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- Some cash-back cards, like the Citi® Double Cash Card, earn the same amount of cash back on every purchase you make.
- Other cards, like the Blue Cash Preferred® Card from American Express, have bonus categories, so you can earn more cash back on certain purchases.
- Other types include cash-back cards with bonus category that change each quarter and cards that allow you to customize where you earn your most rewards.
- Check out Insider’s guide on the best cash-back credit card options.
Most people associate credit cards with different types. Cash-back Cards, Secured Credit Cards, Premium credit cards?, and travel cards.
My personal experience with credit cards was not the best. I wasn’t aware of the differences in the broad categories and the differences between cash-back credit cards. I jumped straight in and applied for the Discover it® Cash Back.
It was great credit card and it worked well for me. That was a good thing. It would have been a good idea to first understand all my options and then take a few steps to apply for a credit card.
Cash-back credit cards offer a percentage-based cash bonus for every dollar spent using the card. Capital One Quicksilver cash rewards credit card offers 1.5% cashback for all purchases.
It is important to know the four main types of cash-back credit card options available when choosing which credit card you should apply for.
Insider’s Featured Credit Cards with Cash Back
Buy unlimited items and receive unlimited 2% cash back
$200 Cash Rewards Bonus upon Spending $1,000 in Purchases in the First 3 Months of Account Opening
You can earn 2% on all purchases. Unlimited 1% cashback when you buy and an additional 1% when you pay.
$200 Cashback after spending $1500 on purchases within the first six months.
Each quarter, you will receive 5% cashback for up to $1500 combined purchases in bonus category. 5% cash back on travel purchased through Chase Ultimate Rewards®. Chase Ultimate Rewards(r) offers a 3% cashback on purchases at drugstores and restaurants, as well as unlimited 1% cashback on all other purchases.
$200 after you spend $500 on purchases within the first 3 months of your account opening
Here, we’re focusing on the perks and rewards that each card offers. The cards are not worth the expense if you have to pay late or interest. It is important that you pay your credit card in full each month. Also, pay on time and only spend what you are able to afford.
1. Flat-rate cash back cards
Flat-rate credit cards, the most basic and common type of cash-back card, are the most commonly used. No matter what category you are spending, a flat-rate card offers the same percentage discount on every dollar that you spend. It is the most common way people think about a cash back credit card.
For every dollar spent, most cards in this category offer 1.5% to 2.0% cash back. One example is a 1.5% Cash Back Card that would give you $1.50 for every $100 spent with the card.
Examples include:
- Citi® Double Cash Card — Earn 2% back on every purchase; 1% back (1 point per dollar) when you buy, and 1% back (1 point per dollar) when you pay your bill
- Wells Fargo Active Cash® Card — Earn unlimited 2% cash rewards on purchases
- Bank of America® Unlimited Cash Rewards Credit Card
— Earn unlimited 1.5% cash back on all purchases
2. Cash-back credit cards that offer bonus categories
A cash-back credit cards with bonus categories (also known as a tiered card) offer different percentages of money back depending upon the type of purchase.
For example, the Blue Cash Everyday® Card from American Express is a tiered cash-back card that offers 3% cash back at U.S. supermarkets on up to $6,000 per calendar year (then 1% back), 3% cash back at U.S. gas stations on up to $6,000 per calendar year (then 1% back), 3% cash back on online retail purchases on up to $6,000 per calendar year (then 1% back), and 1% cash back on everything else (cash back is received in the form of Reward Dollars).
Important to keep in mind is that the “all other” spending reward is often less than a flat credit card. You need to ensure that you spend enough in higher reward categories to compensate that difference.
There are also tiered cash back cards:
- Blue Cash Preferred® Card from American Express — Earn 6% cash back at U.S. supermarkets (on up to $6,000 per calendar year, then 1% back), 6% back on select U.S. streaming subscriptions, 3% back at U.S. gas stations and on transit, and 1% back on everything else (cash back is received in the form of Reward Dollars). The annual fee is $95
- Capital One Savor Cash Rewards Credit Card
— Earn 4% cash back on dining, entertainment, and eligible streaming services, 3% back at grocery stores, and 1% back on everything else
3. Rotating cash-back cards in bonus categories
A rotating category credit card was my first credit card — the Discover it® Cash Back.
The majority of cards in this category offer 1% cashback on all purchases, with the exception of the bonus categories. These cards will typically offer 5% cashback on most purchases. You’ll also earn 5% on spending up to $1500 per quarter. (From October 1 through December 31, 2022 you can earn 5% cashback at Amazon.com. After enrollment, 1% is required.
Gas stations, grocery stores and Amazon are all common categories that qualify for bonuses.
These are the most popular Cash-back cards with rotating bonus category are the Discover it® Cash Back and the Chase Freedom Flex℠. The cards can earn 5% cashback on quarterly bonus categories (up to $1,500 in quarterly purchases), and 1% cashback on all other purchases. These cards earn 5% cash back on quarterly bonus categories (up to $1,500 in purchases each quarter), and 1% back on everything else. Chase Freedom Flex card, Q4 2022 bonus categoriesPayPal, Walmart, and The Discover it® Cash Back card’s Q4 bonus categoriesAmazon.com is a digital wallet.
4. Cash-back cards that can be customized with bonus categories
The most difficult cash-back type is last on this list.
You can choose the spending category that will receive the highest reward from a customizable card. It’s similar to a tiered credit cards. This perk is great because it rewards you for specific spending habits.
The most popular example of a cash-back card with customizable rewards categories is the Bank of America® Customized Cash Rewards Credit Card
. It earns 3% cashback depending on the category it chooses from the following:
- Gas
- Online shopping
- Dining
- Travel
- Drugstores
- Home improvement/furnishings
Additionally, you’ll earn 2% cashback at wholesale clubs and grocery stores, and 1% on all other purchases. You’ll get 1% cash back after spending $2,500 each quarter.
How to choose the right cash-back card type for you
It’s not rocket science to choose a credit line, but these are some tips that will help you make an educated decision and maximize your rewards.
Understanding your options, such as the four cash-back credit card types listed above, is one of these things. You can also apply for your next card by following these simple steps:
Step 1: Verify your credit score
You must first know who you are. Credit scoreBefore applying for a credit line.
Good or excellent credit is required for many cash-back and premium cards. Excellent credit scores. If you don’t already have an account, Credit score of good qualityYou might be better off applying now for a A credit card that is suitable for those with fair creditTaking the time to Your credit score should be improved.
Step 2: Analyze your past spending
To ensure that you choose the right credit card for you, it is essential to know your spending habits.
My credit card spending consists mainly of dining out, shopping, and travel. I don’t drive to work and don’t spend much on gas. I also don’t shop online a lot.
Although it sounds simple, it is not. I choose a credit card that rewards my spending and does not offer great gas mileage or Amazon rewards.
Step 3: Choose the right card type
Understanding the four types cash-back credit card cards is key.
A flat-rate, or even tiered, credit card is the right choice for you if simplicity is your goal. While you may not receive the greatest rewards, you will earn a steady stream cash back and a steady stream of income with very little effort.
A customizable or rotating category credit cards are options for those who are open to optimizing their spending and making a commitment to maximize rewards.
Step 4: Locate your card and apply
After you have done your research about your credit, spending habits, and what type of cash-back card is best for you, you can narrow down your choices and choose the card that suits your needs.
And then … apply! This is our guide to the The best cash-back credit cardYou can also find a complete list here top small-business cash-back cardsTake into account.
Make sure you take advantage of the perks your new credit card offers. Remember that credit cards are best used responsibly. After you have received your card, be sure to use it responsibly and make payments on time.
