Best Cash Back Credit Cards, February 2012

Cash back credit cards are the preferred way to charge purchases IMO. As long as they are used the right way, you can earn extra money using them for doing nothing different than what you'd normally do (buy stuff that's in your budget that you can pay off each month.) Furthermore, you can maximize your cash back each year by taking three simple steps. This is what I do in managing my personal finances. It's an easy way to make several hundred extra dollars each year. (Note: If you want to see exactly what I do and which cards I use, read My New Credit Card Strategy.)

The best cash back credit card(s) will be different for each person based on a variety of factors (I covered this in Three Steps to Making the Most Money from Cash Back Credit Cards.) That said, since I regularly get questions about what I think are the "best" cash back credit cards, I wanted to write a single post that lists them for all to see. Then, as they change, I can simply update the post and link other posts to it for reference.

I've listed the cards below sorted by what I feel are the "best" cards in a given category first. Then I list others that are still good (and recommended) but are only better options for people with specific charging habits. Look over each carefully to see what the best option for you might be.

Here's what I consider to be the best cash back credit cards currently on the market and the specific details about them:

Chase Freedom - Best Overall Cash Back Credit Card

• Cash Back: 5% cash back on up to $1,500 spent on rotating, quarterly categories. Unlimited 1% cash back on all other purchases.


• Annual Fee: None


• Application Bonus: $200 cash back after you make $500 in purchases in your first 3 months.


• My take: Personally, I think this is THE best cash back credit card on the market today because the 5% cash back levels are HUGE (if you charge the $6,000 allowed in quarterly bonus categories each year, this alone can earn you $300.) And I'm not the only one who thinks so -- CBS MoneyWatch agrees. FYI, I have this card and personally use it as part of my current credit card strategy.


• Apply here: Chase Freedom® Visa - $200 Bonus Cash Back

Blue Cash Preferred(SM) from American Express

• Cash Back: 6% cash back at supermarkets, 3% cash back at gas stations and department stores, 1% cash back on all other eligible purchases.


• Annual Fee: $75


• Application Bonus: $100 cash back after you make $500 in purchases in your first 60 days.


• My take: This is the best current booster card (supplement to a main card) IMO because it gets you a GREAT percentage back on categories most of us spend a decent amount of money on -- groceries (primarily) and gasoline (secondary.) And if you shop department stores (which many people do, especially during the holidays), it's nice too. It's a bummer that there's an annual fee, but that's more than offset in year one by the application bonus. And as I wrote in How to Get 6% Cash Back on Grocery Purchases (Or $500 Cash Back), even if you have to pay the fee in year two, the 6% cash back on grocery purchases more than makes up for it. I don't have this card yet, but it's on my list and I plan to get it soon.


• Apply here: Blue Cash Everyday(SM) from American Express (click the link in the preceding sentence and you'll get two card choices. You want the Preferred card -- which is on the right.)

Citi® Dividend Platinum Select® Visa® Card

• Cash Back: 5% cash back on fitness club, health care, and utilities purchases from 1/1/2012 to 3/31/2012 upon enrollment. Changes quarterly. 1% cash back on eligible purchases and cash advances.


• Annual Fee: None.


• Application Bonus: $200 cash back after $500 in purchases within the first 3 months of account opening.


• My take: I don't know much about this card but it appears to be Citi's answer to the Chase Freedom card. It's the same offer (in value) currently, so the choice is whether you prefer Chase or Citibank. In fact, both cards could work quite nicely coupled with each other to allow you to get 5% cash back on several different categories (if they select different quarterly options.) As for now, this looks like a great card for the holidays.


• Apply here: Citi® Dividend Platinum Select® Visa® Card

TrueEarnings® Card from Costco and American Express

• Cash Back: 3% on gasoline up to $3,000 annually, 2% for restaurants and travel, and 1% almost everywhere else (including at Costco.)


• Annual Fee: None for Costco members.


• Application Bonus: None currently.


