands of Dark Web sites.* Activate for free.

    If you have a lower credit score or a limited credit history, you may not be approved for some of the other cash back credit card options outlined in this article. In that case, the Discover it® Secured could make the most sense. 

    Since it’s a secured credit card (meaning you put down money as a refundable deposit to “secure” your account), it’s easier to get approved for this card.

    Highest cash back card, by category

    Regular APR

    14.99% – 23.74%

    Credit Score

    Good to Excellent

    Featured Reward

    $200 Bonus after you spend $500 on purchases in your first 3 months from account opening

    Intro APR

    0% for the first 15 billing cycles

    Chevron iconIt indicates an expandable section or menu, or sometimes previous / next navigation options.

  • Pros & Cons
  • Details

  • Pros
    • No annual fee
    • Generous bonus cash-back categories
    • Great welcome bonus
    Cons
    • Booking through Ultimate Rewards portal can restrict outside earning potential
    • Varying percentages and rotating calendar categories require extra attention
    • 3% foreign transaction fees
    • Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening.
    • Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories each quarter!
    • Earn 5% on travel purchased through Chase, 3% on dining at restaurants and drugstores, and 1% on all other purchases.
    • No annual fee.
    • 0% Intro APR for 15 months from account opening on purchases, then a variable APR of 14.99 – 23.74%.
    • No minimum to redeem for cash back. Cash Back rewards do not expire as long as your account is open.


    Read Our Review
    Read Our ReviewA looong arrow, pointing right

    The Chase Freedom Flex℠ replaced the Chase Freedom in Chase’s lineup of cash back cards, and the good news is that it’s even better than the original. Unlike the Chase Freedom Unlimited®, it earns 5% cash back on up to $1,500 spent in combined purchases within certain bonus categories each quarter of the year (activation is required).

    Sometimes there’s just one major category per quarter, while other times there can be a few different ones. Past categories have included gas stations, local commuter transportation, department stores, grocery stores, drug stores, restaurants, movie theaters, and even Amazon. 

    The Chase Freedom Flex℠ also earns 5% cash back on travel booked through Chase Ultimate Rewards, 3% back on dining and drugstores, and 1% back on everything else. These other bonus categories are exactly what you’ll find on the Chase Freedom Unlimited®.

    Best credit card for 0% intro APR

    Regular APR

    14.99%–23.74% variable APR

    Credit Score

    Good to Excellent

    Featured Reward

    $200 after spending $500 in the first three months from account opening

    Chevron iconIt indicates an expandable section or menu, or sometimes previous / next navigation options.

  • Pros & Cons
  • Details

  • Pros
    • Solid flat cash-back rate
    • You can combine cash-back rewards with Ultimate Rewards points if you have an eligible card
    • No annual fee
    Cons
    • Some other cards offer a higher rate of cash back on certain types of purchases
    • Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening.
    • Earn unlimited 1.5% cash back on all other purchases.
    • Earn 5% on travel purchased through Chase, 3% on dining at restaurants and drugstores, and 1.5% on all other purchases.
    • No annual fee
    • 0% Intro APR for 15 months from account opening on purchases, then a variable APR of 14.99 – 23.74%.
    • No minimum to redeem for cash back. Cash Back rewards do not expire as long as your account is open


    Read Our Review
    Read Our ReviewA looong arrow, pointing right

    The Chase Freedom Unlimited® has no annual fee and often has 0% APR for the first 15 months on purchases. After that, there’s a 14.99%–23.74% variable APR. If you have a major purchase ahead of you, that introductory offer can be useful.

    If you also have a premium card like the Chase Sapphire Reserve®, you can pool your points from the two cards. Then, you’ll be able to transfer the whole body of points to partnering frequent flyer programs or use them to book travel through Chase with a bonus.

    Plus, there are new bonus categories that can earn up to 5% cash back.

    Best cash back card for families

    Annual Fee

    $95 (waived the first year)

    Regular APR

    13.99% to 23.99% variable APR

    Featured Reward

    $300 statement credit after you spend $3,000 in purchases on your new Card within the first 6 months

    Intro APR

    0% intro APR on purchases for 12 months from account opening

    Chevron iconIt indicates an expandable section or menu, or sometimes previous / next navigation options.

