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How To Choose The Best Cash Back Credit Card
Updated On September 5, 2023
Editorial Note: This content is based solely on the author's opinions and is not provided, approved, endorsed or reviewed by any financial institution or partner.
If you want to know how to choose the best cash back credit card, remember this: finding the best cash back credit card can be easy if you know what to look for.
Cash back credit cards are credit cards that give you cash back based on your credit card spending. For every dollar you spend on the top cash back credit cards, you will receive cash back. The amount of cash back you receive with the best cash back credit cards will vary based on the credit card you choose. Typically, with the best cash back credit cards, you will find that you typically can earn 1-2% cash back on your credit card spending.
The best cash back rewards credit card for you will be based on a variety of factors. For example, analyze your spending to understand which your highest spending categories such as travel, hotels, airlines, rental cars, restaurants, gas or everyday purchases. This will help you compare the best cash back credit cards that match your spending categories.
Whether you choose the highest cash back credit card or the best cash back credit cards for excellent credit, you should also consider the annual fee, cash back rate, sign-up bonuses and interest rate, among other factors.
What is the best cash back rewards credit card for me?
The best cash back credit cards are based on your personal preference. There are no “best cash back cards” for everyone. Rather, the top cash back credit cards are the ones that you prefer based on several factors. Therefore, the best cash back rewards credit card is an individual choice.
With the best cash back credit cards, it is essential that you repay your credit card balance each month in full. Why? If you do not repay your credit card balance in full, you will be charged interest, which can cost you more than the value of your cash back rewards.
The best place to start is your spending, particularly the categories where you spend most frequently. Then, you can align your spending habits with the cash back credit card offers that best match your spending. The best cash back credit cards offer cash back in several popular categories such as travel, airlines, hotels, grocery, gas, restaurants and everyday spending, among others.
How should I choose the best cash back credit cards?
There are several factors to consider when you choose the best cash back credit cards:
Rewards Rate
When you choose the best cash back credit card, the cash back rewards rate often is your top consideration. The best cash back credit cards typically have a cash back rewards rate of 1.5% to 2% for flat percentage cash back rewards. For rotating spending categories or tiered spending categories, the rewards rate can vary from 3% to 5% typically.
If your cash back credit card has any annual limits on the amount of cash back you can earn, and you plan to exceed that limit in a single year, then you can use another cash back credit card to earn more cash rewards. So, you can be strategic about how you use the best cash back credit cards and choose more than one cash back credit card to help you earn more cash back.
Sign-up bonus
The sign-up bonus is your second major consideration when you choose the best cash back card. A cash back sign-up bonus is important. However, if you choose between the cash back rewards and the sign-up bonus, choose the cash back rewards. Why? Sign-up bonuses are one-time, whereas cash back rewards are ongoing and you will receive more benefit over time.
Annual Fee
The good news is that the best cash back credit rewards usually do not charge an annual fee. If choose a cash back credit card that has an annual fee, then just make sure that the cash back, benefits and perks you receive exceed the annual fee.
Redemption
When it comes to the best cash back cards, earning cash back and redeeming cash back are both important. Therefore, choose a cash back credit card for which you can redeem cash easily.
Introductory APR / Final APR
If you plan to repay your credit card balance in full each month, then the APR is less important. Instead, focus on the percentage cash back, the sign-up bonus and other perks when you choose the best cash back credit card. A low introductory APR can also work to your advantage if you plan to make a big purchase and pay off your credit card balance in full.
Type of cash back credit cards
There are three primary types of cash back credit cards. To qualify for the best cash back credit cards, it is helpful to have a strong credit score and have a good financial track record.
1. Best Cash Back Credit Cards: Flat-rate percentage
The best cash back credit cards give you cash back based on your credit card spending. Typically, you receive a flat percentage of cash back based on your total spending each month or each year.
These cash back credit cards pay the same, flat percentage rate – typically 1% to 2% – on all your credit card purchases. The good news is there is no limit to the amount of cash back you can receive.
Finally, some of the best cash back credit cards offer additional cash back when you pay your credit bill.
2. Best Cash Back Credit Cards: Spending Categories
With these best cash back credit cards, you earn cash back either in a designated category or a rotating category. These cash back credit offers offer you certain percentages for different categories. For these cash back credit cards, this means that your everyday purchases could earn one percentage, your gas purchases could earn another percentage and your travel purchases could earn another percentage.
For example, you might earn 3% cash back on all grocery spending and 1% cash back on all other spending.
3. Best Cash Back Credit Cards: Bonus Categories
Some of the best cash back cards offer rotating categories, which means the percentages may change each month or quarterly, for example, for specific categories. For example, supermarkets may be the highest cash back one month, but gas purchases may be the highest cash back category another month.
For example, in one month, you might earn 3% cash back on groceries and 1% cash back on all other spending. The next month, you might earn 3% cash back on gas and 1% cash back on all other spending.
How to get approved for the best cash back cards
To get approved for the best cash back cards, you need to have strong credit or excellent credit. The stronger your credit, the higher likelihood that you will be approved for best cash back credit cards.
To get approved for the best 10 cash back credit cards, credit card companies will evaluate your credit profile, income, other debt and your history of financial responsibility. Credit card companies offer the best cash back credit cards to customers have a history of financial responsibility who they can trust to repay their credit card balances in full.
If you have a strong financial profile, you may be a great candidate to qualify for the best cash back cards.
How to choose the highest cash back credit card
The highest cash back credit card is the one that will give you the most cash back based on your spending.
When you want to choose the best cash back credit card, you need to evaluate your specific spending. Once you analyze your spending, you can determine in which category you spend the most. For example, if you find that you spend the most for grocery or gas, you can pick the 3 cash back credit cards that have the highest cash back credit card for these categories. This allows you to match your spending with the highest cash back rewards.
The highest cash back credit card will always be specific to you and your spending. Therefore, it is important to understand whether the cash back credit cards have fixed cash back rewards or rotating cash back rewards.
You can compare the best cash back cards on Mentor Money to determine which categories match your spending habits. With rotating cash back rewards, the categories with the highest cash back rewards may change throughout the year. With these top cash back credit cards, try to time your purchases to match the rotating categories.
The best ways to redeem cash with the best cash back credit cards
With the best cash back credit cards, you can typically redeem cash back in one of the following three ways:
1. Bank deposit: With this cash back redemption option, you receive your cash back directly into your bank account. For the best cash back cards, this is your top strategy to get cash back.
2. Statement Credit: This cash back redemption option puts the cash you earn directly on your credit card statement. The best cash back cards offer this redemption option. The good news is it usually appears within your statement within days.
3. Gift Cards: Cash back credit cards also provide an option for you to receive a gift card with your cash back balance. You can use this gift card with your cash back to spend with online retailers.
When looking for the best cash back rewards credit card, make sure that you can redeem cash back in the way you prefer. When it comes to the best cash back credit cards, also be sure to read the fine print. If you look at the 10 cash back credit cards that are most popular, each of them may have different redemption options for cash back. So, make sure you understand if there are any limits to cash back redemption.
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