As you can see from the table below, the Citi Double Cash card and the Blue Cash Preferred card are both fairly flexible cash back cards. Before you commit to a lucrative offer, consider the following best practices:. Even if you make your minimum payment on time, the interest that you own on a rotating balance can easily outmatch the cash back that you earn. Any comments posted under NerdWallet's official account are not reviewed or endorsed by representatives of financial institutions affiliated with the reviewed products, unless explicitly stated otherwise. How to use it Use this card at U.
Comparing Cash Back Credit Card Offers
Pay your bill in full every month to avoid paying interest. Paying interest on your purchases while simultaneously pursuing rewards is never a good idea. Getting a new card will result in a hard inquiry with at least one of the three credit reporting agencies.
So while you might be enticed to sign up for a handful of offers at once, multiple hard inquiries can temporarily lower your credit score. Hard inquiries show up on your credit report after you apply for credit, like an auto loan or credit card. Not only can they affect your credit score; they stick with your credit report for up to 2 years.
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The information in our reviews could be different from what you find when visiting a financial institution, service provider or a specific product's website. All products are presented without warranty. Learn More on Capital One's secure website. Apply Now On Chase's secure website.
Apply Now on American Express's secure website. Apply Now on Chase's secure website. Hotels, airfare, train tickets, and more. Reward details 2X miles on all purchases.
Current Offer 50, miles. Plus earn 10X miles on thousands of hotels; learn more at hotels. How to use it Use this card for all purchases to earn unlimited 2X miles per dollar.
Redeem your miles for hotels, airfare, cash back, and more. Start your application now Back to top. Statement credit, airfare, hotels, cruises, and more.
Current Offer 50, points. Highlights Provided by Chase Show Highlights. No foreign transaction fees 1: How to use it Earn 2X points per dollar spent on travel and dining purchases around the globe.
Use this card for everything else and get 1X points per dollar you spend. Transfer your points to 11 leading airline and hotel loyalty programs at a 1: You can get up to 1 million additional points per year. Factors in our evaluation include fees, promotional and ongoing APRs, and sign-up bonuses; for rewards cards, we consider earning and redemption rates, redemption options and redemption difficulty. A single card is eligible to win in multiple categories. NerdWallet adheres to strict standards of editorial integrity to help you make decisions with confidence.
Some of the products we feature are from partners. We adhere to strict standards of editorial integrity. Some of the products we feature are from our partners.
Not sure which card is right for you? Let's find the one. Tell us what you most want your new card to do. Save me money on interest. Establish or build my credit score. Apply Now on Chase's secure site.
Recommended Credit Score See if you may qualify. Pros A large bonus High rewards rate High value benefits Cool factor - metal card No foreign transaction fee Cons High annual fee Needs excellent credit.
Here are a few advantages and disadvantages of using a cash back rewards card. Whether you are treating your new cash back card as a starter card or if you want redemption options, a cash back product has a number of benefits:. Easy to work with — Cash back cards may be the simplest way to earn rewards since cardholders know exactly how much they will earn back from each purchase without having to convert a point or mile into an equivalent cash value.
Lots of redemption choices — Cash back rewards can be redeemed in a variety of ways, including statement credits, checks, bank deposits, gift cards and charitable donations. Good cards for everyday spending — These are good cards for earning rewards on restaurants, groceries, gas and other everyday expenditures.
Can keep building credit — If you pay in full and on time each month, you can continue to build your credit, allowing you to eventually graduate to a premium rewards card.
Makes for good practice — These cards are a great way to practice using a simpler rewards card until you feel ready to move on to a more ambitious rewards product. Choice in benefits — Increasingly, cash back cards offer such benefits as purchase protection and extended warranty. Cash back cards aren't for everyone. For example, the world traveler may want to look elsewhere, and some cash back cards can have onerous rules.
Lack of travel benefits — When you choose a cash back card over a travel rewards card, you typically lose out on such features as airport lounge access and annual travel credits. Not ideal for travel — Unlike many travel rewards cards, cash back cards often have foreign transaction fees, making them not ideal for foreign travel or shopping online with companies that use foreign banks. Limited redemptions — Some cash back cards have limited redemption options.
For example, you may not be able to redeem with a check. Maximum spend requirements — Most cards with rotating categories cap you with a maximum spend. Sign-ups required — Some cards require you to sign up each quarter to qualify for the increased rewards. Cash back cards appeal to customers for a number of reasons, but mainly due to their ease and flexibility: In fact, polls show that people prefer cash back cards by a ratio of 3-to No annual fee — Cash back cards rarely charge an annual fee.