• My take: Another great booster card IMO. I carry this card for three reasons: 1) the good rewards on restaurants and gasoline, 2) I earn 1% at Costco (many cash back cards don't pay -- or pay lower rates -- on club store purchases), and 3) it doubles as my Costco membership card (my pic is on the back) so I can carry one less card. Apparently, many others think it's a great card too since American Express says it's rated 4.5 out of 5 stars in overall satisfaction by current TrueEarnings® cardmembers.


• Apply here: TrueEarnings® Card from Costco and American Express

If you want to take a different card strategy and try to make as much money as possible by simply taking advantage of the best credit card deals and bonuses (since opening new card accounts in a controlled manner won't impact your credit score much if at all), Here's the list of the best credit cards deals and bonuses out there today.

Have I left any cards out that you think I should consider?

Comments

[Eric]

FMF,

Are you sure that Discover offers a $50 Amex gift card as a reward? I have never seen that before and would be shocked to see it offer a rival's gift card.

[mark]

If you take vacations or travel at all, you can get *way* more value from credit cards that offer miles / points. See, for example, the recent Citi cards offering 75k American Airlines miles or the Chase Sapphire Preferred 100k points bonus (which can be immediately converted to $1000).

[Scott]

I've had the Chase "Rewards" card which just got discontinued and replaced by the "Freedom" card you mention above for years, and it's been a great card. My back up is the Discover cashback card. However, I just applied for the CapitalOne Cash Rewards card, which looks fairly comparable to the Chase Freedom card, because they do not impose the same 3% foreign transaction fee that Chase does. We're getting ready to do a little international travel, so the absence of that fee will be helpful.

[j jones]

I opened a Chase Freedom card last month and received the $200 cash back. Today in the mail I got an application for it with $250 cash back. Do you think they'll give me the additional amount?

Another benefit of the card if you have a Chase Checking is an additional point with every transaction.

[FMF]

Eric --

This is why I post things like this -- you all catch things I don't. Amex is NOT on the list (I'll change the post). For those interested, here is the list of Discover More gift card partners:

http://www.discovercard.com/customer-service/rewards/view-partners.html

[FMF]

Mark --

Can you email me links to those offers? Those are waaaaay higher than I've seen anywhere. Perhaps they are for a select group?

[FMF]

j jones --

Yes, call them ASAP. I've had other readers call when the bonus went from $150 to $200 and got the extra $50. It doesn't hurt to ask so even if they decline you haven't lost anything.

[FMF]

j jones --

Exactly! I wrote about that here:

http://www.freemoneyfinance.com/2011/05/how-to-get-55-more-rewards-and-31-cash-back-with-your-chase-freedom-credit-card.html

[Jessica]

I got a snail mail that Citi was changing the terms of the Dividend card. In order to get cash back, you have to put $750 on the card a month to get 10% back.

[FMF]

Jessica --

It's quite common for card companies to send different offers to different people (based on various criteria, I'd guess.)

[Bruce]

I believe the 5% cash back on the Chase Freedom card is really 6%, since it is a 5% bonus. You get that in addition to the normal 1%.

[FMF]

Bruce --

It's actually a 4% bonus on top of the 1% you get as the base -- for a total of 5%.

[Kristen]

Just a quick comment on the Citi Dividend vs Chase Freedom. I have both. I have had the Citi Dividend card since college. It used to pay on set categories (gas, groceries, etc). Then they switched to the rotating categories. Both Chase Freedom & Citi Dividend almost always have the same rotating categories at the same time. Chase announces their categories at the beginning of the year for the whole year. Citi waits until right before the new quarter. But we are on year 2 of the rotating categories on Citi and only one month was there much difference.

[Stephen]

The Citi Forward card is actually 5%, you just have to make sure you don't take the lower offers, i.e, don't take the $25 gift card for 3,500 points. If you wait until you have 10,000 points you can get a $100 gift card and you make your 5%. Also, they do have sign-up bonuses right now, 6,000 bonus points after $250 in purchases within the first 3 months. And the paperless bonus is 2,500.

[Stephen]

I just noticed your Citi Forward link doesn't provide the best offer in terms of bonuses. If you google Citi Forward though there is a link with higher bonuses.

