Best Cash Back Credit Cards 2020 [2 to 5%]
HSBC Cash Rewards MasterCard® Credit Card
Credit Score Required:
Good to Excellent
Sometimes the simplest things are the best things – and that’s certainly true when it comes to credit card reward programs. The HSBC Cash Rewards MasterCard® offers an ongoing 1.5% cash back, with the option of getting 3% cash back if you spend $10,000 in your first year as a cardholder.
What We Like
No Annual or Foreign Transaction Fees
Ongoing 1.5% cashback
10% loyalty bonus each year on all rewards for the year
Fidelity® Rewards Visa Signature® Card
Credit Score Required:
The Fidelity® Rewards Visa Signature® Card offers a straightforward cash back reward program. However, something that makes this card different is that it can deposit your rewards directly into an eligible Fidelity account like a 401(k) or a 529 education savings fund. As a result, it really helps your money grow!
What We Like
$100 cash back when you spend $1,000 if the first 90 days of membership
Unlimited 2% cash back on all purchases, no caps or categories
No Annual Fee
One of the most popular types of credit cards comes in the form of a ‘cash back’ credit card. Cash back credit cards rebate a percentage of every purchase you make onto your credit card statement. For example, if you have a 1% cash back credit card, every $100 you spend on that particular card will result in $1 being rebated onto your credit card balance at the end of the month. This is seen as a great way to recoup some of your spending. Certain cash back cards work with any purchase that you make, while others work with only certain types of purchases (i.e. gasoline). Some cards even have different cash back percentages depending on the type or purchase you make.
Assessing which types of cash-back cards are best for you will help you ensure you get the most value out of your credit card. It’s important to understand your spending habits, as well as your debt payment habits, if you’re to get as much value as possible out of your cash-back card.
Cash back cards are particularly good for people who are responsible with their credit cards. If you use your card frequently, but pay off your balance in full at the end of the month, a cash back card can be a great way to get some back some of the money you spend. But if you’re someone who carries a large balance at all times, the interest you’re paying on the balance will offset any major benefit you get from a cash back card. This isn’t to say it is completely useless, as you will still be receiving statement credits, but it shouldn’t cloud your judgement when deciding which credit card is best for you.
In this article, we will outline what you should look for when deciding on a cash back credit card, as well as some of the advantages and disadvantages of this particular type of card.
What to Look For
When deciding on a cash back credit card, there are a few vital things to look at prior to making a decision: cash back percentage, cash back purchase categories, and promotional periods. It’s the combination of these three items that will help you determine the best card for you.
- Cash Back Percentage – This is probably the most important factor of any cashback card. You’ll want to have a look at the percentage of money you will receive in cash back, as well as if there is an upper limit on this percentage. A good cash back percentage is considered to be anything between one and two percent – it probably isn’t worth your time if it’s anything less.
- Cash Back Purchase Categories – Cash back purchase categories are the types of purchases that you get cash back on. Many popular cards allow cash back on any form of credit card purchase aside from a cash advance. Others may be store credit cards where you only get cash back on purchases within their network. Some cards also have varying rates depending on the purchase category.
- Promotional Periods – Often lenders will offer promotional periods in which cash back is doubled or boosted to some degree. This is a great way to take extra advantage of your cash back card. But make sure not to apply for just the promotional period, as cancelling a credit card can impact your credit score.
As with any credit card, it is also important to have a look at the interest rates applicable to the specific card. This is especially important if you believe you will be carrying a balance on the card.
The main advantages lie in the amount of cash back you can receive. If you’re someone who regularly uses your credit card but pays the balance in full, this is a great way to save some money. In addition, there may be a store specific credit card that gives you cash back on purchases. If you are a regular customer at this store (for example, Amazon has a cash back store card), then you will be able to save considerable money.
The disadvantages of a cash back card lie in the interest rates. Like any rewards credit card, interest rates are higher to offset the costs of the lender. If you don’t carry a balance this won’t impact you, but if you do it will offset your cash back advantages. Don’t be sucked in by cash back enticements if you know you will likely be paying interest on your card.
Annual Fee is Crucial
The annual fee that you pay on the cash back card is a crucial component in deciding which one is best for you. As with any card, the one with the lowest annual fee is normally the one with the most value. There are obvious exceptions to this rule, but it’s safe to say that cash back cards are more suited to low annual fees.
