The Ultimate Guide to Choosing the Best Cash Back Credit Cards
Introduction
Hello friends, welcome to our comprehensive guide on choosing the best cash back credit cards. Credit cards have been an indispensable financial tool for many people, providing convenience, security, and rewards. One of the most popular rewards programs is cash back, which allows you to earn a certain percentage of your spending as cash rewards. In this guide, we will explain everything you need to know about cash back credit cards and provide some recommendations for the best cash back credit cards in the US.
What are Cash Back Credit Cards?
Cash back credit cards are credit cards that offer cash bonuses or rewards for certain types of spending. The rewards are often a percentage of the amount spent, expressed as a cash back rate. For example, a card may offer 1.5% cash back on all purchases. Some credit cards will have different cash back rates for different categories of spending, such as groceries, gas, or travel.
How do Cash Back Credit Cards work?
Cash back credit cards work by offering a certain percentage of cash back on each purchase made with the card. The percentage varies by card and by category of purchase. To earn the cash back rewards, you simply need to use the card to make purchases. The rewards will accumulate over time and can be redeemed for cash or other rewards, such as statement credits or gift cards.
Some cash back credit cards may also offer sign-up bonuses, which are one-time rewards for opening a new account and meeting certain spending requirements within a specified time period. These bonuses can range from a few hundred dollars to thousands of dollars, depending on the card.
Benefits of using Cash Back Credit Cards
Using cash back credit cards can have several benefits, including:
- Earning rewards for your purchases, which can help reduce the cost of your spending
- Some cards offer additional benefits, such as purchase protection, extended warranty coverage, and travel insurance
- Building your credit score, if you use the card responsibly and make payments on time
- Many cash back credit cards offer low or 0% introductory APRs, which can save you money on interest charges
Types of Cash Back Credit Cards
There are several types of cash back credit cards, each with its own features and benefits. Here are some of the most common types:
Flat-rate Cash Back Credit Cards
Flat-rate cash back credit cards offer a single cash back rate for all purchases, regardless of category. For example, a card may offer 2% cash back on all purchases. These cards are simple and easy to use, but you may be able to earn more rewards with other types of cards if you spend a lot in certain categories.
Bonus Category Cash Back Credit Cards
Bonus category cash back credit cards offer higher cash back rates for certain categories of spending, such as groceries, gas, or travel. These cards can be a good option if you spend heavily in these categories, but may not be as valuable if you spend more evenly across different categories.
Rotating Category Cash Back Credit Cards
Rotating category cash back credit cards switch up the bonus categories on a regular basis, usually every quarter. For example, a card may offer 5% cash back on gas and restaurants from January to March, then switch to 5% cash back on groceries and home improvement from April to June. These cards can be more rewarding if you can time your purchases to match the bonus categories, but can also be harder to keep track of.
Tiered Cash Back Credit Cards
Tiered cash back credit cards offer different cash back rates for different spending tiers. For example, a card may offer 1% cash back on the first $1,000 of spending, then 1.5% cash back on spending between $1,000 and $2,000, and 2% cash back on spending above $2,000. These cards can be a good option if you spend heavily in certain categories and can earn the higher cash back rates.
Factors to Consider when Choosing a Cash Back Credit Card
When choosing a cash back credit card, there are several factors to consider:
Cash Back Rate
The cash back rate is the percentage of cash back you will earn on your purchases. Look for cards with higher cash back rates for categories of spending that match your budget and lifestyle.
Annual Fee
Some cash back credit cards may charge an annual fee. Consider whether the rewards you will earn are worth the cost of the fee. Some cards may waive the fee for the first year.
Sign-Up Bonus
Some cash back credit cards offer sign-up bonuses for new accounts. Consider whether you can meet the spending requirements to earn the bonus and whether the bonus is worth the effort.
Bonus Categories
Some cards offer bonus cash back rates for certain categories of spending. Consider whether the bonus categories match your spending habits and budget.
Redemption Options
Consider the redemption options for your rewards, such as cash, statement credits, gift cards, or travel rewards. Look for cards with flexible redemption options that fit your needs.
Top Cash Back Credit Cards for 2022
Here are some of the top cash back credit cards for 2022:
| Card Name | Annual Fee | Cash Back Rate | Bonus Categories | Sign-Up Bonus |
|---|---|---|---|---|
| Chase Freedom Unlimited | $0 | 1.5% on all purchases | None | $200 after spending $500 in first 3 months |
| Citi Double Cash | $0 | 1% on all purchases, plus another 1% when you pay your bill | None | None |
| Blue Cash Preferred from American Express | $95 | 6% on groceries (up to $6,000 per year), 3% on gas and department stores, 1% on everything else | Groceries, gas, and department stores | $250 after spending $1,000 in first 3 months |
| Discover it Cash Back | $0 | 5% on rotating categories (up to $1,500 in purchases per quarter), 1% on everything else | Rotating categories | Cash back match at the end of first year |
| Capital One Savor Cash Rewards | $95 | 4% on dining and entertainment, 2% on groceries, 1% on everything else | Dining and entertainment, groceries | $300 after spending $3,000 in first 3 months |
Conclusion
Cash back credit cards can be a great way to earn rewards on your spending and reduce the cost of your purchases. When choosing a cash back credit card, consider factors such as cash back rate, annual fee, sign-up bonus, bonus categories, and redemption options. Our top picks for cash back credit cards in 2022 include Chase Freedom Unlimited, Citi Double Cash, Blue Cash Preferred from American Express, Discover it Cash Back, and Capital One Savor Cash Rewards. Remember to use your credit card responsibly and make payments on time to avoid interest charges and damage to your credit score. Thank you for reading and see you in the next article.
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