Cash-back credit cards have long been a popular go-to rewards card for many cardholders — and for good reason. You can simply make money off of those everyday purchases you’d make anyways. That money can then be used to pay off your credit card bill, as one redemption example.
How much cash back you can earn depends on the credit card and its cash-back rate. Some cards offer a flat-rate cash back, say 2%, on all purchases no matter what they are. Others offer a higher cash-back rate, say 5%, but only on purchases in certain spending categories.
Here’s how to know which is better for you.
Flat-rate cash-back credit cards
With a flat-rate cash-back credit card, you earn a fixed rewards rate on all eligible purchases. For newbies to the credit card rewards game, these credit cards can make for a simple and easy way to start out.
Flat-rate cards typically don’t carry an annual fee, in exchange for their benefits being less impactful. While the exact rate will vary by card, some of the best flat-rate cash-back cards offer 2% cash back on purchases, so a purchase of $100 will earn you $2 in rewards.
Flat-rate cards are a good option if you want to stick to one credit card for most of your purchases, and you’d rather not mess around with points or miles.
One of the most popular flat-rate cash-back cards available is the Citi Double Cash® Card, which offers an unlimited flat 2% cash back on all your purchases: 1% when you make a purchase and 1% when you pay your bill. The card doesn’t have any category restrictions, nor does it require enrollment, so you’ll be earning with every purchase. The Double Cash Card also comes with an introductory 0% APR period and has no annual fee.
The Citi Double Cash® Card is one of the best no-annual-fee cash-back cards thanks to its straightforward rewards structure.
- Long intro-APR for balance transfers
- High flat-rate cash-back rewards structure
- No annual fee
- Has a foreign transaction fee
- Intro APR doesn’t apply to purchases
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
- Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back.
- 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. Plus, earn 5% total cash back on hotel, car rentals and attractions booked with Citi Travel.
- Balance Transfer Only Offer: 0% intro APR on Balance Transfers for 18 months. After that, the variable APR will be 18.24% – 28.24%, based on your creditworthiness.
- Balance Transfers do not earn cash back. Intro APR does not apply to purchases.
- 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 an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).
Balance transfer fee
There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. A balance transfer fee of 5% of each transfer ($5 minimum) applies if completed after 4 months of account opening.
Foreign transaction fee
The Wells Fargo Active Cash® Card is great if you want simplicity thanks to its flat-rate 2% unlimited cash rewards on purchases and $0 annual fee.
- High flat-rate return on purchases
- Intro-APR for purchases and qualifying balance transfers for a year
- No annual fee
- Cell phone protection
- Has a foreign transaction fee
- Limited redemption options unless you pair it with a Wells Fargo card that allows point transfers
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
- Select Learn More to take advantage of this offer and learn more about product features, terms and conditions.
- Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.
- Earn unlimited 2% cash rewards on purchases.
- 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 19.24%, 24.24%, or 29.24% Variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
- $0 annual fee.
- No categories to track or remember and cash rewards don’t expire as long as your account remains open.
- Find tickets to top sports and entertainment events, book travel, make dinner reservations and more with your complimentary 24/7 Visa Signature® Concierge.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
Balance Transfer Fee
Intro balance transfer fee of 3% for 120 days from account opening, then up to 5%, min: $5
Foreign Transaction Fee
Using a flat-rate card means you don’t have to track changing bonus categories or worry about using a specific card for a purchase. You can check out our comparison of these two cards for a more in-depth look.
Pros of flat-rate cash-back cards
- Easy to use: You won’t have to track rotating bonus categories to maximize the amount of rewards you earn.
- Earn on almost every purchase: Flat-rate cards can earn rewards on almost any purchase at any location.
- No cap on rewards: Many flat-rate cards don’t have a limit to the total amount of cash-back rewards you can earn.
Cons of flat-rate cash-back cards
- Lower rewards rate: Flat-rate cards will have a lower rate of return compared to the rotating bonus category cards.
- Fewer benefits: These cards often don’t have an annual fee, which means the benefits might provide less value.
- Less redemption options: With flat-rate cards, the redemption options aren’t as valuable as what other rewards cards offer.
Bonus categories
Bonus categories offer a higher rewards rate, usually 5%, for spending in specific categories, like grocery stores and online shopping. The bonus categories will either rotate every quarter or be fixed categories that don’t change. Both of these options typically have a maximum amount of cash back you can earn in your categories, then the card earns 1% after you’ve hit the threshold.
Credit cards offering bonus categories allow you to earn more rewards than flat-rate cash-back cards, but only if you spend efficiently, and maybe get a little lucky with your categories. The Chase Freedom Flex® earns you 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate, then 1%. The categories rotate each quarter based on the current Chase Freedom cash-back calendar and are typically announced a few weeks before the new quarter. You’ll also get 3% cash back on dining at restaurants, including takeout and eligible delivery services, and 1% on all other purchases.
