How to choose the best cash-back credit card: Pros and cons

Editor’s Note: This article contains updated information from a previously published story.

Don’t leave money on the table — put down a cash-back credit card instead and earn rewards on your purchase. That’s the headline incentive for why you should use a cash-back credit card. But before you jump to open a credit card account, you’ll want to understand the pros and cons and consider how a cash-back credit card compares to other types of rewards cards.

What is a cash-back credit card?

A cash-back credit card is a rewards card that offers you cash back on your purchases. Generally, you earn the cash-back rewards as a percentage of eligible purchase amounts — a 2% cash back card gives you $2 worth of rewards for every $100 you spend, for example. 

Depending on the card, you might receive these rewards as points or cents in the card issuer’s rewards program. Additionally, there may be various redemption options for your cash-back rewards, such as a transfer to your bank account, check, statement credit to lower your card’s balance or gift cards. And some cards will allow you to redeem your cash back for as little as 1 cent, while others will require a minimum redemption amount, often $25 worth of rewards.

Pros of cash-back credit cards

• It’s easy to understand the value. Points and miles can quickly get confusing as their value depends on the rewards program and your redemption choices. With cash back, a dollar is a dollar.
• Save money overall. Every dollar in cash-back rewards you earn can go toward paying down your bill or building your savings.
• Lots of options don’t have an annual fee. Although there are exceptions, some of the best cash-back cards don’t charge an annual fee. Many travel rewards cards do.  

Cons of cash-back credit cards

• Cash back might be worth less than travel rewards. With some high-value redemption options, such as booking first-class flights and luxury hotels, the value of miles and points can far exceed cash-back rewards. 
• Might have foreign transaction fees. Cash-back cards are more likely to have foreign transaction fees than travel rewards cards. 
• Could encourage overspending. As with other rewards credit cards, you might find yourself justifying purchases because you’ll earn cash-back rewards. 

Types of cash-back cards

There are four broad types of cash-back credit cards rewards structures:

• Flat-rate: Flat-rate cards give you the same reward rate on all your purchases. With cash-back cards, this tends to be 1%, 1.5% or 2% cash back on your purchases — and you may need a good or better credit score to qualify for the top cards. However, there are some ways to earn more. For example, the Bank of America® Unlimited Cash Rewards credit card * The information for the Bank of America® Unlimited Cash Rewards credit card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. earns a base rate of 1.5% cash back on purchases, and offers up to a 75% bonus for Bank of America Preferred Rewards® members, which brings the maximum possible rewards rate up to 2.62%.
• Tiered: Tiered rewards cards offer defined levels of cash-back rewards depending on purchase category. For instance, the PayPal Cashback Mastercard® * The information for the PayPal Cashback Mastercard® has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. offers 3% cash back when checking out with PayPal and 1.5% cash back on other purchases. Other tiered cards may have additional tiers or more specific requirements — such as one rate at supermarkets, another at gas stations and a base rate for all non-bonus purchases. 
• Rotating: A rotating cash-back card has several tiers of rewards, but the bonus rewards categories rotate throughout the year. The Chase Freedom Flex® * The information for the Chase Freedom Flex® has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. is a popular example that offers 5% cash back on up to $1,500 in categories that rotate quarterly (requires activation), 5% cash back on travel purchased through Chase Travel℠, 3% cash back on dining and drugstores and 1% cash back on all other purchases. 
• Dynamic: Some tiered cash-back credit cards have dynamic bonus categories that change based on where you use the card — the Citi Custom Cash® Card * The information for the Citi Custom Cash® Card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. offers 5% cash back on purchases in a top eligible spend category each billing cycle, up to the first $500 spent each month and 1% cash back on all other purchases. Plus, an additional 4% cash back on hotels, car rentals, and attractions booked on the Citi Travel℠ portal through 6/30/25. There are also cash-back credit cards that let you change and choose your bonus categories, such as the Bank of America® Customized Cash Rewards credit card * The information for the Bank of America® Customized Cash Rewards credit card has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. .

You might also come across cash-back cards that are categorized by the top tier of their tiered rewards program. For example, a dining credit card might offer a high bonus cash-back rate on dining purchases, while a gas cash-back card gives you bonus cash back at gas stations. 

Always on the road? Get rewarded at the pump with one of our picks for best gas credit cards.

