Cash back credit cards essentially pay you to shop, and who does not love that concept? These cards are great for anyone looking to earn a little money while spending money, which is the way that the world should work. Not all credit cardholders are looking to earn travel rewards or other points; some simply want to pay their expenses and then receive a little cash back. That’s why we thought it would benefit our readers to know which cash back credit cards are the best cash back credit cards for 2016. These cash back credit cards are not all created equal; some offer more benefits than others. Many cash back cards do not make the list because the rewards, fees and other additions are simply not worth it in the grand scheme of how these cash back credit cards work.
Whether you have plenty of money in the bank or you are looking for a way to earn a little bit more to set aside for that upcoming vacation or your Christmas shopping addiction, these cash back credit cards pay you to spend money. Of course, we do like to point out that when these cash back credit cards are used incorrectly, they are not so good for earning cash back. For example, running up the balance and not paying it in full each month limits the amount of cash back these credit cards pay, as well as your credit rating. In this article, we will discuss not only which cards are the best cash back credit cards available right now, but also how to make the most of these cash back credit cards and how to keep your credit stellar so that you can continue to spend, earn and enjoy all that each of these cash back credit cards has to offer.
Something else we like to point out is the fact that not all cash back credit cards seem as good as they actually are when you read the bold words and terms; sometimes you have to delve a little deeper into what the cards have to offer so that you see which one is right for you. Some might seem like the right cash back card for your wallet, but it all depends on how you shop, where you shop and what you do with your spending.
Cash back credit cards are a great way to earn a little additional income to use at the end of the year to do your Christmas shopping, to pay your taxes, or to put into a savings account for something awesome (like your future, for instance). These cards are amazing for just about everyone, but they’re particularly good for a certain group of people. Cash back credit cards are great for those who know how to use their credit responsibly, for those who always pay their credit card bill in full each month, and for those who are willing to spend as much as possible on the card to ear the most cash back.
These are also great cards for people who would rather have cash back than travel rewards with their credit card. Some people simply do not travel enough to make an airline, hotel or travel rewards card worth it, but everyone uses money; that’s why a cash back credit card is always worth it to have in your wallet.
Making the Most out of a Cash Back Credit Card
There are many ways you can make the most out of a cash back credit card, but what few people realize is that just about anyone can make the most out of a cash back credit card. Many consumers feel that using a rewards card is absolutely pointless if they haven’t a massive budget, but that is not always the case. In fact, anyone can make the most out of a cash back credit card if they merely know how to work the system. We have a few tips that will help you to earn the most possible cash back, the most possible rewards and still maintain a great credit score while you’re doing it. It’s not difficult; it’s genius.
- Pay for everything with your cash back credit card – We mean pay for everything. If you can pay your mortgage online or over the phone with a credit card, do it. If you can spend that money on the card and earn cash back just for paying your house payment, we recommend you do it. Pay as many of your monthly expenses as possible with this cash back credit card so you can earn the most money back. We want you to pay your gas, groceries, entertainment, electric, cable and every other bill imaginable. Book your vacations with this card, buy your kid’s year book with this card. Pay for everything you do with this card.
- Pay off the card in full each month – Now that you know you can make the most of this cash back credit card every month by paying everything you owe and using it to purchase everything you regularly use, go ahead and pay this card off in full. Before you start saying that you cannot afford to spend thousands of dollars each month on a credit card, remember that you’re paying for all the things you would have purchased anyway. That means that you’re not using your cash at all. Now take your cash that’s usually designated for things like your mortgage and use it to pay off the credit card bill at the end of the month. This keeps your balance clear and it keeps your credit right on track.
- Save your cash back – You can use any of the cash back credit cards that make our list for the best cash back credit cards for 2016 to redeem points and earn cash back at any time. That is one of the huge perks of using this card. However, we advise that you not do this. Sure, a statement credit of $50 per month is nice when you’re paying your bill. But we like the idea of saving it all up and redeeming your points around the holidays when it’s time to shop and when it’s time to buy your kids things for the holidays. We recommend that you use your card to do your Christmas shopping so that you can earn all the cash back possible, and then redeem your cash back in the form of a statement credit you can use to pay off a portion of your bill when the holidays are over. This time of year is a stretch for so many families, so why not make it a little bit more relaxing for yourself by using your cash back to do that – or save it for a vacation or whatever you feel you want to use it for when there is a lot to redeem.
- Remember to use the card – We should not have to mention this to you, but we have to. So many credit cardholders forget to use their cash back credit card to make purchases and they lose out. This is a card that pays you to spend money. No one and nothing else pays you to spend money, so why not? Spend your money and earn money in return for spending. It’s a great concept that more people should take advantage of, if you ask us.