You need to take a look at the annual fee of the card and see if the amount of money you plan to spend will result in your coming out on top. If your card gives cash back, but you only spend a small amount of money on it, there’s not much point using it. Cash back cards are best for people who are planning on spending a lot of money on the card, this is especially true if the annual fee on the card is high.
Make a concerted effort to determine your current level of expenditure on your card and use this as a benchmark to see how much you would be able to receive in cash back every year.
Planning on Carrying a Balance? Interest Matters
If you do plan on carrying a balance, the interest rate that you’ll receive matters a lot. As we have mentioned in this article, we don’t suggest that you use a cash back card to carry a balance on. Interest rates are too high to justify carrying a large balance.
But if you do plan on carrying a balance, you might be trying to offset your interest rate with the cash back rate that you’ve been offered. You should compare the interest rate with the cash back rate directly. Determine which one is best in comparison.
It’s worth noting that if you’re going to carry a balance and offset the interest rate with the cash back rate, you might as well look at some other credit cards that offer overall interest rates that are better. You’ll most likely find that low-interest cards have better interest rates, even when you factor in the cash back amount that you will receive.
Other Perks to Look Out For
Modern credit cards come with a range of features that help provide benefits to those who use them. But many of these features aren’t advertised – the issuers prefer that you see the cash back or rewards offers that they provide, as it is a more tempting offer. But the other benefits that you can receive with a standard credit card are sometimes just as important.
For example, credit cards are much safer to use, especially if you don’t do all your shopping in person. This is because lenders are worried that you won’t authorize a charge on a card if you haven’t done it yourself. Most lenders operate a zero-liability policy that ensures that you don’t have to pay for anything that you don’t spend – fraud won’t damage you if you become a victim.
This also separates your cash from your credit – fraudsters won’t be able to drain your bank account if they steal your credit card number. If you’re traveling or shopping online, it can be much safer to use your credit card instead of your debit card. Getting stolen money back from a debit card can end up taking considerable time. Also credit card travel insurance coverage can definitely come in handy.
Another benefit that you might expect to see in the best cash back cards is a zero foreign transactions fee feature. Most debit and credit cards will charge you a commission on every transaction that you conduct overseas – this is normally around 3%. And while this might not seem like a lot, it can add up quickly if you go on a big trip. Some of the best cash back cards allow you to avoid paying these fees while you’re overseas – it’s a perfect feature for those who travel a lot. Look at the best credit card for travel miles.
These are just two examples of features that we’ve seen in some of the best cash back cards on the market, but there are many others hidden in the fine print of cards on offer from a range of issuers. Make sure to check if there’s anything else that you’re afforded as a card holder.
General Over Specific
It’s safe to say that you should prioritize general cash back cards over ones that have specific spending requirements attached to them. Unless your someone who spends all your money on one specific type of item, it can be fairly fruitless having a cash back card that specifies certain purchases for cash back.
There are obvious exceptions to this rule, if you constantly shop at a retailer that offers a cash back card, it might be worth signing up for it. But these cards will leave you with less benefit than a card that offers a similar cash back rate at every retailer in the country. There are now plenty of cards that offer substantial cash back rates for general purchases. We recommend that you prioritize these types of cards unless there is a specific offer that you know you can benefit from.
Don’t Alter Your Spending Habits
Even with the best credit card rewards, it’s important to not change your spending habits simply because you have incentive to do so through your card. Many consumers make the mistake of spending money that they don’t need to in order to accumulate additional points or miles. The same goes for cash back cards, especially ones specifying certain categories for spending.
Individuals may end up shopping for different types of items or preferring certain distributors over others. The value in this is truly limited, and can end up resulting in you over consuming products that you don’t need. In order to get solid value out of a cash back credit card, you need to make sure that you don’t change your habits, it’s the easiest way to overspend what you would get back from your cards cash back function.
Cash back credit cards can be the perfect way to get more value out of your credit card. Make sure to compare the cash back percentage available with the interest rate. Also, use your cash back card as a credit card that you pay off every month, not a card that you carry a balance on. The last thing you want to do is get tricked into racking up debt on a high interest card just to get a few dollars back for your purchases – it’s not worth it.
