For larger households, this can be one of the most valuable categories to get accelerated rewards. Sometimes called "dining," this usually includes everything from fast-food restaurants and pizza delivery to white-tablecloth fine dining. Gas stations. This is often described as "gas" and usually applies to traditional gasoline service stations, such as Mobil, Shell and BP.
It usually doesn't extend to gas stations affiliated with supermarkets or warehouse clubs. Often, it counts everything you buy in the associated convenience store, too, although a few cards count only gas paid for at the pump. That last point hints at the key to cash-back categories — the best ones are where you spend the most money regularly. Other bonus categories you might see include entertainment, drugstores, home improvement stores, wholesale clubs and mobile wallet purchases.
Rotating bonus category cards sometimes designate specific retailers for bonus rewards for a quarter, such as Amazon or Walmart.
Which type of cash-back credit card is right for you depends on how you spend money and your patience for tracking rewards categories. If you spend a lot in certain categories, such as gas or groceries, consider a tiered or bonus category card. The key is to make sure paying the annual fee is worthwhile mathematically.
Think of the fee as a reduction in your annual cash-back total. A cash sign-up bonus is nice to get — if your regular spending will be enough to earn it. Or, for a card with an annual fee, it might compensate for the annual fee for a few years.
Bonuses are less common with cash-back cards, and bonuses are low compared with those on travel credit cards. A higher rewards rate on one card could be a better deal than a card with a bonus and a lower rate, depending on how much you spend and where you spend it. What are the rules for getting your cash back?
Some cards allow you to take the cash back as a statement credit, which can lower your next credit card bill. Others allow you to redeem cash directly into your bank account, while some offer to mail you a paper check. Some issuers allow you to redeem rewards for more than cash back — for merchandise or gift cards, for example. And others might allow you to transfer cash-back points to another card program where strategic use might yield better value.
Carrying a balance from month to month incurs interest charges that can eat up the value of your rewards. If you expect to carry a balance, look for a low-interest credit card instead. Cash-back cards are easy to understand and use, but they can also seem boring. And co-branded travel cards for airlines and hotel companies might give you perks no other card will.
For example, airline cards often offer free checked bags and priority boarding. Many of the best hotel credit cards give you a free night's stay each year. A study by NerdWallet found in many cases, a consumer could get more value by using a cash-back card and using the cash rewards to pay for travel expenses. A big exception: Americans who travel overseas an average of at least once per year are often better off with a travel rewards credit card because of higher point values and no foreign transaction fees.
Cash-back cards are great for many people, but not everybody. Best rewards currency. Cash is king for flexibility. Nobody can change the value of it, and you can spend it anywhere. No or low annual fees. You can find plenty of choices with no annual fee or reasonable fees if you want superior cash-back rewards.
Low bonus requirements. Relatively low sign-up bonuses. No outsized value. Points earned with travel cards can sometimes be parlayed into huge value, far exceeding the value of any cash-back card. Inappropriate for carrying a monthly balance.
Few perks. Foreign transaction fees. Some cash-back cards charge you a percentage of every purchase you make abroad. Such fees are rarer on travel and luxury cards. But if you never carry a balance, try to pile as much spending as you can onto your cash-back card to pump up your rewards.
For example, you can get one card that offers extra cash back for dining, another that offers extra for shopping at Amazon, and another that gives extra for gas and groceries. Make sure you meet the minimum spending requirement to qualify for the bonus, otherwise you could miss out on hundreds of dollars.
Online credit card malls , accessible through your credit card login, can help you earn extra cash back on your web-based purchases, sometimes up to 10 times as much. If you carry a balance from month to month, the interest can quickly gobble up more than you're earning in cash back. In that case, a low-interest card is probably a better choice.
If you need to transfer a balance, look for a balance-transfer credit card. Still not sure? See our best rewards cards for a range of credit cards that earn cash, points or miles. NerdWallet's Credit Cards team selects the best cash-back credit cards based on overall consumer value, as evidenced by star ratings, as well as their suitability for specific kinds of consumers. Factors in our evaluation include each card's cash-back earning rates, rewards structure such as flat-rate or tiered categories , annual fee, redemption options including minimum redemption amounts , promotional APR period for purchases, bonus offers for new cardholders, and noteworthy features such as loyalty bonuses or the ability to choose one's own rewards categories.
Learn how NerdWallet rates credit cards. Every time you use a cash-back credit card, the card issuer "pays you back" a certain percentage of the purchase amount. With most cash-back cards, you can see your accumulated earnings on your monthly statement or through your online account portal, and you can decide when and how to redeem your cash back.
Some cards automatically apply your cash back to your account as a credit. But the rewards do ultimately leave you with more cash in your pocket. APY 1. Last updated on December 23, You may also like these People often identify opening a savings account as their next money move. Discover Bank Online Savings.
Enter Offer Code NW when applying. Deposit must be posted to account within 30 days of account open date. What to know: Offer not valid for existing or prior Discover savings customers or existing or prior customers with savings accounts that are co-branded, or affinity accounts provided by Discover. Eligibility is based on primary account owner. Account must be open when bonus is credited.
Bonus will be credited to the account within 30 days of the account qualifying for the bonus. Bonus is interest and subject to reporting on Form INT. Offer may be modified or withdrawn without notice. Yes, you can earn Cashback Bonus when you use your Discover Card wherever it is accepted. Log in to see all your redemption options. Use Rewards at Amazon. Amazon is not a sponsor of this promotion. Amazon, the Amazon. Cashback Match: Only from Discover, as of November We'll match all the cash back rewards you've earned on your credit card from the day your new account is approved through your first 12 consecutive billing periods or days, whichever is longer, and add it to your rewards account within two billing periods.
You've earned cash back rewards only when they're processed, which may be after the transaction date. We will not match: rewards that are processed after your match period ends; statement credits; rewards transfers from Discover checking or other deposit accounts; or rewards for accounts that are closed. This promotional offer may not be available in the future and is exclusively for new cardmembers.
No purchase minimums. Not now. And not hiding a year from now. Then User ID. Earn Cashback Bonus. Redeem Any Amount Any Time: We will credit your account with your cash back bonus balance if your account is closed or has not been used in 18 months.
Grocery Store purchases include those made at supermarkets, meat lockers, bakeries, smaller grocery stores, and grocery delivery services. All purchases made at Walmart, Target, convenience stores, wholesale clubs, discount stores, and supercenters are not eligible. Athletic or recreation facilities may be eligible. Virtual and in-person fitness classes may be eligible. Individual merchants and stand-alone stores within fitness clubs, gyms, athletic or recreation facilities may not be eligible in this category.
Purchases must be made with merchants in the U. For online purchases, the transaction date from the merchant may be the date when the item ships. Rewards are added to your account within two billing periods. Merchants and payment processors are assigned an MCC based on their typical products and services. Discover Card does not assign MCCs to merchants. Learn more at Discover. Use Rewards at Amazon. Amazon is not a sponsor of this promotion. Amazon, the Amazon. Pay with Rewards will be available for eligible credit cards on eligible purchases.
We will not match: rewards that are processed after your match period ends; statement credits; rewards transfers from Discover checking or other deposit accounts; or rewards for accounts that are closed. This promotional offer may not be available in the future and is exclusively for new cardmembers.
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