[Jacob @ My Personal Finance Journey]

I absolutely agree. All around, the Chase Freedom is the best cash-back card I've found, and the one I use for the majority of my purchases. My favorite gas card is Chase's BP visa card.

[Diannah Campbell]

Your website rates this card very highly. I will admit, at a glance it is very appealing. We spent a good bit of time and several phone calls to the card issuer and discovered some information that we are not sure that you are aware of. Did you realize that to get just a $10 cash back reward(true check in the amount of $10), using the 1% cash back, you would have to spend $100,000 in credit card purchases? So to earn the 2,000 points and a $20 cash back reward that they advertise, you would need to spend $200,000 in credit card purchases! I feel their advertising is misleading and thought you should check into this to see if you still want to rate their product so highly.

Thanks!

[FMF]

Diannah --

Which card are you talking about? I'm guessing it's none of these. I own several of these cards personally (and the rest are recommended by my readers) and know they pay a MINIMUM of 1% cash back -- which on $100k would be $1,000. If they are used the right way, you'll get much more back than 1% though.

There's no card I know of where you have to spend $100k to get only $10 back.

[Nick]

I just got the Fidelity Investment 2% cash back Amex with no annual fee. I saw it as a simple, straight-forward 2% card where you don't have limits on a category (i.e. up to $500 in gas gets 5% cash back) or rotating categories (i.e. travel in the summer, home improvement in the fall). I may pick up the Case Freedom to take advantage of the 5% on Charitable donations this fall though, as I was planning on making some donations. Also, I could use a better non-Amex in my mix.

[FMF]

Nick --

The 2% cash back "simple" method is a good option -- I used it myself for many years. But by adding a couple cards you can get much, much more cash back -- and it's not really a hassle at all (even when you have to coordinate with someone else, like I do with my wife.)

[George]

I have still been using what was the Schwab Invest First 2% cash back on all purchases. It was taken over by FIA Card Services in the last year, but there were no changes to the program as of yet. BUT, they closed it to new applications, and just yesterday I get a notice in the mail that I will soon be getting a "new" BOA card to replace my account. No details as to the reward program, but I am betting it is going away...I also have the Chase Freedom, so looks like I will be switching my main card (I already use it for the 5% categories anyway). My wife will actually be happy to not have to ask which card to you use for what.

[Rachel]

I called to talk to someone about the FIA card that was previously part of the Schwab 2% back card. Not a lot of info out there yet. Change to Bank of America should happen around December this year and will LOOSE the 2% back on all purchases unless you go to a card with an annual fee. New card will have 1% back rewards with "extras." Whatever that means. So get big purchases in before they end it all!!

[Richard V]

I have had a Chase "Rewards" card for many years. It worked welll for my wife and I. 3% on gasoline, 1% on everything else. Now, with the "Freedom" card it is 5% on gasoline (but only in July-September) so I am looking for another card for gasoline. We travel mainly off-season but have a gas-guzzler for off-roading. APR on the card is never a problem. But a fee would be a deal breaker. And, we don't want to take the card for six months or a year and just cancel itwhen the fee came on. We bank now with B of A, Citi and Chase.
Any ideas for us on a good gas card with a rebate?

[FMF]

Richard V --

I have two options:

1. Get the Blue Cash Preferred from American Express card and buy gas gift cards at your grocery store -- you'll get 6% cash back. You can see details on how I do it here:

http://www.freemoneyfinance.com/2011/09/my-new-credit-card-strategy.html

2. If you belong to Costco, you could get the TrueEarnings® Card from Costco and American Express. It has 3% cash back on gas every day.

[UltimateSmartMoney]

Just be careful with high bonus/cash back promotions with credit cards. They usually have high APR so you better pay your balance on time.

[FMF]

USM --

That's a non-issue. If you're carrying a balance of any sort, you shouldn't be dealing with credit cards (and trying to get rewards) at all.

[Jeremy @ Personal Finance Whiz]

Hey FMF - Great post. Just wanted to let you know that I picked it as my top finance post of the week!

[FMF]

Jeremy --

Thanks!!!

