If you were to ask here at 10xTravel what the best credit card rewards are, we would undoubtedly tell you travel points.
Although we love travel rewards, not everyone wants to accumulate points and miles only for travel.
For some people, they just don’t get enough time off work to use all of their accumulated travel points. Other people, admittedly, don’t want to spend every minute of every day thinking of travel (maybe we really are the crazy ones!).
Whatever your reason, if you’re looking for an alternative to travel rewards credit cards you may want to consider the next best option: cash back credit cards.
In this overview we’re going to dig into cash back credit cards. What separates cash back cards from travel rewards cards, what you should look for in a cash back card, and what we recommend as some of the best cash back credit cards out there.
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Before getting into the best cash back cards, it is important to understand how cash back cards work.
On a base level, cash back cards work just like travel rewards cards. While some offer sign-up bonuses, you’ll typically find smaller bonuses on cash back cards. This isn’t always true, but high point bonuses tend to be reserved for traditional travel cards.
Beyond the sign-up bonus, you’re eligible to earn cash back on your everyday spend. Simply swipe your card and earn cash back on every purchase you make. The typical cash back rate is between 1% and 2%, but some cards can earn up to 6% in select categories.
What differentiates cash back cards from travel rewards cards is how you redeem the cash back.
When it comes to redeeming cash back earned on your cash back credit cards, the options vary. There are three primary methods to cash out on your cash back.
The first way you can redeem cash back from credit cards is as a statement credit. This is a fairly popular option offered by most cash back cards out there. If you’ve accumulated $200 of cash back, you can simply redeem it against your next statement. For example, if you spend $275 on your card during the statement period and you redeem $200 as a statement credit, you would only owe $75.
After a statement credit, the next most popular way to redeem your cash back is through direct deposit. Not every cash back card offers this as an option, and some card issuers require you to have a checking account with their bank to do redeem your cash back as a direct deposit.
Finally, some issuers allow you to redeem your cash back rewards against specific purchases. This is similar to a statement credit, but instead you’re just picking a specific purchase to offset with your cash back earned.
We wouldn’t be doing you justice if we neglected to mention that most banks allow you to cash out your cash back for gift cards. If you want to go this route, be sure to check the value of the gift cards first. Sometimes you will get less value when redeeming for gift cards than if you redeem through other avenues.
If this is the case and you really want the gift card, you can purchase the gift card with your cash back card and use your points to offset the cost. Whether you are offsetting it as a statement credit, direct deposit, or redeeming against the gift card purchase specifically, this will get you the best value possible.
Before you get to some of the best cash back cards out there, you should know that you may see some travel rewards cards listed. That’s because a traditional travel rewards card is often a good cash back card as well.
Many travel cards will let you redeem your points as a statement credit instead of redeeming them for cash back. When you do this, typically you’ll earn 1 cent for every point you’ve earned. Although some cards will allow you to redeem for more value.
Just because a card isn’t labeled as a “cash back” card doesn’t mean the rewards earned can’t be used as cash back. A general rule of thumb is that a card labeled as a cash back card can’t be redeemed for travel, but a card labeled as a travel rewards card can also be used as a cash back card.
There are some exceptions to this rule, but just keep it in mind when choosing one of the best cash back cards available.
Speaking of travel rewards, points and miles don’t have to be an all or nothing game. You can choose to earn points for travel as well as for cash back.
Many people choose to earn cash back to cover their expenses when they do travel. Travel rewards may cover some of the biggest expenses of travel – your flights and accommodations – but the next biggest expense when you travel are your incidental expenses. Food, activities, and tours all cost money.
Even if you choose not to use cash back for travel expenses, many people strive to earn cash back for a number of reasons. Maybe you earn plenty of travel rewards to cover all of your trips, but you don’t want your routine spend to go to waste. By earning cash back you can earn useful rewards for the rest of your routine spend.
Your travel points are doing you no good if you’re unable to use them for travel. Putting them to use and earning cash back instead of travel rewards is a good way to extract the most value as possible from credit card rewards.
If you are interested in earning cash back, the strategy is no different. There are plenty of cash back cards available with good sign-up bonuses. In addition to sign-up bonuses, taking advantage of bonus categories and choosing the right card for each expense can help get you the most cash back.