The Importance of Paying off your Balance in Full Each Month
We cannot stress to our readers enough that paying off your credit card bill in full each month is such an imperative choice to make. The world is filled with people that forget that allowing a revolving balance to sit unattended has such a negative effect on your entire life, especially your finances. We already know that it is not a good idea to carry a balance on any card, and it’s not a good idea to have any debt. But so many people forget that they should pay their cards in full each month, and there are a few things those cardholders should consider if they’re going to use a cash back credit card. This is why it’s so important to pay that balance in full each month.
- It prevents you from paying more for things that aren’t worth it – Let’s say that you decide to order a pizza in January, and then you do not pay the balance in full. You pay the minimum balance of $10 per month or whatever it is that’s due after your $100 pizza party order. You have a 16.99% interest rate on that particular cash back credit card. Not only do you now have a revolving $100 balance that shows up on your credit report, you still have not paid for pizza. And each month that your pizza sits on your bill, you are acquiring and paying interest. After a year, that $100 pizza ends up costing you a total of $108.60. That might not sound like a lot at first, but once you ad $8.60 in interest to every $100 you charge and don’t pay off each month, it really adds up.
- It prevents you from ruining your credit – The fastest way to ruin your credit is to build it up and never pay it off. You have to pay off your credit. It is the only way to keep your score high and your credit favorable. You might be under the impression that you’ll have an excellent credit score no matter how much debt you have so long as you never make a late payment or miss a payment, but that’s not entirely true. When you have so much debt that your debt-to-income ratio is blown, you might as well have poor credit. You might have a decent score, but you will not be able to purchase anything with a loan since you have no more available income to cover the cost of the additional debt since you allow your credit card charges to sit there time and time again only paying the minimum.
- It allows you to buy things – Not everyone can afford to pay cash for a car or house. If you are one of the many billions of people who makes a good enough living to buy a home or car, but only through financing, you will need a great credit score. Too much debt or a low score will prevent banks from even looking at you as a potential recipient of their funds, and that can have a lasting negative financial impact on your life. You have to pay off balances if you want to keep your credit good enough so that you can purchase the things that you want and need over the course of the rest of your life.
- You cannot take advantage of cash back credit cards otherwise – Let’s say that you have a cash back credit card on this list and you get to earn a lot of money back for everything that you buy. Now let’s say that your card comes with a $20,000 limit. You spend it all in a few months and then you don’t pay it off. You earned cash back for that $20,000 worth of purchases, but now you’re not earning anymore. If you cannot use your card to the fullest each month, pay it off and continue using it, you cannot make the most out of your card. You have to pay off your cash back credit cards in full each month if you want to earn the most points and continue to rake in the cash on cash back rewards.
Best Cash Back Credit Card for Earning Rewards on Purchases – Discover it
We love this card, and we cannot stop saying amazing things about this cash back credit card. For one, it offers some of the highest reward rates imaginable. Secondly, there is no annual fee. Who does not love a cash back credit card that not only pays you to spend money, but does not charge you to have the card in your wallet at the same time? It’s a win-win situation for everyone that chooses to use this card, and it’s why we love it so. This is a cash back credit card that really works for the people, and it’s great for those who are looking for a card that rewards them for shopping at specific locations.
Something else that makes this one of the best cash back credit cards on the market is the fact that this particular card has the same perks as a credit card that has a higher fee than others. This is an elite type of card that is more widely available to everyday spenders, which makes it one of the best in the business. The double your cash back offer the first year is stellar, and that’s what makes us so fond of this particular cash back credit card. The reward categories rotate on a quarterly basis, which gives all cardholders a chance to earn more money at any particular time using this card to shop. That’s just one of the many benefits of using this card; you can earn additional cash back on purchases at your favorite supermarket, at gas stations, restaurants and on certain types of entertainment. Since these are purchases almost all people make on a regular basis, it’s a highly profitable card for many.
The new Double Your Cash Back offer is astounding. What Discover is willing to do with this cash back credit card is offer users the chance to double all the cash back they earn in the first year of card membership. This is automatic earnings; you don’t have to do anything special. If you are able to earn $500 cash back throughout the year, Discover will double that and send you $1000 cash back. You cannot beat an offer like that.
Additionally, the company has offered a new feature that highly benefits those that choose this particular cash back credit card. It’s called the Freeze It feature, and it’s great for your financial security. Let’s say you head out and cannot find your card; all you have to do is head to your account and freeze it with an on or off switch – available online and over the phone – and it will turn off your card from use until you find it or cancel it. It prevents theft in a major way, and that’s something that not all cards offer (but likely will over the course of next few years).
