MSN Money Names Best Cash Back Cards

MSN has a piece on making the most of your credit cards and in it names the best cash back credit cards. Their list gives the title of "best" cash back credit card to the Blue Cash® from American Express card, thought they admit the following:

Given normal spending patterns, you'd probably have to charge $2,500 a month before the card made more financial sense than its fellow top picks. But for big card users, that could happen.

Actually, I think the breakeven could be much lower than that as long as a good portion is spent on gas, groceries, and drugstores -- the places you earn 5% back once you reach the second tier.

The other cards they list as honorable mentions include:

• Discover More Card
• Chase Freedom Credit Card
• Discover Open Road Card

I currently carry both the Blue Cash® from American Express and Chase Freedom cards, but I'm in the midst of an analysis to determine "the best" one for me. I'll be posting that analysis sometime in the next three years. ;-) (Hopefully it will be a lot sooner than that, but I've been saying it for so long, who knows?)

Comments

[Eric]

FMF, if you don't do anything else, please do that analysis! I'm so anxious to see your results (plus you keep mentioning it) ;-)

For what it's worth, I don't charge enough to make use of the Blue Cash. I do, however, have the Discover More and I agree it's the best card for me since I do most of my shopping online. Their online rebates are pretty extensive and generous. Plus instead of cash, you can choose to redeem gift cards to popular stores which can sometime increase your redemption value up to double the amount. Of course the thing that pulled me in the most though was the $100 bonus at the time. :-)

[David R.]

The linked article mentions that the credit card industry calls people who pay their balances in full every month "deadbeats." This is very telling about the credit-driven lifestyle that so many people (and our government!) lead.

[Todd]

Wells Fargo Platinum Cash Back Visa has dropped its tiered rate and is now 1% for every dollar spent. Hopefully, other major bank cards will follow. Not everyone qualifies for an AMEX card these days.

[Todd]

The credit card industry you speak of David, is Visa/MC I assume? If banks don't make money off the interest on revolving balances, and they don't make money off of card fees, then I think the trend will be getting the transaction fees from merchants split more favorably between the bank and Visa/MC. That way, those of us who do pay our balance every month shouldn't feel like deadbeats. The more we charge, the more money the bank and the credit card companies will make. It just won't be at 20%, and more like 3-7%. There will always be enough consumers paying credit card interest and fees to maintain it as a lucrative profit center, even with write-offs from bankruptcies.

One thing we all have to realize, is that merchant fees cause prices to be artificially high across the board, so as a whole, society isn't saving money with cash back credit cards.

If they ever stop providing cash back, rewards, or no-fee cards, I'll just stop using credit cards and go back to cash. I haven't spent money on fees and interest for over eight years and I'm not going to start just to boost my FICO score. Hell, I don't even pay for a stamp since I don't write checks to pay my balance every month, and my bank doesn't have to send me a paper bill.

We're not deadbeats, we're smart consumers that just want a tiny rebate on our purchases that help drive this economy up and lift all boats as they say. Paying credit card interest makes us spend less, not more. The sooner the banks understand this the better off they'll be because they'll have more savings to lend to borrowers.

[maryM]

Mint.com just revamped their credit card comparison tool to factor in what categories you spend the most $$ on, whether or not you are a credit card "deadbeat", etc.

[Sarah]

Discover More just made some cuts to its program (including no cash out until $50, instead of $25--you can still get gift cards at $25).

If you're shopping in one of the rotating categories (and the categories are, at least, usually ones a person might be expected to regularly shop in) or at one of the retailers that gives a generous cash back if you come in via the Discover website (Lands End especially), Discover can be useful, but honestly these days I keep it mostly because it's my oldest card by a long shot. I've switched over to the HSBC Weekend card (1% on everything weekdays, 2% on everything weekends, no caps, cash out at $25) for regular use. (Actually I am temporarily using the Amex Gold Preferred Rewards to get the $100 back for spending $500 in three months, but that's only until I earn the reward. I'll probably cancel it next year when they start charging the membership fee.)

[MB]

I am interested your analysis too. I'm also going to go look at my Mint account and see what they say with the new comparison tool (thanks MaryM!).

We use an American Airlines Advantage card to accrue miles from purchases. Since we also accrue miles with flying, the combined flying and buying will probably get us a free flight faster than just saving the money from a cash back card...but I'm not sure. I need to do my own analysis of that, but it just seems so tedious.

And we have NEVER had a problem booking an award travel flight on American or Qantas. We even were able to book 2 award seats last year on the exact dates we wanted, no worries. I don't know why so many people have problems with it.

[texashaze]

I'm supprised the Costco AmEx didn't make it - 1% cash on everything but 5% on gas.

[thomas]

I have blue cash and highly recommend it. I am able to put 95% of all my bills/spending on there. Since I pay off monthly, I have no worries about interest rates. I'm also pulling a pretty good number for cashback. I prefer cashback over other rewards as I am not tied to anything specific - I can buy whatever I want with my reward.

[Jon]

The problem with the Costco AmEx card is you have to keep being a member to cash out, you have to cash it out at Costco, and you only get to cash it out once a year. (Mine has a 1%, 2%, 3% tier structure. Just finally finished my second year and am cancelling it after cashing it out.)

[CBCCRG]

Another cash back card worth mentioning is the Fidelity American Express. It earns 2% cash back on all spending.

It's like the Schwab 2% Visa, but has one important advantage over the Schwab 2% card: Fidelity will cut you a check.

So you don't have to open a Fidelity account to take advantage of the 2% cash back. With the Schwab card, you have to have a Schwab account.