Cashback credit cards (1)

A cashback credit card is a beneficial card that refunds a small percentage of money on a single purchase. It also refers to the practice of cardholder to get an incentive when he exceeds the specific purchase threshold.

It is an incentive program operated by companies issuing a credit card. In the last two decades, it has become dramatically popular. In 1990, this program of giving incentive was offered by major credit card companies only. Later on, these programs have become ubiquitous, and now nearly all credit card companies are offering this feature on all or at least one of their products. It tempts the current client to use the card often and attracts the new client to switch from a previous competitor and sign up for the card giving the best rates.

Traditional card issuers offer reward points that can only be used to buy goods and other services. But cashback credit card offers actual cash. This cash is applied to purchases or credit card bills, or cash holders may get it on a monthly credit card statement. Sometimes the consumer gets it directly in checking account deposits, or through the check via mail. The percentage of cash reward ranges between 1-3% of a transaction, but some card issuers can raise it as high as 5%. Merchant-partnership offers double incentive on a single transaction if someone purchases from that merchant.

Cashback rewards mostly depend upon the level of transaction and type of purchase. For instance, a customer might earn a 2% reward on groceries and a 3% reward on fuel. Sometimes special promotions keep fluctuating for three months. In this period, spending in particular categories such as departmental stores or restaurants earns more cashback.

When a cashback credit card is a good choice?

If someone is paying monthly bills, groceries, or fuel through credit cards, then a cashback credit card is a good option. A person can get a reward for spending money that would have spent another way.

The right way to use cashback credit cards

  • It is important to find a credit card that suits the patterns of spending. For example, if someone is having a large family then he must go for the cashback credit card that pays more percentage on groceries. One who drives a lot must choose the credit card that offers a high reward on fuel.
  • It is important to pay the full bill monthly to avoid interest charges on the balance.
  • Making unnecessary purchases on useless things is not the best way to make a profit from cashback credit cards.

Overall best cashback credit cards

A client spends several hours to analyze and choose the best card, offering a wide range of benefits.

The best overall cashback credit cards are

  1. United Explorer
  2. Chase sapphire reserve
  3. Wells Fargo propel
  4. Capital one spark miles for business
  5. Capital One spark miles for business
  6. Hilton Honors American Express card
  7. Capital one quicksilver cash rewards

What is the annual fee?

Some cards charge annual fees ranging between $500- $1000 or even higher. One must have full information regarding the annual fee before applying for the card. If the annual fee overweighs the total earnings then it will be a bad choice.

No-annual-fee cash back credit card (2)

Some credit card issuers oblige their customers with no annual fee credit card. So one must look for such cards when planning for having a credit card. No annual-fee cash back credit card provides a variety of incentives; including cashback bonuses, top-notch rewards, and more.

The most definite benefit of no annual-fee credit card lies in its name; it does not charge annual membership costs to keep credit card active. Yearly fee credit cards prevent the client from buying something they want. Some clients save their reward points to pay off annual fee. By using no annual-fee credit card, the client can save those reward points to buy something they want or for dining out.

Best no annual fee credit cards of 2020

  1. Capital One Quicksilver cash rewards credit card; Best for new cardholders
  2. Blue cash everyday card from American express; best card for gas stations and supermarket or grocery purchases
  3. Discover it cashback; Suitable card for low interest
  4. Chase freedom unlimited; best for unlimited earning potential
  5. Discover it Chrome; Best card for the first-year welcome offers
  6. Citi double cash card; Best no annual fee card for cashback

Flat-rate cash back credit card (3)

These cards offer a fixed percentage of the amount i.e., 1.5% on every purchase a client makes. A client using flat-rate cash back cards is usually not bound to quarterly signups and maximum spendings. It makes it easy for the client to earn rewards on a variety of purchases regardless of the transaction type. Most of the flat-rate cashback cards offer 1-2.5% cashback.

Best flat-rate cash back cards (4)

  1. Alliant Visa signature card; Best for those who annually spend at least $50,000 on the credit card. It offers 2.5% cashback
  2. Citi double cash card; Best for those who pay through credit card monthly. It offers 2% cashback – 1% when the client pays and 1% when the client buys.
  3. Fidelity rewards visa signature card; It is a better choice for those who want 2% cashback without splitting it between payment and purchase.

It offers 2% unlimited cash back on all types of purchases.

  1. Capital one Quicksilver one cash rewards credit card; It gives unlimited access to the credit score and tools to monitor it. It also allows for an increased credit limit. So it is a better choice for those who are credit builders. It offers 1.5% unlimited cashback.
  2. Journey student rewards from Capital One; Type of card specially tailored for the students who want some cashback. It offers 1% cashback, and this percentage rises to 1.25% if the student pays the bill on time.