How to choose the best cash-back card to fit your spending needs

When selecting a cash-back credit card to apply for, consider the following questions:

• In what categories do you spend the most? This is probably the most obvious factor to consider. If a card offers cash back at restaurants but you mostly cook at home and rarely dine out — you’d probably be better off with a card that rewards grocery shopping instead. Examine your budget to determine what your major spending categories are and this will help you narrow down the list of credit cards worth considering.
• Are you willing to pay an annual fee? There are many cash-back cards available that don’t charge an annual fee. However, in some cases, the cards that earn the best rewards rates in certain categories might charge one. For example, one of the top cards on the market for earning cash back at U.S. supermarkets is the Blue Cash Preferred® Card from American Express (terms apply, rates & fees), which charges a $0 intro annual fee for the first year, then $95. Do the math to make sure you’ll earn enough cash back to more than recoup the annual fee.
• What redemption options do you need? Some credit cards come with restrictions on how you can redeem your cash back, such as requiring a minimum redemption amount or not allowing you to request a deposit to a bank other than the one issuing the card. That might not be a problem, for instance, if you already do most of your banking with that institution. But for maximum flexibility, a card that has no minimum redemption requirement and lets you take rewards as a deposit to any checking account is ideal. 
• Are you looking to pair this card with any others? If you’re savvy about managing multiple credit cards — you maximize the cash back you earn by using specific cards for purchases in specific categories. For example, if your biggest expenses tend to be online shopping and grocery store purchases, you might pair the Prime Visa * The information for the Prime Visa has been collected independently by Blueprint. The card details on this page have not been reviewed or provided by the card issuer. and the Blue Cash Preferred. You could even add the Wells Fargo Active Cash® Card to earn a flat rate on assorted purchases that neither of the other cards offers an elevated rewards rate on.
• Do you need an intro APR period? If you need to finance a big purchase, choosing a cash-back card that offers a 0% introductory APR on new purchases can be a way to pay the item off over time without incurring interest charges. However, not all cash-back cards offer an intro APR. Also, some cards may come with an intro APR on balance transfers, but not on purchases. It’s crucial to review terms and conditions before applying.

Want to earn a stellar cash-back rate? Check out the best 5% cash-back credit cards.

Cash-back vs. points: Which is better?

Cash-back cards and rewards points cards both have pros and cons, and there are both great and terrible cards within either group. 

If you’re a good fit for a cash-back card and qualify for a top card, that might be best. However, if you frequently travel or are up for learning more about maximizing rewards, cards that use points-based rewards programs may offer more flexibility — and potentially more value. These include American Express Membership Rewards®, Bilt Rewards, Capital One Miles, Chase Ultimate Rewards® and Citi ThankYou® Rewards programs.  

For example, depending on the specifics of the program, you may be able to redeem points for cash back, to book travel through the issuer’s portal or transfer the points to a partner hotel or loyalty program. 

There can even be times when you can use fewer points to book an award flight or hotel stay compared with paying cash. For instance, you might find that a night at a hotel costing $200 only requires 10,000 points if you first transfer the points to the hotel’s loyalty program and then book an award night. 

Travel cards, such as airline and hotel cards, might also offer perks that you don’t receive with cash-back cards, such as free checked bags or automatic status in a loyalty program. These benefits can make the card worth having, even if you use a cash-back credit card for your everyday purchases. 

Should you get a cash-back credit card?

Cash-back credit cards may be best for someone who:

• Doesn’t want to pay an annual fee.
• Isn’t interested in learning about credit card or loyalty rewards programs.
• Wants to use rewards to pay down credit card bills.
• Doesn’t travel often.

If that sounds like you, then you may want to start thinking about which type of cash-back card you’d prefer and begin systematically comparing the different options available.

But be aware that many of the best cash-back cards are aimed at people with good or better credit. If you’re just starting out in your credit journey or if you are rebuilding from damaged credit, it’s likely an issuer might deny your application.

That said, there are still options to consider if you’re new to credit or if your credit is less than stellar, such as a student credit card or secured credit card that earns cash back.

There are also cash-back business credit cards, in case you’re a small business owner looking to manage your cash flow and earn rewards at the same time.

However, if you’re still weighing your options and figuring out what type of credit card will best suit your needs, our list of best credit cards can provide some inspiration.

Not sure what your score means? Read our article explaining a good credit score.

Frequently asked questions (FAQs)

^{For rates and fees for the Blue Cash Preferred® Card from American Express please visit this page.}