Best Cash Back Credit Cards of 2024

What are cash-back credit cards?

Cash-back credit cards are a type of rewards card that give you money back based on the amount you spend. The cash reward is usually a percentage of your total purchase, typically 1% to 5%. Some cards offer the same amount on all purchases. Others give higher percentages for categories like groceries, dining, or gas.

For example, if you have a card that offers 2% cash back on groceries and you spend $200 at the store, you’ll get $4 cash back. You can usually redeem this money as a statement credit, direct deposit, gift card, or check.

Why do credit cards give cash back?

Credit cards offer cash-back rewards to encourage users to spend more on specific products and services. Card issuers make money through fees and interest, so it’s in their best interest to motivate cardholders to use their credit cards frequently.

How do cash-back credit cards work?

Cash-back cards give you rewards every time you use them to make a qualifying purchase.

Here’s how it works:

1. Make a purchase: Use your cash-back credit card to pay for something.
2. Earn cash back: The card company will determine how much cash back you’ve earned based on your purchase and the spending category. This amount gets credited to your account.
3. Redeem rewards: Some cash-back credit cards require you to wait until you’ve met a certain threshold to redeem your rewards, while other cards will allow you to redeem them at any time. You can usually redeem these rewards for a statement credit, a mailed check or a direct deposit into your bank account.

Types of cash back credit cards

Cash-back cards come in three main types:

1. Flat-rate cash back cards: These cards offer the same percentage, like 1.5% or 2%, on all purchases. They are the easiest to manage and often have no reward cap or restrictions.
2. Tiered cash back cards: These cards offer different percentages depending on the category. For example, 3% on groceries, 2% on dining, and 1% on everything else.
3. Rotating category cards: These cards offer higher rewards, often 5%, in categories that change every quarter (three months). These categories often have a quarterly maximum, then the cash-back rate drops to 1%.

Common cash-back bonus categories

Many cash-back cards offer elevated earnings in specific bonus categories.

The most common categories include:

• Supermarkets/Groceries: If a card has a bonus category of supermarkets, grocery stores, or groceries, they’re referring to any purchase made at an eligible grocery store. Most of the time, superstores like Walmart and Target aren’t included, nor are warehouse clubs like Sam’s Club or Costco.
• Restaurants/Dining: This category applies to anything from fine dining to Chinese takeout. Sometimes this category only applies in the U.S. and other times it can be used worldwide, so check your specific card’s benefits.
• Entertainment: Some cards offer rewards on eligible entertainment purchases, typically booked through the issuer’s portal.
• Gas stations: Multiple cards offer rewards for purchases made at gas stations, often including gasoline and purchases made at the convenience store. These are usually only applicable at traditional gas stations like Wawa or BP, not store-affiliated stations like Walmart.
• Travel: Some cards offer elevated cash back on eligible travel purchases, typically when booked through the issuer’s portal.

How to maximize your cash back credit card

To maximize the benefits of a cash-back credit card, consider these tips:

1. Pay your balance in full: Always pay your balance in full to avoid interest charges eating into your cash back.
2. Know your categories: If your card has rotating or tiered rewards, keep track of these categories to maximize the amount of cash back you can earn.
3. Take advantage of sign-up bonuses: Many cash-back cards offer sign-up bonuses if you spend a certain amount within the first few months. Plan large purchases around this time to ensure you hit the spending requirement.
4. Monitor spending caps: Cards with higher cash-back rates in certain categories often have spending caps. Keep an eye on these limits to know when your rewards will drop to the lower rate.
5. Use multiple cards: If you’re organized, you can get a few cards with different cash-back categories to maximize rewards. For example, one card may offer 6% back on groceries while another earns 3% back on dining.
6. Check the issuer’s portal: Many credit card issuers offer online shopping portals where you can earn extra cash back on eligible purchases.

Pros and cons of cash-back credit cards

How to choose the best cash-back credit card

When choosing a credit card, consider your spending patterns and financial goals.

Here are a few key factors to consider when picking a cash-back credit card:

Spending habits

Consider your spending habits to evaluate which categories would be most beneficial. If you don’t want to worry about categories, consider looking for a card with flat-rate cash back on all purchases.

Sign-up bonuses

Look for cards with welcome offers to help boost your rewards from the start. Typically, these offers require spending a significant amount in a set period to earn.

While this can easily fit into some people’s regular spending habits, it can encourage overspending for other people. Consider your spending habits and whether you can realistically earn a card’s bonus.

Annual fees

There are many cash-back cards with no annual fees, but some cards with higher rewards may have one.

Weigh the fee against the potential rewards. Remember that the cash back you earn won’t technically be money in your pocket until you’ve earned back the annual fee.

For example, the Blue Cash Preferred Card has a $95 annual fee ($0 intro fee for the first year). It offers 6% back on groceries and select streaming services. To offset the annual fee, you’d need to spend about $1,600 in those specific categories to earn enough cash back.

Consider whether the amount you earn beyond that point justifies getting this card over a no-annual-fee alternative like the Blue Cash Everyday Card.

APR

Some cards offer an intro 0% APR period on purchases and/or balance transfers. While it’s always best to avoid carrying a balance, these cards can be helpful if you need more time to pay off a large purchase or balance transfer without accruing interest charges.

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^{For rates and fees of the Blue Cash Preferred® Card from American Express, please visit this page.}

^{For rates and fees of the Blue Cash Everyday® Card from American Express, please visit this page.}

^{For rates and fees of The American Express Blue Business Cash™ Card, please visit this page.}

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