That might sound like a lot of work, and if that’s you then you can choose one or two cards from the “best cash back for non-bonus spend” below and put all of your expenses on those cards. While you won’t be getting the most cash back from every dollar you spend, you will likely get 1.5-2% on all of your purchases. That’s certainly better than the 0% you’ll be getting from using a debit card!
Choosing just one cash back credit card as the ultimate cash back card is simply impossible. It all depends on how you’re wanting to earn cash back.
For those who like getting the most cash back on every purchase, you’ll want a few different cards from each category. The best card for groceries isn’t always the best card for restaurants. Having a few different cards can help you get more than 2% cash back on most of your purchases.
If, instead, you’d rather not think that hard and just want to get a few sign-up bonuses and use the same card at the same place then take a look at one of the best cash back cards for non-bonus spend.
For many families, groceries are one of the largest monthly expenses. Thankfully, there are plenty of cash back cards that offer higher cash back rates for groceries, helping you earn extra rewards on one of your budget’s biggest line items.
The average American commute is 16 miles each way. For those of you lucky enough to have a shorter commute, consider yourself the envy of many. If your commute is average or longer, you may find yourself spending a lot on gas. Getting the most cash back possible on gas for those long drives may take out a little bit of the sting next time you’re stuck in gridlock.
Bank of America Cash Rewards credit card.
Foodies rejoice, as there are lots of great cash back cards for restaurants! You can earn a good bit of cash back with the right cards whether you’re eating in, taking out, or ordering for delivery.
US Bank Altitude Go Visa Signature Card
Entertainment is a fairly broad rewards category, but if you’re a ticket junkie who is always chasing the next concert or movie premier, then there’s some great cash back options for entertainment.
Capital One SavorOne
All of the cards above are the best options for given categories because they earn extra cash back in those respective categories. Most card portfolios would benefit from a good generic cash back card – one that earns cash back no matter what you’re spending your money on.
You may notice that the best cards for non-bonus spend are all non-annual fee cards. Most cash back cards with an annual fee only offer 1% cash back on non-bonus spend. If you are going to have just one card for general cash back, one of these options are your best choice.
after you spend $500 in the first 3 months. Plus earn 5% cash back on up to $12,000 spent on grocery store purchases in your first year (excluding Target and Walmart).
Just because you run a small business doesn’t mean you shouldn’t be able to get cash back. There are some good cash back options for small businesses to help rewards your business for its spend.
In addition to the cards listed above, there’s a few cash back cards that deserve to be highlighted that don’t really fit into any of these categories. If you’re looking for the following unique scenarios, and have the appropriate qualifications then the following cash back cards may be right for you:
Bank of America Premium Rewards credit card – Bank of America Preferred Rewards members get elevated cash back on the Bank of America Premium Rewards card depending on their rewards level. If you’re a Bank of America Preferred Rewards member, you’ll likely get higher cash back with this card than with many others. Especially for routine spend.
The American Express Platinum Card for Schwab – If you bank with Schwab you can use this card to cash out Membership Rewards for 1.25 cents per point directly into your Schwab account.
Fidelity Rewards Visa Signature Card – This cash back card is a little different. Instead of getting the cash as a statement credit you can redeem the points earned as cash back into a number of different types of Fidelity investment accounts.
For the best cash back cards you’ll want a credit score over 680. There are some cash back cards available that are made for people with lower credit. This helps them build their credit so they’ll be eligible for better cards over time.
Multiple banks offer student cards that offer cash back. Some cards that aren’t marketed towards students can be easier to get for students as well. Keep your eye out for targeted offers in the mail, or check with a local credit union for other options to help you build your credit and be eligible for more cards.
Most premium amenities just make sense to be on travel cards. Why would someone pay $450 for a card with travel benefits if they just want cash back? The market simply isn’t there for premium cash back cards to be an option.
You should first start with our free course to learn all that you need to know about credit card rewards. After that, you should look to start with the card that best fits your needs. For most people, this will be a travel card. The good news is that if you start with a travel card, and you later find you need the cash back you can often redeem your travel points for cash back.
No. The only travel points that are eligible to be used for cash back are bank points such as American Express Membership Rewards or Chase Ultimate Rewards.