- 5% cash back on rotating categories each quarter
- No interest on any purchases for 12 months
- No interest on balance transfers for 12 months
- No annual fee – ever
- No foreign transaction fees – great for families traveling internationally
- Cash back categories on a bonus transaction level offered throughout the year
- 1% cash back on all purchases
- No overlimit fee when you spend a bit too much
- No fee for one late payment (do not make late payments)
- Paying late does not raise your interest rate
- Free FICO credit score each month on your monthly statement
- Stellar customer service
Best Cash Back Credit Card for the Things You Buy Most – Blue Cash Preferred Card from American Express
If you are like most Americans, you likely spend the bulk of your monthly budget on things like gas and groceries. This particular Amex offers the highest cash back rewards for those who use this card for gas and groceries, which is why it makes our list of best cash back credit cards on the market. The cash back you’ll receive using this card is impressive:
- 6% cash back on all grocery purchases up to $6,000 per year (1% after this amount is reached)
- 3% cash back on all gas purchases without a limit
- 3% cash back on all department store purchases
- 1 % cash back on all other purchases
If you don’t spend much at the grocery store throughout the year, perhaps you could try earning 6% cash back by purchasing gift cards at the supermarket so that you’re essentially earning 6% cash back on everything you purchase everywhere else throughout the year. To show you just how impressive this kind of cash back reward system is with this credit card, I decided to do a little math – which is not my favorite. I went through my budget for the past month, which was nothing out of the ordinary for our family. With a family of six, Halloween almost here, food to feed our kids and lunches to pack, shopping to do for winter clothes and fall apparel, I came up with this and multiplied it throughout the year.
Spending $1,500 per month at the supermarket, $720 per month on gas, $1,700 on department store purchases and $4,000 on the rest of our monthly expenses and our entertainment, we would earn the following if the past month was the same each month for an entire year:
- $480 cash back with this credit card on our supermarket purchases
- $259 cash back on all gas purchases
- $612 cash back on all department store purchases
- $480 cash back on all other purchases
This is a grand total of $1,831 cash back throughout the year by using this credit card. Of course, every month is different and this is assuming that we pay all our monthly expenses using this card, including our mortgage and utilities. Since we don’t winter wardrobe shop every month, I didn’t include any vacations in this month and we sometimes spend more and sometimes spend less on things like gas, groceries and entertainment, it’s give or take a few dollars. But still; that’s a lot of cash back to earn for doing nothing but paying for things you’re buying regardless.
Did we mention that this particular cash back credit card also comes with a cash back bonus? Anyone that signs up for this cash back credit card and spends $1,000 in three months is going to receive a $150 cash back bonus that shows up as a statement credit on that last billing cycle.
- Highest rate of return for any cash back credit card on grocery purchases
- 6% cash back on grocery purchases up to $6,000 per year
- 3% cash back on all gas purchases and department store purchases
- 1% cash back on all other purchases
- Impressive sign-up bonus
- No APR For 15 months on both balance transfers and purchases
- Annual fee waived for one year (only $75 per year after)
- Easy redemption features
- No rotating categories makes for easy points accumulation and ease of use
Best Cash Back Credit Card for Flat Rate Rewards – Citi Double Cash Card
Sometimes it’s the simplest things in life that matter the most, and this cash back credit card shows us just how important and valuable that saying really is. The Citi Double Cash card is one that allows you to earn rewards in the form of cash back without any stress, hassle or confusion in the least. This card is easy to use, and it’s quite profitable. What we love most about this particular cash back credit card is that it allows users to earn cash back with purchases, and again with the payoff of each purchase. Essentially, this cash back credit card pays you to pay off your credit card balance in full and maintain your good credit score.
Who else pays you to maintain your good credit and be responsible with your finances? Off topic just slightly, we think that being rewarded with cash back is a great way to encourage people to pay off their balances, keep their credit amazing and be financially responsible – people that see tangible results are often more successful than the people that do not.
What this cash back credit card offers to cardholders is quite simple; no hassle. You earn 1% cash back on all the purchases you make throughout the year, and then you earn another 1% cash back on all the purchases you pay off on your card each year. That means everything purchase you make throughout the year is worth an astounding 2% cash back. Since most other cash back credit cards only offer 1% cash back on most purchases and a slightly higher percentage in a few other categories, this is the most profitable card around. Let’s take the math equation we made with the Amex Blue Card and use it here.
If you spend the same $7,920 per month as mentioned above (which is high for every single month of the year, to be quite honest) and you pay it all off every single month, you’ll earn 2% cash back for a grand total of $1901 cash back using this credit card over the course of a year. That’s more than the cards with revolving categories with higher cash back percentages in those.
- No annual fee
- No APR for 15 months on balance transfers
- Earn 1% cash back on all purchases
- Earn an additional 1% cash back on all purchases you pay off in full
- No APR on purchases for 15 months
- No revolving categories
- Easy points redemption
Best Cash Back Credit Card for Cash Back on Rotating Categories – Chase Freedom
This particular cash back credit card is a big time favorite for so many. Scour the internet for approximately 2 minutes and you will see that financial experts, spenders, the average Joe and everyone in between loves this card. It offers a huge rate of return on rotating categories, and it’s easy to use. This cash back credit card earns 5% cash back on some of the most commonly purchased items in the world by consumers, and it’s what makes it one of the best cash back credit cards on the market. While not everyone is a fan of rotating categories, chances are quite good that the rotating categories are things you purchase regularly regardless, so you’ll have more opportunity to spend more and earn more every quarter when the categories rotate.