[Michele H]

I've had the Citi Dividend for a while (in its various names) and the only drawback is my cap of $300/calendar yr in cash-back earnings rewards. Now if I shop-online via their special links, that percentage of cash-back doesn't count into my $300 max. I rarely shop online, haven't in several years. Now it's early Nov. and I've earned all my $300 cash back, and I stopped using that card since I can't get more earnings till next calendar year. I don't carry a balance. I'm considering adding another card with a better cash-back program; lots out there offer sign-up bonuses (do those count against your yrly max?); I thank you for the updates to help us.

[FMF]

Michele --

I do not believe that bonuses count against an annual max. Anyway, you might want to check out the Chase Freedom card since it has no annual maximum limit.

[Chris]

CapitalOne Cash Credit Card

[Alex]

I am considering options right now. Does anyone have/use the Bank of America Americard cash back?

Rewards increase when deposited into a B of A checking account, and I'm wondering if that makes it a better option than the Chase Freedom card (recently switched from Chase to B of A checking).

Thanks!

[FMF]

Alex --

Sorry, I do not have any experience with that card.

[Devon Sibbell]

Charles Schwab Invest First Card pays 2% cash back on all purchases. You must have a Schwab account to obtain this card. I charge everything possible on this card (about $20k annually) and get $400.00 cash back.

[FMF]

Devon --

Are you referring to the now closed Schwab card? We discussed it here:

http://www.freemoneyfinance.com/2011/09/update-on-the-fia-services-schwab-2-cash-back-credit-card.html

[TM]

Great article! After the rewards programs ceased for my debit cards, I figured I'd try a cash back credit card. I decided to go with the Citi Dividend World card...I just have to make a conscience effort to remember the 5% categories!

[kcfield]

Hi,
You missed the best cash back credit card in the country, which is Pentagon Federal Savings Platinum Visa. There is no annual fee, 5 percent cash back for gasoline (no cap), 1 percent cash back for everything else (no cap), and periodic additional incentives. Also, there are often balance transfer offers with no transfer fee and low APR. If you are not a military member, you can join a family association for a year for 20 bucks to make you eligible to join Pen Fed. They are equivalent to USAA in their excellence as a bank.

[FMF]

kcfield --

I'm not sure how that's better than the Amex Blue Cash Preferred card where you get 6% on groceries plus all sorts of other purchases by buying gift cards at your grocery store. That's what I do. Details are here:

http://www.freemoneyfinance.com/2011/09/my-new-credit-card-strategy.html

[Steve]

So basically, the best you can do is 1% cash back as the base, plus sign up bonuses and/or 5% bonus categories?

I have a 1.5% Fidelity Visa but it expires in 6 months.

[FMF]

Steve --

Are you looking for a one-card strategy -- so you only carry one card and don't try to beat what it offers?

I'm asking because you can get up to 2% with one card -- or 3% to 4% if you use a few. Here's what I do:

http://www.freemoneyfinance.com/2011/09/my-new-credit-card-strategy.html

[Bill Woessner]

I have the old AMEX Blue Cash. They're about to change the reward formula so that you get 1% on non-everyday purchases (as opposed to 1%). I'm wondering if I should convert to the new Blue Case Preferred. My company will pay for the annual fee, so that's not an issue. But it seems like I still might be better off with the old formula.

[FMF]

Bill --

You know you can earn 6% cash back on many different categories using it, right? See my links above -- they'll lead to posts detailing how.

[Raj]

FMF,

A news item on LA times talks about CITI sending 1099 for the bonus miles. Looks like something else we got to watch out for when signing up for new card.

http://www.latimes.com/business/la-fi-lazarus-20120124,0,1228880.column

Wonder what is next. Will we be paying taxes on cash back. I normally end up with close to 1200 to 1500 cash back with the various card combination.

[FMF]

Raj --

Yes, I've been watching that develop. We'll see what transpires. We all can still make money using cards, it just may be that we'll need to detail pre- and post-tax returns in doing so. Ugh. Time will tell.

[Josh @ Live Well Simply]

Thanks for the reviews. I currently have 2 of these, but number two with 6% cashback at grocery stores sounds really good.