Out of the 52 cards polled in our yearly cash back survey , only four had annual fees. Cash back on every purchase — Some cards offers a bonus rate on certain purchases, but virtually all of them offer a standard rate of cash back on all other purchases. Limited expiration dates — Although some cards place restrictions on the amount of time you have to redeem your cash back rewards, the vast majority do not.
Only eight out of 52 cards had expiration dates. Rewards on everyday purchases — Cash back cards, whether a simple, tiered or bonus category card, offer cash back on the items that you buy everyday, such as gas, groceries, department stores and wholesale clubs.
If you load your cash back rewards back onto your credit card, it will earn its own cash back when you spend it. To quickly bulk up rewards earnings or meet the minimum spend requirement for a sign-up bonus, you should use your cash back cards for as many of your everyday purchases as possible. A large purchase -- such as a down payment on a car, furniture or other major purchase -- can help you meet a spending threshold and score a large amount of cash back in one swoop. However, using cards for your everyday spending — including groceries, gas and utility bills — is the best way to go if you want to earn a large amount of cash back over time.
Note that you need to watch out for merchants that tack on a convenience fee, since this can negate the value of your cash back. If you sign up for multiple cash back cards that offer bonuses in different spending categories and rotate them to earn bonuses in each of the spending categories, you can increase the rate of cash back that you earn. You need to take care to pay your card by the due date, since the late fees and penalties from a missed payment can quickly negate any cash back that you earn.
Even if you make your minimum payment on time, the interest that you own on a rotating balance can easily outmatch the cash back that you earn. Over time, you may find yourself owing more cash back than you earn. Cards that offer sign-up bonuses usually have a minimum spend requirement that needs to be met within a certain amount of time.
Make sure you pick a card that has a requirement you can meet. Some cards reward for signing on an authorized user or referring new cardholders, so check for that. Look at your spending before choosing your card. If you find that you spend a disproportionate amount on, say, groceries or restaurants, let that inform your decision. If you love to shop at Amazon, then a card that rewards for shopping there may be best. After your first year of card membership, if there is an annual fee, consider calling your card issuer and asking if they'll waive the annual fee a second year.
Our study shows that when cardholders ask for better terms on their cards , chances are they'll get it. Choosing the right card will depend on your spending habits and how much maintenance you want to put into a credit card. Here are the criteria that you should consider:. The most generous cash back cards will usually have a high barrier to entry. While you want to get the best card possible for your credit rating, you also want to minimize inquiries into your credit history, which can lower your credit score.
You should check the required credit rating for a card and make sure you can qualify before you apply. Recall that there are three primary types of cash back cards: The type you choose will depend on whether you prefer simplicity or the ability to maximize your cash back through bonus categories.
For instance, if you have a family that eats at home most of the time, you may be best off with a card that offers a bonus on grocery purchases, whereas if you dine out often you may prefer a card with a bonus on restaurant purchases. Or, you may get a higher cash back rate with a card that offers the same flat rate on all your purchases. Some of the most popular categories include groceries, restaurants, gas, rideshare services, Amazon. There are also business cash back cards, which reward you for spending on advertising, utilities, software and hardware, travel, and more.
You should factor this into your overall card rewards — depending on whether you plan to hold the card for the short term or the long term — it could put you ahead of a card with a higher cash back rate, but no sign-up bonus.
Depending on your spending habits, you can often earn more cash back, even once you subtract the fee. Also, there are cards with annual fees that waive the fee the first year, making your first-year savings that much more generous. Think in the long term about how you plan to use your card. If it's a card you plan to use for the long haul and for moderate expenditures, a no annual fee card may be best.
How hard do you want to work to get your cash back? Interest rates and penalties are probably not the top priority for consumers who are considering a cash back card. If you are planning to use your cash back card outside of the U. Common benefits on cash back cards include travel and purchase protections, such as car rental insurance and extended warranties. With the above factors in mind, here is how to compare two cash back cards using the Citi Double Cash vs. American Express Blue Cash Preferred as an example.
In comparing the two cards, we need to consider these three questions:. In comparing two cash back cards, you need to calculate the rewards value for the card.
You should use the following formula:. As you can see, annual fees can be deceiving. You also need to consider how long you will hold the card. You can see in our second table that the rewards value drops significantly for the Blue Cash Preferred card in the second year. For the cardholder in our example, the Citi Double Cash card is the better card in the long run:.
You need to consider how easy it is to manage and redeem your cash back with each card. As you can see from the table below, the Citi Double Cash card and the Blue Cash Preferred card are both fairly flexible cash back cards. The Blue Cash Preferred card, on the other hand, is more limited on redemption options — mostly, you are restricted to redeeming your cash back for statement credits:.
Also, you should compare benefits — such as travel and purchase protections — that can add significant value to the cards.