Cashback credit cards are one of the best financial tools for those who want to earn rewards on everyday purchases. Instead of earning points or miles, these cards provide a percentage of your spending back in cash, which can be used for future purchases, statement credits, or even direct deposits into your bank account. Choosing the right cashback card depends on your spending habits, as different cards offer various reward structures, bonus categories, and additional perks.
This guide will help you understand how cashback credit cards work, what to consider when selecting one, and the best cashback credit cards available today.
How Cashback Credit Cards Work
A cashback credit card rewards you with a percentage of the amount you spend on eligible purchases. The cashback earned can usually be redeemed in multiple ways, such as statement credits, gift cards, or bank deposits.
Types of Cashback Credit Cards
There are three main types of cashback credit cards, each catering to different spending habits.
- Flat-Rate Cashback Cards – These cards offer a consistent cashback percentage on all purchases, typically ranging from 1.5% to 2%. They are ideal for individuals who want a simple, hassle-free rewards system.
- Category-Based Cashback Cards – These cards provide higher cashback percentages on specific spending categories, such as groceries, dining, gas, or travel. They are great for those who spend heavily in certain areas.
- Rotating Category Cashback Cards – These cards offer higher cashback on certain categories that change every quarter. Cardholders must activate these categories to earn the highest rewards.
Factors to Consider When Choosing a Cashback Credit Card
Cashback Rate and Structure
Evaluate how cashback is earned to ensure it aligns with your spending habits. A flat-rate card might be best if you prefer simplicity, while a category-based card is ideal if you spend more in specific areas like groceries or dining.
Annual Fees
Some cashback credit cards have no annual fees, while others charge a fee in exchange for higher rewards and extra benefits. If you opt for a card with an annual fee, make sure the cashback earned offsets the cost.
Redemption Options
Check whether the cashback can be redeemed as statement credits, direct deposits, gift cards, or travel credits. Some issuers have restrictions on when or how cashback can be used.
Interest Rates and Fees
If you carry a balance, the interest rate (APR) can negate the cashback benefits. Always aim to pay your balance in full each month to maximize rewards.
Bonus Categories and Rotating Rewards
For cards with rotating categories, check if you need to activate the categories every quarter. Also, make sure your spending aligns with the bonus categories to maximize cashback earnings.
Best Cashback Credit Cards
1. Citi® Double Cash Card – Best for Flat-Rate Cashback
This card offers 2% cashback on all purchases—1% when you buy and another 1% when you pay your balance. There are no category restrictions, making it an excellent choice for those who prefer simplicity.
Pros:
- High flat-rate cashback at 2% on all purchases.
- No annual fee.
- No need to track bonus categories.
Cons:
- No bonus categories for higher cashback.
- Foreign transaction fees apply, making it less ideal for travel.
2. Chase Freedom Unlimited® – Best for Everyday Spending
This card offers a flat 1.5% cashback on all purchases and bonus rewards on dining, drugstores, and travel booked through Chase.
Pros:
- 3% cashback on dining and drugstores.
- 5% cashback on travel booked through Chase.
- No annual fee.
Cons:
- Requires booking through Chase Travel for maximum rewards.
- Base rate of 1.5% is lower than the Citi Double Cash Card.
3. Blue Cash Preferred® Card from American Express – Best for Groceries and Gas
This card is ideal for families and individuals who spend a lot on groceries and gas. It offers 6% cashback at U.S. supermarkets (up to $6,000 per year), 3% on transit and gas, and 1% on everything else.
Pros:
- Highest cashback rate on groceries at 6%.
- 3% on gas and transit expenses.
- Includes select streaming services in the 6% category.
Cons:
- Has a $95 annual fee (waived the first year).
- The 6% grocery cashback is capped at $6,000 per year.
4. Discover it® Cash Back – Best for Rotating Categories
This card offers 5% cashback on categories that change each quarter (such as gas, groceries, and restaurants) and 1% on all other purchases. It also features a first-year cashback match, doubling all cashback earned.
Pros:
- 5% cashback in bonus categories.
- Cashback Match feature doubles your first-year earnings.
- No annual fee.
Cons:
- Requires activation of rotating categories each quarter.
- 5% cashback has a spending cap per quarter.
5. Capital One SavorOne Cash Rewards – Best for Dining and Entertainment
This card is great for food lovers, offering 3% cashback on dining, entertainment, streaming services, and grocery stores.
Pros:
- No annual fee.
- 3% cashback on popular spending categories.
- No foreign transaction fees.
Cons:
- Not ideal for those who don’t spend much on dining or entertainment.
- Lower base rate of 1% on other purchases.
6. Wells Fargo Active Cash® Card – Best for High Flat-Rate Cashback
With 2% unlimited cashback on all purchases, this card competes with Citi Double Cash but does not require paying your balance to earn the full rewards.
Pros:
- Simple 2% cashback on all purchases.
- No annual fee.
- Intro APR offer for new cardholders.
Cons:
- No bonus categories for higher earnings.
- Foreign transaction fees apply.
7. Chase Freedom Flex℠ – Best for Versatility
This card offers 5% cashback on rotating quarterly categories, 5% on travel booked through Chase, 3% on dining and drugstores, and 1% on everything else.
Pros:
- High cashback rates in multiple categories.
- No annual fee.
- Access to Chase Ultimate Rewards program.
Cons:
- Requires activation of rotating categories.
- Spending cap on the 5% rotating cashback.
Maximizing Your Cashback Earnings
Use the Right Card for Each Purchase
If you have multiple cashback cards, use them strategically. For example, use the Blue Cash Preferred for groceries, SavorOne for dining, and a flat-rate cashback card for all other purchases.
Pay Your Balance in Full
Carrying a balance negates cashback benefits due to high interest charges. Always pay in full each month to maximize rewards.
Combine Cashback with Other Discounts
Use cashback cards alongside store discounts, coupons, and cashback apps like Rakuten for extra savings.
Take Advantage of Sign-Up Bonuses
Many cards offer introductory cashback bonuses if you meet a spending requirement within the first few months.
Final Thoughts
Choosing the best cashback credit card depends on your spending habits and financial goals. If you prefer simplicity, a flat-rate cashback card like the Citi Double Cash is ideal. For those who spend heavily in specific categories, cards like Blue Cash Preferred or SavorOne offer higher rewards.
By using cashback cards wisely and avoiding interest charges, you can turn everyday spending into valuable rewards.