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Cash-back credit cards are incredibly popular. Whenever you use one to buy something, you earn rewards. Usually, you earn a percentage of the amount you spend. Depending on the card you have, that percentage will fall between 1% and 6%. In most cases, you can later redeem that cash back for gift cards, statement credits, or cold hard cash.

The thought of getting paid to shop or save money on everything you buy is obviously enticing. If you want to learn more about the best cash back credit cards and how to take advantage of them, here are all the details that you need to know.

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The Best Cash-Back Credit Cards of 2019

Chase Freedom

Annual Fee: $0
APR: 0% for 15 months, then 16.99% to 25.74% Variable
Bonus: $150 after you spend $500 in your first 3 months
Rewards: 5% cash back on rotating categories, 1% elsewhere
Pro: Transfer cash back to Chase travel rewards card for increased value
Con: Not good for use outside bonus categories

Read full card details here.

Chase Freedom Unlimited

Annual Fee: $0
APR: 0% for 15 months, then 16.99% to 25.74% Variable
Bonus: $0
Rewards: 1.5% cash back
Pro: Transfer cash back to Chase travel rewards card for increased value
Con: Not the best cash-back rate available

Read full card details here.

Discover it

Discover it®

Annual Fee: [annualfee id="753"]

APR: 0% for 14 months, then 13.99% to 24.99% Variable
Bonus: Cash-back match for your first year
Rewards: 5% cash back in rotating categories; 1% elsewhere
Pro: Huge potential for the sign-up bonus if you spend a lot
Con: Not great for use outside of bonus categories

Read full card details here.

Capital One VentureOne

Annual Fee: $0
APR: 0% APR 12 months, then 14.24% to 24.24% Variable
Bonus: 20,000 miles
Rewards: 10X miles on Hotels.com; 1.25X miles elsewhere
Pro: Travel perks
Con: Rewards can only be redeemed toward travel expenses

Read full card details here.

Citi Double Cash

Citi® Double Cash Card

Annual Fee: [annualfee id="443"]

APR: 15.99% to 25.99% Variable
Bonus: $0
Rewards: 1% back on purchases plus an additional 1% when you pay minimum payments on time
Pro: The highest cash-back rate on generic purchases with no fee
Con: High foreign transaction fee

Read full card details here.

Wells Fargo Cash Wise Visa Card

Wells Fargo Cash Wise Visa® Card

Annual Fee: [annualfee id="820"]

APR: 0% for 15 months, then 15.99% to 27.99% Variable
Bonus: $150 when you spend $500 in the first 3 months
Rewards: 1.5% cash back
Pro: Free cell phone protection when you pay your bill with the card
Con: Not the best cash-back rate available

Read full card details here.

Amex Blue Cash Preferred

blue cash preferred

Annual Fee: $95
APR: 0% APR for 15 months, then 14.74%-25.74% Variable
Bonus: $250
Rewards: 6% cash back on U.S. supermarkets (up to $6,000 per year in purchases), 3% on gas and department stores, 1% elsewhere
Pro: High rewards on popular spending categories
Con: Have to spend enough to make the annual fee worth paying

Read full card details here.

Journey Student Rewards

Capital One Journey® Student Rewards Card

Annual Fee: [annualfee id="827"]

APR: 26.96% Variable
Bonus: $0
Rewards: 1.25% cash back
Pro: Build credit while earning cash back
Con: Not a good long-term card

Read full card details here.

Alliant Visa Signature Card

Alliant Visa® Signature Card

Annual Fee: [annualfee id="829"]

APR: 12.24% to 15.24%
Bonus: 3% cash back
Rewards: 2.5% cash back, increased to 3% in the first year
Pro: The highest flat cash-back rate on generic purchases available
Con: Only useful for high spenders

Read full card details here.

Discover it Secured card

Discover Secured Card

Annual Fee: [annualfee id="725"]

APR: 26.99% Variable
Bonus: None
Rewards: 2% cash back on gas and dining; 1% on all other purchases
Pro: Earn rewards, even when you have poor credit
Con: Not a good card for the long term

Read full card details here.

What is a cash-back credit card?

A cash-back credit card is a special type of credit card that pays rewards when you use it. With a standard credit card, you simply pay for purchases. With a cash-back credit card, you earn a percentage of your total purchase in the form of cash back or points.

Just like a regular card, a cash-back credit cards sends you a bill at the end of every month. You have to pay at least the minimum amount due, or you’ll owe late fees and your credit score will take a hit. If you don’t pay the balance in full, you’ll also incur interest charges.

As part of your monthly statement, you’ll receive information about the rewards you’ve earned. Cash-back cards keep things simple by paying out rewards in dollars and cents. You’ll see how much you earned from each purchase, as well as the total amount of cash back you’ve earned.

When you want to redeem your cash back, you can log on to your online credit card account. You’ll see a rewards portal where you can redeem your balance. Most card issuers offer multiple redemption options, including direct deposit to your bank account, a statement credit applied to your bill, or gift cards to specific retailers.

Because cash-back credit cards are more desirable than standard credit cards, they can be more difficult to qualify for compared to a non-rewards cards. You’ll want to make sure you have a credit score of at least 700 before you start applying for cash-back cards. That’ll increase your probability of approval.

Cash-back credit cards also tend to charge higher fees, and may charge higher rates of interest than other cards. You should only use cash-back cards if you pay your bill in full each month, as the interest you pay will far outpace the rewards you earn. Whether any annual fee is worth paying will depend on your shopping habits and the rewards you earn.