Cash back cards can be suitable for anyone, but they’re particularly good for people who have high expenditure levels. Otherwise, you might not be getting any value out of the card, especially if you have to pay a high annual fee every year.
Finding the best cash back card seems a lot simpler than some of the other reward based cards. It’s quite easy to see the exact amount of return you can expect to receive by spending money on the card. But there are a range of other features that differentiate cards from one another. We’ve done research to determine which of the cash back cards truly offer you the best value. Check out some our favorite cards before you start doing your research. For example take a look at current airline credit card offers.
Remember, make sure to not to apply to multiple cards at once. Lenders don’t look kindly on those who are applying for a range of different lending products. You should approach your cash back credit card application seriously – it’s the best way to get approved.
General Cash Back Credit Card Questions
This section answers general questions about how cash back credit cards work. Use this information to prepare yourself for more advanced questions.
What is cash back credit card?
A cash back credit card gives you a cash back reward for spending on your credit card. A typical cash back card will give you 1% cash back on all your purchases. Keep in mind that you can also get credit cards with 0 apr introductory periods that have cash back.
Can you get cash back from a credit card?
Lots of credit cards have cash back programs. These cards are usually specifically marketed as such and can give all kinds of different cash back perks.
How do cash back credit cards work?
Cash back cards work by taking the amount of money you spend on your card and giving you cash back based on that amount. Most purchase will get 1% cash back. However, some cards will give bonus cash back on things like gas or groceries.
What is the best cash back credit card?
That depends on what you’re looking for in a cash back credit card. The Discover it Cash Back card is the best option for the bonus rewards with cash back, while the Wells Fargo Cash Wise Visa has the best cash sign up bonus. Finally, the Capital One Quicksilver Cash Rewards credit card is the best flat rate cash back card. Take a look at more credit card reviews 2020 has to offer.
Are cash back credit cards good?
For many people, yes. As long as you pay your bill in full each month, cash back cards allow you to lower the cost of all your purchase by your cash back amount. That’s because when you pay your bill in full you aren’t hit by any interest charges.
Why do credit card companies offer cash back?
Credit card companies offer cash back to get people to sign up for their cards. They bet that people won’t always pay off their whole bill each month and so the interest charges will get the credit card company more money than they’ll pay out in cash back rewards.
How can credit card companies give cash back?
Credit card companies can give cash back because they still make money on credit card processing fees. Additionally, the interest charges on a credit card are always much higher than the cash back rate, so if you carry a balance, then the credit card company will still be turning a net profit.
Why use cash back credit cards?
You should use cash back cards to save money on the purchases you make. You can save a lot of money if you make sure to pay your bill off in full, as then you’ll only get cash back but won’t have any interest charges. These are also no foreign transaction fee credit cards.
What are good cash back percentages for credit cards?
The typical cash back credit card gives 1% cash back. However, some cards have special bonus cash back on things like groceries, gas, restaurants, and entertainment. These programs allow you to maximize the amount you get back.
How to qualify cash back credit cards?
You can qualify for cash back credit cards the same way you qualify for any other credit card – you need a good credit score and a decent income. Sometimes if your score is good enough you can receive offers for preapproved credit cards. So this may be a challenging category of cards to qualify for if you're just starting out. Read more: My first credit card.
Getting Cash Back
This section helps you understand how to use and get cash back from your credit cards.
How to take advantage of cash back credit cards?
The best way to take advantage of cash back credit cards is to use the card within a budget and then pay the bill off in full every month. That way you don’t pay any money for financing or interest charges, and you get money back from all the purchases you would have made anyway.
How to get cash back from credit card?
You can get cash back from a credit card by picking a card with a cash back perk. Cards like the Chase Freedom can get you up to 5% cash back in certain purchase categories, while cards like the Capital One Quicksilver Cash Rewards Credit Card get you a flat rate of cash back on all purchases.
Where can I get cash back on my credit card?
The best place to look for cash back on your credit card is your online credit card account. You’ll find how much cash back you’ve earned on that page and will get options on how to get your cash or spend it.
How to calculate credit card cash back earned?
The best way to calculate credit card cash back earned is to take the amount of your purchases and multiple them by your cash back rate. For example, if you spend $1,000 on your credit card and your cash back rate is 1%, then you’ll get $10 back.
How to get cash back from credit card without PIN?
