The Best Cash-Back Cards Are Simple to Use, but Far From Basic. How to Maximize Your Rewards

Cash-back cards are one of the most common types of rewards cards, and arguably the easiest ones to use.
Travel cards get a lot of attention, but not everyone wants to memorize a dozen different award charts to find the perfect redemption, shell out hundreds of dollars in annual fees — or even travel at all. With a cash-back card, there’s nothing complicated. Just swipe your card and essentially get cold hard cash back in your pocket.
Of course, there’s still an art to picking the best cash-back card for your lifestyle and budget. Some cards may have higher cash-back rates in specific spending categories, while others may provide flat cash back no matter what you buy. Many cards have no annual fee, but some may charge a fee in exchange for better rewards or more perks.
And, the benefits of a cash-back card might not end at the rewards. Several popular cards offer additional benefits like purchase protections. It’s a big wide world of cash-back cards out there — here’s how to pick the best one for you.
What is a cash-back credit card?
A cash-back card gives a percentage of qualifying purchases back to you as rewards. Though redemption options vary by card, you can typically redeem your rewards as a statement credit, for cash deposited it into your bank account, or for gift cards or purchases.
How to choose a cash-back card
When you’re choosing a cash-back credit card, the rewards rates and categories are among the most important features. Pick a card that bolsters your own spending habits, or a general rewards card that earns on purchases no matter what you’re buying.
If the card charges an annual fee, you’ll want to make sure the rewards you’d earn with regular spending are enough to cover the annual fee, plus still offer you a value.
Also, consider any additional card perks. For example, cash-back cards can sometimes include an introductory 0% APR on new purchases to help you temporarily avoid interest charges.
What are the different types of cash-back credit cards?
Cash-back credit cards generally fall into four primary categories: flat-rate, tiered, rotating or choose-your-own.
Flat-rate cards: You’ll earn the same rewards rate for all of your purchases. The best flat-rate cards typically let you earn 2% cash back or 2x points per dollar.
You’ll earn the same rewards rate for all of your purchases. The best flat-rate cards typically let you earn 2% cash back or 2x points per dollar. Tiered cards: These cards offer different rewards rates depending on how you’re using them. For example, a credit card might let you earn 5% cash back for groceries, but 3% for gas.
These cards offer different rewards rates depending on how you’re using them. For example, a credit card might let you earn 5% cash back for groceries, but 3% for gas. Rotating category cards: These credit cards feature a different set of bonus categories every quarter. So, for the first three months, you might earn rewards at Amazon or Walmart, and the following three months you could earn rewards for eating out or with Target.
These credit cards feature a different set of bonus categories every quarter. So, for the first three months, you might earn rewards at Amazon or Walmart, and the following three months you could earn rewards for eating out or with Target. Choose-your-own category cards: These offer you more choice than the other card types. You can select the types of purchases you’d like to earn rewards for.
What are the benefits of using a cash-back credit card?
Aside from the main benefit of earning rewards simply, some cash-back credit cards offer additional perks. Common credit card benefits include purchase protection, extended warranties, roadside dispatch services and cell phone protection.
Virtual credit cards add another layer of protection while shopping online. Many credit card issuers offer virtual card access for cardholders. A virtual card lets you use a unique, digital card number in place of your physical card. This prevents the merchant from saving any of your financial information, which can help further protect you from credit card fraud.
How do I maximize my cash back?
Keep these tips in mind as you use your cash-back credit card.
Match your card to your spending habits. If you’re making purchases you otherwise wouldn’t for the sake of earning more rewards or you can’t afford to pay off your balance each month, the interest charges and fees could wipe out the value of your rewards.
If you’re making purchases you otherwise wouldn’t for the sake of earning more rewards or you can’t afford to pay off your balance each month, the interest charges and fees could wipe out the value of your rewards. Choose a credit card that matches your spending. If your regularly spend money on eating out and using Uber or Lyft, choose a card that provides dining and ride-share rewards.
If your regularly spend money on eating out and using Uber or Lyft, choose a card that provides dining and ride-share rewards. Earn a welcome bonus. Many cash-back credit cards offer a welcome bonus if you spend a certain amount within a specific time frame. So long as you’re not overspending to reach it, it’s a good way to push your cash-back earnings even higher.
Many cash-back credit cards offer a welcome bonus if you spend a certain amount within a specific time frame. So long as you’re not overspending to reach it, it’s a good way to push your cash-back earnings even higher. Don’t forget to activate reward categories. If you have a credit card that features rotating rewards, don’t forget to activate them each quarter if your card issuer requires this step. Otherwise, you might miss out on higher cash-back rates.
How should I redeem my cash back?
Your cash back rewards can be redeemed in several ways, though it might vary by issuer and card. Some of the most common ways to redeem cash back include:
A statement credit (which reduces your credit card bill)
A direct deposit of cash into a linked bank account
A gift card
For purchases with select merchants, like Amazon
If your credit card calculates its rewards in points, one point is usually worth one cent when redeemed for cash back — though this can vary depending on the issuer and your specific card.
Is a cash-back card right for you?
If you don’t have a credit card that rewards you for your regular everyday spending, consider a cash-back credit card.
If there is something you regularly spend a lot on, choosing a credit card that earns rewards for the purchase can be a good way to boost your finances. Just try not to let a cash-back card encourage you to spend money you otherwise wouldn’t have.
Alternatives to cash-back credit cards
While cash-back credit cards are a great way to earn rewards for your purchases, they’re not your only option.
Travel cards: You can typically redeem points in more ways than cash-back rewards, and you’ll often get the most value out of rewards when redeeming them for travel purchases. Many travel credit cards also let you transfer points to the credit card issuer’s travel partners, where the rewards could be worth more than 1 cent per point.
You can typically redeem points in more ways than cash-back rewards, and you’ll often get the most value out of rewards when redeeming them for travel purchases. Many travel credit cards also let you transfer points to the credit card issuer’s travel partners, where the rewards could be worth more than 1 cent per point. Cash-back debit cards: If you’re worried about incurring credit card debt, another alternative is to use a debit card that earns rewards. Keep in mind that a debit card’s reward rate is often lower than what you’d get with a credit card.
How to apply for a cash-back credit card
Follow these steps to get a cash-back credit card of your own:
1. Find the card that matches your budget. Look at your spending habits to determine which categories — such as groceries, dining out or gas — you spend the most money on each month. Then find a card that offers elevated rewards rates in those categories.
2. Apply securely on the credit card issuer’s website. Most issuers will ask for personal identifying information like your name and Social Security number, as well as information about your employment and income. You’ll also have to consent to a hard credit pull so the issuer can check your credit score.
3. Use the card responsibly to earn rewards. Don’t spend more than you can afford to pay off each month, and always pay your bill on time and in full. Otherwise, interest charges and late fees could wipe out the value of any rewards you earn, and you risk sinking into credit card debt or damaging your credit.
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