  • Pros & Cons
  • Details

  • Pros
    • Generous bonus rewards, especially at US supermarkets
    • One of a small handful of credit cards that offer bonus rewards on select streaming services
    • Intro APR offer
    Cons
    • Unlike many other cash-back cards, it charges an annual fee
    • If you spend more than $6,000 at US supermarkets each year, you’ll want to use another card once you reach that cap
    • Earn a $300 statement credit after you spend $3,000 in purchases on your new Card within the first 6 months.
    • $0 introductory annual fee for one year, then $95.
    • 6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%).
    • 6% Cash Back on select U.S. streaming subscriptions.
    • 3% Cash Back at U.S. gas stations and on transit (including taxis/rideshare, parking, tolls, trains, buses and more).
    • 1% Cash Back on other purchases.
    • Plan It® gives the option to select purchases of $100 or more to split up into monthly payments with a fixed fee.
    • Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit.
    • Terms Apply.


    Read Our Review
    Read Our ReviewA looong arrow, pointing right

    If you’re looking for an American Express cash back card, the Blue Cash Preferred® Card from American Express is the best option. The Blue Cash Preferred® Card from American Express offers a 0% intro APR on purchases for the first 12 months, before switching to a 13.99% to 23.99% variable APR (See rates).

    The Blue Cash Preferred® Card from American Express comes with a handful of travel and purchase protections as well.

    The Blue Cash Preferred® Card from American Express offers the highest rewards rate available for grocery spending, although there is a $6,000 annual spending cap on that 6% rate. After that, you earn 1% (cash back is received in the form of Reward Dollars).

    Best card for cash back on dining

    Regular APR

    15.99% – 24.99% variable APR

    Featured Reward

    Earn a one-time $300 cash bonus once you spend $3,000 on purchases within 3 months

    Chevron iconIt indicates an expandable section or menu, or sometimes previous / next navigation options.

  • Pros & Cons
  • Details

  • Pros
    • High cash-back rate for dining and entertainment
    • No foreign transaction fees
    Cons
    • Many other cash-back cards don’t charge an annual fee (but at least this one’s waived for the first year)
    • Unlimited 4% cash back on dining and entertainment, 2% at grocery stores (excluding superstores like Walmart® and Target®) and 1% on all other purchases
    • No Foreign Transaction Fees
    • One-time $300 cash bonus once you spend $3,000 on purchases within 3 months from account opening


    Read Our Review
    Read Our ReviewA looong arrow, pointing right

    If dining and cooking are your thing, the Capital One® Savor® Cash Rewards Credit Card is the winner. The Capital One® Savor® Cash Rewards Credit Card makes it easy to earn cash back quickly.

    The downside of this card is that it has a $95 annual fee. The earning rate may make up for the fee in some cases, though. 

    How does earning cash back work?

    Cash-back credit cards earn you a percentage of cash back — usually at least 1%— on every dollar you spend (or more with cards that have bonus cash back categories). You can transfer the cash back you earn from these cards to a bank account or use them to wipe charges from your credit card statement.

    Credit card issuers also allow you to redeem the cash back you earn for gift cards and merchandise. If you’re trying to put money back in your wallet, our top recommendations are to transfer your cash back to a banking account or use it to reduce the amount owed on your credit card statement.

    Do cash back cards actually give you cash?

    Cash-back credit cards do give cash, but that’s not to say you’ll necessarily see the physical cash. You’re typically awarded cash back as a credit that you can use to cancel out purchases from your credit card statement, or to redeem for gift cards or merchandise online.

    What are the different types of cash back cards?

    What credit card offers the most cash back?

    If you don’t want to overthink it, the Wells Fargo Propel American Express® card is a good go-to. It offers 3% back on a wide variety of categories, including travel and eating out.

    That’s not to say you couldn’t earn more cash back with another card, though. The Blue Cash Preferred® Card from American Express earns 6% back on the first $6,000 you spend each calendar year at US supermarkets (then 1% back), and 6% back on select US streaming services, for example, and the Capital One Savor is the most rewarding pick for dining out with 4% back.

    Is a cash back card better than a travel or rewards card?

    It depends on what you want to do with your rewards. If you want to put money back in your bank account, a cash back credit card will help you accomplish just that — and you usually won’t have to pay a very high annual fee, if you have to pay one at all.