The most commonly used reward categories using this cash back credit card include gas, restaurants, supermarkets, Amazon.com, and more. Additionally, you’ll still earn 1% cash back on all the other purchases you make throughout the year. If you spend approximately $3000 per month on the rotating categories and another $2000 per month on everything else for an entire year, you are going to earn cash back rewards worth $2,040 at the end of the year. That’s impressive.
The impressive cash back reward system is not the only thing going for this cash back credit card, either. This is a card that also offers a sweet sign-up bonus worth $100 for all new cardholders that are able to spend only $500 within the first 3 months of opening this account. That’s minimal, and it’s easy to do. This is a card that almost anyone can get on board with. If you take a look at the rotating cash back rewards for 2015, you’ll see that this is one of the best cash back credit cards for 2016 if the past is any indication of the future:
- First quarter 5% cash back rewards included movie theaters, Starbucks and all supermarkets
- Second quarter 5% cash back rewards included restaurants, Bed Bath & Beyond, Overstock.com and H&M purchases
- Third quarter 5% cash back rewards included Kohls and gas
- Fourth quarter 5% cash back rewards included Diapers.com, Zappos.com, Amazon.com and Audible.com purchases
- Earn $100 cash back bonus by spending $500 in three months
- Earn 5% cash back on rotating categories throughout the year
- Earn 1% cash back on all other purchases
- No annual fee
- No APR on all purchases for 15 months
- No APR on all balance transfers for 15 months
- Easy redemption
- Good credit consumers are considered for the card
- Earn an additional $25 cash back bonus when you add an authorized user to your account and he or she makes a purchase within 3 months
- Rewards do not expire
Best Cash Back Credit Card for Higher Cash Back on All Purchases – Capital One Quicksilver Cash Rewards
Being a cash back credit card that specializes in simplicity rather than confusion certainly does have its perks. The Capital One card here is one of the simplest cash back credit cards on the market, which is why we love it. This particular cash back credit card does not try to fool its users into thinking that they’re getting some amazingly high rate of return on their purchases by promising big numbers and high cash back only to provide so much fine print you realize you’re actually getting nothing. There are no rotating categories that give you approximately three months to earn money on gas and groceries that you buy all year long, and there are no exclusions.
This cash back credit card is exactly what it is; a cash back credit card that pays you to spend money on everything. Instead of 5% cash back on gas up to X amount of dollars for X number of days, this cash back credit card offers 1.5% cash back on all your purchases all the time, no matter how much you spend. That’s a nice rate of return in comparison. Don’t believe me? Let’s figure it out together.
Let’s say you spend $40,000 per year on your cash back credit card. Let’s say your cash back credit card offers you 5% cash back on all your supermarket purchases up to $1,500 per year and the rest of your purchases are worth 1% cash back – you’ll earn $560 cash back all year. Now let’s say you have the Capital One cash back credit card and you earn 1.5% on all your purchases throughout the year. You’d earn $600 cash back all year. The math is quite simple and really does speak for itself.
However, this is not the only reason the Capital One credit card is one of the best cash back credit cards on the market. There is an impressive sign-up bonus worth $100 for all new cardholders that are able to spend $500 or more in the first three months your account is open. There is also no annual fee to have this card in your wallet, and transaction fees in foreign countries are non-existent. The best part, perhaps, is the redemption rate; this card is so easy to earn points using it to make your everyday purchases, and it’s even simpler to redeem them and make them your own. All you have to do is redeem them for a statement credit, a check in the mail or even a gift card anywhere you’d like to go. You do not need to earn any minimum points to redeem points, and they never expire as long as your card remains active.
This is a card that is for those who don’t usually spend much in the certain categories rotation department. Perhaps you live in New York City and you don’t spend much money on gas, or perhaps you are a family of 2 and you spend a grand total of $50 per week on groceries because you eat out more often or you grow your own vegetables in a garden and only have to buy things like meat at the store every so often. If you are on a tight budget and haven’t much extra to spend, this card is great because you can use it to pay your monthly expenses so that you can pay them off in full at the end of the month and still maintain good credit and earn cash back at the same time.
- Cash back bonus of $100 for all new cardholders able to spend $500 in three months
- No foreign transaction fees
- No annual fee
- Earn 1.5% cash back on all purchases all the time
- Easy redemption plan
- Redeem points for cash back, statement credits or gift cards
- No revolving categories each month or quarter