What is the best cash-back credit card?

Now that you know what a cash back credit card is, you probably want to know which one’s the best.

There’s no one answer to this question. Each cash-back card is different and intended for a different type of spender. One person might earn hundreds of dollars per year, while another would struggle to earn $10 by using the same card. Some people are willing to pay an annual fee for a card, while others aren’t.

When trying to figure out which cash-back credit card is best for you, consider the following factors.

Flat rate or category bonuses?

There are two primary types of cash-back credit cards.

Flat-rate cards offer the same cash back no matter where you spend. Whether you’re buying groceries, gas, clothing, or a meal at a restaurant, you’ll earn the same fixed percentage. You never have to worry about what card you’re using. You’ll know exactly the how much cash back you’ll earn. On the downside, flat-rate cards tend to offer about 2% cash back or less, which is below the highest rates available.

Category-based cards offer low standard cash-back rates, often just 1%, on the majority of purchases. However, they offer significantly higher rewards on specific types of purchases. For example, the American Express Blue Cash Preferred card offers just 1% cash back on most purchases, but a whopping 6% at a grocery stores. You can quickly rack up hundreds of dollars in rewards by taking advantage of bonus categories.

Welcome bonus

Many cash-back credit cards sweeten the deal by offering a welcome bonus. You can often earn $100, $200, or more if you apply for a card and meet its spending requirement within the first few months after account opening.

This bonus will often equal or surpass the amount of cash back you’ll earn in a few months or a year. Some people focus solely on earning welcome bonuses, without worrying about getting cards that will help them earn consistent rewards over the long term.

Even if you’re looking to keep a card for the long haul, a few hundred dollars right away can make a difference when comparing cards.

Redemption options

While all cash-back credit cards earn you cash, that doesn’t mean they let you redeem that cash in the same way.

Some cards have minimum redemption amounts. That means your rewards are locked away until hit the minimum. American Express, for example, only lets you redeem cash back once you’ve accrued $25 in rewards. With Capital One, you can redeem just a penny.

The ways in which you can redeem your cash back matter, too. Almost every card issuer allows you to redeem your rewards toward a statement credit, which will reduce your credit card balance. Some issuers offer alternatives, such as a deposit to your bank account or gift cards to popular retailers. Depending on how you plan to use your cash back, some of these options may be more appealing—and lucrative.

Other perks

Credit cards—even rewards credit cards—aren’t solely about rewards. Many cards offer  perks that set them apart from comparable cards.

American Express, for example, includes cards Amex Offers on its cards. These special deals save you money on purchases from popular retailers, so long as you activate the offers through your online account. Wells Fargo, for another example, provides complimentary cell phone insurance when you pay your bill with your card. That might seem like a small perk, but many people pay $10 or $12 a month for such a service. In addition, most card issuers offer extended warranties for products purchased using their cards, which can save you headaches and money.

Regardless of the specifics, these perks can add a lot of value to a card and are worth considering in tandem with the cash back you’ll earn.

Should you use one card, or multiple cards?

The advantage to using one credit card: It keeps things simple. You have one card in your wallet and never have to think about which card to use at checkout. You’ll also receive just one bill every month, which means you don’t have to track and pay multiple bills.

The downside to using one credit card: You won’t maximize your cash-back earnings. Inevitably, you’ll miss out on bonus rewards you’d earn by being able to strategically use a card that earns bonus points in a given category, and a flat-rate card where there’s no bonus.

The advantage to using multiple cards: You can fully optimize your cash-back that earnings. For example, imagine you have the Alliant Visa Signature card and the American Express Blue Cash Preferred card. You’ll never earn less than 2.5% cash back, and when you shop for groceries, you’ll earn 6% cash back.

The downside to using multiple cards: You have to remember which card to use for which purchases, and you’ll have to deal with multiple bills at the end of the month.

There’s no right or wrong answer. If you don’t want to deal with carrying a dozen cash-back cards, the best plan is to get two or three cards: One card that offers a high cash-back rate on all purchases, and one or two others that offer higher rates in categories where you do most of your spending, like dining or groceries. For making your wallet just a bit thicker, you’ll earn an exponentially greater amount of cash back.

How can cash-back cards afford to pay rewards?

The idea of a credit card company paying cash back for purchases might seem too good to be true. If you use your card, pay it off in full each month, and never pay any interest, how can the card issuer afford to pay rewards? Well, don’t feel too sorry for them.

Card issuers use the money they make from interest charges to fund their rewards programs, but they also have other sources of income. For example, card issuers make money from interchange fees. Merchants who accept card payments pay these fees in exchange for using the credit card infrastructure that the card issuers provide.

These fees can range from 1% to 4% of the amount paid, plus a small flat amount. So, if you make a $100 purchase and pay with a card, the merchant might only receive $97 from the card issuer. The remaining $3 interchange fee is split between the card network runner, like Visa or Mastercard, and the card issuer.

These fees are a major part of how credit card companies can afford to pay rewards. You can feel confident that the cash-back deals are not too good to be true.

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Conclusion

Cash back credit cards are a great way to get paid for things you were going to buy anyway. Knowing how they work, what makes each one different, and how to choose the right one for you will put you on the path toward earning great rewards.

Now that you’ve got an idea of how all this works, why not try the CardCruncher tool to see which card will be the best one for you?