You’ll get cash back automatically from a cash back reward card when you make a signature or a PIN purchase. That means you don’t need a PIN in order to get cash back.
Does Walgreens give cash back on credit cards?
If you’re using a cash back card, then you should get cash back on any eligible purchase with your card. You’ll need to check with your credit card company to see if purchases at Walgreens qualify for cash back.
What stores offer cash back on credit cards?
The Amazon Prime Rewards Visa Signature card offers 5% cash back on all Amazon.com purchases, 2% back at restaurants, gas stations, and drug stores, and 1% back on all other purchases. You can also get cash back at Target using the Target REDcard, which nets you 5% on all purchases at Target.
Can you ask for cash back on a credit card?
Usually credit cards either have a cash back feature or they don’t. You should make sure that you’re getting the credit card perks you want when you’re signing up for a credit card. And if you can't qualify for these then look at the best credit card for bad credit.
What stores give cash back on credit card with purchase?
This isn’t up to the store, but rather is up to the credit card company. You should contact your credit card company to find out what counts as an eligible purchase for cash back with your store credit card.
What credit cards give cash back from Nordstrom’s?
There are no credit cards which specifically offer cash back from Nordstrom’s. However, The Blue Cash Preferred card from American Express gives bonus cash back for select department stores, and Nordstrom’s is on that list. That means you’ll get 3% back on your Nordstrom purchase.
Which credit card gives cash back on Costco purchase?
The Costco Anywhere Visa by Citi gives 2% cash back on Costco purchases, as opposed to 1% cash back you get on other kinds of purchases.
Cash Back and Specific Credit Cards
We’ll answer questions about cash back options for specific credit cards in this section.
Can you get cash back on a Walmart credit card?
Yes, the Walmart Mastercard gets you from 1% to 3% cash back. You get the greatest amount of cash back when you use your card to make purchases at Walmart’s website. If you can't qualify for these because you have no credit history then look at no credit credit cards.
Can you get cash back from a Target credit card?
Not really – the Target Credit Card gives you a lower price instantly on your Target purchases, but it doesn’t provide any kind of cash back feature.
Can you get cash back from Capital One credit card?
Yes, Capital One has a few cash back options. The most popular Capital One cash back card is the Capital One Quicksilver Cash Back Rewards card. It offers 1% cash back on all purchases with the card. These can be some of the best credit cards to apply for.
Which credit card has cash back for Home Depot?
There’s no credit card that has specific cash back bonuses for Home Depot, so we recommend picking a card that gives bonus cash back for home-improvement stores or one that has general cash back on purchases.
How to get cash back from Capital One credit card?
It’s easy to get cash back from a Capital One credit card that has a cash back reward. All you need to do is log in to your Capital One account and click on the credit card with cash back. You’ll see your current balance and below that you’ll see your cash back rewards amount. Click on the cash back amount and you’ll get a choice of how to use your rewards money.
Can you get cash back on a Discover credit card?
Yes, Discover offers the Discover it Cash Back Card. You get 1% cash back on all purchases automatically. You’ll also get 5% cash back for rotating categories that change every quarter. Some of the categories include grocery stores, restaurants, Amazon.com, gas stations, and others.
How to get cash back from Best Buy credit card?
The Best Buy card doesn’t offer any cash back rewards program. Instead, you’ll get rewards in the form of Best Buy points or credit. You’ll get 10% back in Best Buy rewards on your first purchase and 5% back in Best Buy rewards for other Best Buy purchases.
Can you get cash back on Citi credit card?
Yes, Citi has 3 different cash back cards. The Citi Double Cash card gives you 2% cash back – 1% when you make your purchase and 1% when you pay your bill. You can also get 1% cash back for all purchases and 2% cash back for Costco with the Costco Anywhere Visa by Citi. Take a look at some of the best credit card sign up bonus offers.
Can I get cash back on my Lowes credit card?
The Lowes credit card doesn’t have any kind of cash back program. Instead, you get 5% off of your Lowes purchases when you use the card. You can also get deferred interest financing if you spend more than $399 at once on your Lowes card.
Which credit card gives cash back on IKEA purchase?
The IKEA Visa card will give you 3% cash back on dining, grocery and utility purchases, in addition to offering 5% rewards on all IKEA purchases, Traemand installations, and TaskRabbit assembly services.
How to get cash back from TD credit card?