    On the other hand, if you’re hoping to earn rewards that you can redeem for travel, a card that earns points is more up your alley. Our picks for best points-earning rewards cards earn either Amex Membership Rewards points, Chase Ultimate Rewards points, Citi ThankYou Rewards points, or Capital One miles. You can transfer all three of these currencies to travel partners and redeem them for things like free flights. (Note that while Capital One calls its rewards currency “miles,” they aren’t miles with a given airline program.)

    If you’re willing to juggle multiple credit card accounts, there’s value in having both cash back and points-earning cards. If you prefer a single-card strategy, evaluate your goals and consider how much you’re willing to pay in annual fees to make the best decision for your situation.

    How to compare cards to find the best one

    A good cash back card is one with generous bonus categories, since the goal is to earn as much cash back as possible on your spending. The more bonus categories, the better, and the higher the cash back rate, the better.

    That said, the best cash back card is different for everyone. To find the best one for you, you’ll want to look for a few things:

    • The cash back rate for your common spending categories. Extra cash back for gas isn’t much use if you don’t drive. Consider how you intend to use this card, and look at the rate for those spending categories.
    • How you redeem your cash back. Make sure you’re clear on what you’re earning. Is it statement credit? Cash? Points? If points, can they be combined with or transferred to other cards you have, or brands you like?
    • The annual fee. An annual fee may make or break your choice. Are you willing to pay one? And more importantly, can you afford it comfortably — or will it be effectively wiped out by the cash back you’ll earn in a year?

    We don’t mention the APR because the rate only applies if you’re carrying a balance on your credit card. We recommend applying for a cash back credit card intending to pay off the balance in full each month. For other categories of credit cards, like balance-transfer cards, the APR might be a more important consideration.

    If this all sounds too complicated, you can’t go wrong by using the Citi® Double Cash Card, which has no annual fee and a flat earning rate of 1% upon spending, then another 1% upon paying your bill.

    Pros and cons of a cash back credit card

    Cash back credit cards are often best used in combination with cards that earn points to create a complete credit card portfolio that takes advantage of multiple types of rewards. If you’re trying to decide whether to open a cash back credit card, whether as your first card or one of many, bear these pros and cons in mind:

    Pros of cash back credit cards:

    • They rarely carry annual fees
    • There are no restrictions to how you can redeem and spend the cash
    • You can earn airline and hotel status by booking with cash (but not points)

    Cons of cash back credit cards:

    • They rarely offer large sign-up or welcome bonuses
    • Cash back is generally less valuable, dollar for dollar, than points

    How to make the most of a cash back credit card

    If you have a cash back credit card or are considering opening one, you’ll want to make the most of it. Keep the following steps in mind to get the most value from your card:

    Always pay the balance in full. Credit card cash back or points aren’t useful if you’re carrying a balance and paying interest charges each month. To make the most of rewards, use your card responsibly: Spend only money you have and pay your bill in full each month.

    Read up on rewards rates for different spending areas. Some cash back cards offer elevated rewards rates on specific spending areas, like restaurants, gas stations, or supermarkets. Some of these cards even change those areas from quarter to quarter, meaning you’ll want to stay on top of where your card earns the most and when. If you’re using this card for every purchase, you don’t need to be as diligent, but if you’re using your card as one of many you’ll want to be sure you know how to maximize rewards.

    Make sure to redeem your cash back. It might be tempting to let your cash back pile up just to watch the total tick up, but it’s more useful if you redeem it. You can generally apply the cash to your card balance or get it deposited in your checking account, and either one is a fine option. 

    Consider opening a “sister” card. In some cases, cash back can be transferred to a points-earning card on which your rewards are worth more. Chase cards are an example of this: If you hold a cash back card like the Chase Freedom Flex℠ and a points-earning card like the Chase Sapphire Preferred® Card, you can transfer cash back earned on the Freedom Flex (which is technically earned in Ultimate Rewards Points) to the Sapphire Preferred, where it can be redeemed for travel. This strategy isn’t required to make the most of your cash back card, but it can help take redemptions to the next level.

    Sarah Silbert is the senior reviews editor at Personal Finance Insider. She’s covered personal finance and credit card rewards for six years, and she’s a Certified Educator in Personal Finance (CEPF).

    Most Related Links :
    newsbinding Governmental News Finance News

    Source link

    Back to top button