The Chase Freedom Flex® is an excellent cash-back card for maximizing your spending in a variety of categories.
- Long intro APR for purchases and balance transfers
- Rewarding quarterly bonus categories
- No annual fee
- Bonus categories are capped each quarter
- Has a foreign transaction fee
Rewards
- 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate (then 1%)
- 5% cash back on travel booked through Chase Travel℠
- 3% on drugstore purchases and on dining (including takeout and eligible delivery services)
- 1% cash back on all other purchases
Balance transfer fee
Intro fee of either $5 or 3% of the amount of each transfer, whichever is greater, on transfers made within 60 days of account opening. After that, either $5 or 5% of the amount of each transfer, whichever is greater.
Foreign transaction fee
Prefer a card with bonus categories that don’t rotate? The Blue Cash Preferred® Card from American Express offers 6% cash back on groceries at U.S. supermarkets (up to $6,000 per year), 6% cash back on select streaming services, 3% on transit, 3% on gas and 1% on everything else. These categories are fixed and won’t rotate, so you can plan your spending without worrying about them ever changing.
The Blue Cash Preferred® Card from American Express is a low-fee card with generous cash-back rewards and useful ongoing benefits, such as a monthly Disney Bundle credit. (Enrollment required for select benefits mentioned)
- High cash-back earnings for U.S. supermarkets and streaming services
- Intro-APR offer for purchases and balance transfers
- No annual fee for the first year
- It’s less rewarding after the first year because of the annual fee
- Bonus rewards for U.S. supermarkets are capped
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select’s editorial staff.
- Earn a $250 statement credit after you spend $3,000 in eligible purchases on your new Card within the first 6 months.
- $0 intro annual fee for the first year, then $95.
- Buy Now, Pay Later: Enjoy $0 intro plan fees when you use Plan It® to split up large purchases into monthly installments with a fixed fee. Pay $0 intro plan fees on plans created during the first 12 months from the date of account opening. Plans created after that will have a monthly plan fee up to 1.33% of each eligible purchase amount moved into a plan based on the plan duration, the APR that would otherwise apply to the purchase, and other factors.
- Low Intro APR: 0% intro APR on purchases and balance transfers for 12 months from the date of account opening. After that, your APR will be a variable APR of 20.24% – 29.24%.
- 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.
- Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit or at Amazon.com checkout.
- $84 Disney Bundle Credit: With your enrolled Blue Cash Preferred® Card, spend $9.99 or more each month on an auto-renewing Disney Bundle subscription, to receive a monthly statement credit of $7. Valid only at Disney Plus.com, Hulu.com or Plus.espn.com in the U.S.
- Apply with confidence. Know if you’re approved for a Card with no impact to your credit score. If you’re approved and you choose to accept this Card, your credit score may be impacted.
- Terms Apply.
- See Rates & Fees
Balance transfer fee
Either $5 or 3% of the amount of each transfer, whichever is greater.
Foreign transaction fee
2.7% of each transaction after conversion to US dollars
While many bonus category cards have the ability to out earn flat-rate cash-back cards, it will depend on your spending habits. Make sure to shop around to find a bonus category card that fits your lifestyle instead of just going for the highest return.
Pros of bonus category cash-back cards
- Higher rewards rate: These cards earn rewards at a higher rate, often 5% cash back or higher.
- More cash-back categories available: Cards with rotating rewards categories can earn you rewards in more rare categories or earn you rewards in categories you weren’t previously.
Cons of bonus category cash-back cards
- Category spending caps: Many cards that offer bonus categories cap the amount of rewards you can earn at the highest rate.
- Bonus categories may not align with your spending: If the card rotates to a category that doesn’t fit your spending habits, you won’t be able to get much value.
- Activation may be required: You might have to remember to activate your bonus categories each quarter.
- More hands-on: Bonus category cash-back cards require you to take a more hands-on approach to your budgeting and spending.
Compare savings options
Which type of cash-back card is right for me?
Both flat-rate cards and bonus category cards can work well, but it comes down to how you want to spend. If you’re curious, it might be helpful to do the math on some mock purchases, so you can see how your rewards change.
Another popular solution is to have both types of cards as they can pair together quite well. You can earn your elevated rewards in your bonus categories, and for purchases that don’t fall into one of those, you can use your flat-rate card to likely earn higher than the 1% you might have otherwise.
Either type of card can help you get the most out of your spending, but you have to be aware of how you spend your money so you can pick the best card to match.
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For rates and fees of the Blue Cash Preferred® Card from American Express, click here.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