TD Offers 3 different cash back cards. The TD Cash Credit Card, The TD First Class Visa Signature Credit Card, and the TD Ameritrade client Rewards Card. You can get your cashback by logging into your TD account online and clicking on the card to gain access to your cash back rewards. If you don't qualify for these then look at a credit card for average credit.
How to redeem cash back on Amazon credit card?
You can redeem your cash back on the Amazon credit card by selecting the Amazon Rewards Visa when you’re making a purchase on Amazon.com. then, just choose the amount you want to apply to your purchase and hit continue.
How does Wells Fargo cash back credit card work?
The Wells Fargo Cash Wise Visa card actually has a very easy to understand cash back program. You get 1.5% cash back on all purchases with your card. There’s no limit to how much you can get back, and there’s no rotating categories or anything else to keep track of. It does take a higher score to qualify for these cards so if that's not you then take a look at the best credit card for poor credit.
Can I get cash back on my Meijer credit card?
No, the Meijer credit card doesn’t offer any kind of cash back features. That means you won’t be able to get cash back from it. Instead, you’ll just get the discounts at Meijer’s that come with the card.
Other Cash Back Credit Card Questions
There are lots of different questions about cash back credit cards. This section answers questions that don’t fit into our other categories.
Is credit card cash back taxable?
Not usually. The IRS considers credit card cash back rewards to be discounts, not income. Unlike income, discounts aren’t taxable. So if you just got new business credit cards this isn't usually something you need to be concerned about.
How to enter credit card cash back rewards in QuickBooks?
You can enter your credit card cash back rewards in Quickbooks by creating a new income account and labeling the type as other income. The detail type should be other misc income. You can change the name in the upper right-hand corner to cash back rewards so you can track it easily. Make sure you only enter rewards you redeem, not as you earn them.
Which credit card has the best cash back program?
That depends on what you’re looking for from a cash back program. The Capital One Savor card is the best choice for entertainment and dining, while the Blue Cash Preferred card from American Express has the best cash back on shopping. The Citi Double Cash has the best general cash back features, while the Capital One Quicksilver Cash Back Rewards card is the best option for a flat-rate card. There are also credit cards for fair credit with high limits if you can't qualify for cash back cards.
How do credit card companies make money on cash back?
Credit card companies make money on cash back because they still get paid from credit card processing fees. Additionally, the interest rate on any credit card is going to be much higher than any cash back rewards rate. That means credit card companies make a profit if you carry a balance and get charged interest.
How to make money with cash back credit cards?
The best way to make money with cash back credit cards is by making sure you pay your bill in full each month. This means you won’t have any interest charges that will overwhelm the savings you get from the cash back feature of your card.
Do I have to report cash back from credit cards?
Not usually. Cash back rewards are considered to be discounts by the IRS, so they aren’t taxable income.
What cash back credit cards allow a cosigner?
Many cash back credit cards allow a cosigner. The Wells Fargo Cash Wise Visa, Bank of American Cash Rewards Credit Card, and the US Bank Cash + Visa Signature Card are some of the most popular options. If you're a student then take a look at what the best credit card for college student is.
Do credit card cash back work on balance transfer?
No, balance transfers are different types of transactions, and credit card companies don’t offer cash back on them. Instead, they’ll offer specific balance transfer perks like no fee or zero interest on balance transfers. Take a look at balance transfer cards no fee required.
Do cash back cards build credit?
Yes, any credit card builds credit as long as you pay your bill on time and pay off your balance in full or keep it low. That’s because paying the bill counts as an on-time payment for your credit history, and a low or zero balance keeps your credit utilization low, which makes up 30% of your credit score. Also the top secured credit cards can help you build credit. Compare the best cards to rebuild credit versus credit cards to help build credit up from no credit.
How to handle credit card cash back in new YNAB?
The best way to handle credit card cash back in YNAB is to create a new income category and mark the amount of cash back you’re getting as inflow.
Do credit card statements show cash back?
In pretty much every case, yes. However, this isn’t standardized or regulated, so your credit card company might have a different process for dealing with cash back rewards.
Financial Advisor - MoneyBeagle.com
Michelle is part of our expert team of financial advisors with a proven track record in the credit card industry. After graduating with an Economics Degree focusing on Personal Finance, she got involved with several credit and debt counseling startups.