If you haven’t noticed, banks are pushing us toward credit cards instead of debit cards. However, if it makes you feel better, competition with each other is getting us consumers a bigger piece of those merchant fees back in our pockets. This is where cash back credit cards come in. With them, I can get benefits like fraud protection, expense tracking, and the most flexible of rewards, cold hard cash. Then I pay off my bill in full each month, and not a penny of interest is paid while I rack up hundreds of dollars a year in savings on things I would have bought anyway (over $300 in 2010).
Here are what I feel are the best cash back credit cards available on the market today. I’m also a fan of cards that use points and miles, but here I am focusing on cash back only. Each of them works a little differently, so I’ve made a brief summary of each one so you can decide which ones are best for your spending patterns. Mix and match!
Blue Cash Preferred(SM) Card from American Express.The Blue Cash Preferred Card from American Express Card offers a whopping 6% cash back on purchases at supermarkets, 2% cash back on gas and department store purchases, and 1% cash back on everything else. In addition, there is a $150 welcome bonus when you spend $1,000 or more within your first 3 months. The card has a $75 annual fee, but keep in mind that spending $25 a week on groceries, that 6% back will earn enough cash ($78) to pay for the annual fee by itself. Finally, don’t forget that you can buy a lot of nice gift cards at popular stores at supermarkets – I’ve seen Home Depot, Best Buy, Macy’s, Sears, and ARCO gas stations… Even Amazon.com!
The regular Blue Cash Everyday(SM) Card from American Express gives you $100 cash back bonus after spending $1,000 in eligible purchases in the first 3 months, pays 3% cash back on purchases at supermarkets, 2% cash back on gas and department store purchases, and 1% cash back on everything else and has no annual fee. If you spend less than a combination of $175 per month on groceries and $100 on gas per month, then the Blue Cash Everyday would give you more money back overall. Otherwise, the Preferred above works out better.
Chase Freedom® Visa – $100 Bonus Cash Back. The Chase Freedom Visa offers 1% cash back on everything with no tiers and 5% back back on rotating categoriesthroughout the year. From October 1st to December 31st, you can earn 5% cash back on up to $1,500 spent in the following categories: Hotels, Airlines, Best Buy, and Kohl’s. In addition, you can earn an additional $100 bonus if you spend $500 within the first 3 months of the account opening. Finally, You can earn 10% cash back when shopping at online purchase through their website. No annual fee.
Citi® Dividend Platinum Select® Visa® Card. The Citi Dividend Platinum Select Visa Card offers 1% cash back on everything with no tiers and 5% back back on rotating categories throughout the year. From July 1 to September 30, you can earn 5% cash back at Airline andCar Rental purchases, and on back-to-school shopping at Gap, Banana Republic, Old Navy, Gap Outlet and Banana Republic Factory Store. There is no cap on the 5% back, except for the $300 overall cap on all dividend rewards annually. In addition, it offers an additional $100 bonus if you spend $500 within the first 3 months of the account opening. Finally, you can also get 0% introductory APR on balance transfers and purchases for 12 months. No annual fee.
Discover® More Card. The Discover More card has a tiered cashback rate (1% unlimited Cashback Bonus on purchases after your total annual purchases exceed $3,000; purchases that are part of your first $3000 earn .25%.). The highlight is the 5% Cashback Bonus in categories that change throughout the year like travel, gas, groceries, restaurants, and home improvement stores up to the quarterly maximum. From July through September, cardmembers can sign up to earn 5% Cashback Bonus on up to $300 in purchases on Gas, Theme Parks & Movies.
PenFed Visa® Platinum Cash Rewards Card. The PenFed Vusa Platinum Cash Rewards Card is the card to get if you are a road warrior and use a lot of gas. It offers 5% cash back on gas purchases (must pay at pump) and 0.25% cash back on everything else. No annual fee. The rewards are credited on each monthly statement. They sometimes run seasonal promotions as well.
The catch? You must also be a member of the Pentagon Federal Credit Union (you can apply for both at the same time). In general, membership is open to the military, US government employees, or the family of existing members. However, anyone can become eligible by joining the National Military Family Association (NMFA) for a one-time $20 fee.
Fidelity® Investment Rewards® American Express® Card. The Fidelity Investment Rewards American Express Card earns 2% on all purchases, deposited into your eligible Fidelity account. No sign-up bonus currently available. No annual fee.
The catch? You must open a brokerage trading account, IRA account, or 529 college savings plan with Fidelity, and all cash back earned must be deposited into that account. Withdrawals from IRA and 529 must be qualified according to IRS tax rules, or are subject to penalties.
Capital One® Cash Rewards. The Capital One Cash Rewards Card earns 1% cash back on all purchases, plus a 50% bonus on the cash back you earn every year. As long as your card is still open at the end of the year, that’s a total of 1.5% cash back. You can request the cash back as a credit on your account, or in the form of a check. In addition, it offers an additional $100 bonus if you spend $500 within the first 3 months of the account opening. The Capital One Cash Rewards has no annual fee and a 0% APR on Purchases and Balance transfers until August 2013.
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