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Here at Go Curry Cracker, we advocate for transferable miles and points that can be transferred to airlines and hotels to reap substantial rewards. But as they saying goes, “cash is king” and in today’s uncertain circumstances there are situations where being able to redeem rewards for real cash can be the most beneficial choice. Today we’ll discuss which cash back credit cards offer the best benefits and return for your everyday spending.
There are lots of ways to consider what “cash back” means in the realm of miles and points, since all transferable currencies can become cash via statement credits (although they are more valuable if transferred to partners). However, there is a category of cards whose benefits are strictly focused on cash back which offer a suitable alternative and can offer returns greater than 1 cent per point. What’s more, these cards generally do not carry an annual fee which makes them ideal for everyday spending in categories that do not offer bonuses.
How best to focus exclusively on “cash back” was a popular question in earlier posts, which fortunately is a simple topic…
Here are four of the best cash back cards currently available:
card_name
Features:
- 2% cash back on purchases (1% when making the purchase, 1% when paying them off)
- No annual caps or categories
- Foreign transaction fee: 3%
- $0 Annual Fee
Why it’s great:
The Double Cash is the granddaddy of cash back cards. With a solid 2% cash back rate (assuming you pay your balance on time), it consistently ranks among the highest in payouts. What’s most excellent about this card is that Citi now allows you to transfer DoubleCash rewards to ThankYou points at a rate of 1 cent per point (if you have the Citi Premier or Prestige card as well), meaning you can earn 2 ThankYou points per dollar spent on all purchases. That’s an incredible value for nonbonus spend! Having the flexibility of using the DoubleCash rewards for either a statement credit or ThankYou points makes it incredibly useful. This card occasionally offers a welcome bonus, although it currently is not.
card_name
Features:
- $150 cash rewards bonus after spending $500 in the first 3 months
- Unlimited 1.5% cash rewards on all purchases and 1.8% cash rewards on qualified digital wallet purchases, like Apple Pay® or Google Pay™, during the first 12 months
- Up to $600 protection on your cell phone ($25 deductible) against covered damage or theft when you pay your monthly bill with the card
- Foreign transaction fee: 3%
- $0 Annual Fee
Why It’s Great:
The two best features of this card are the $150 welcome bonus and the $600 cell phone protection — benefits that are a huge boon for no-fee cards. While the cashback rate of 1.5% (1.8% for the first 12 months on digital wallet purchases) is decent, it’s not as good as the DoubleCash and the earnings are not transferable to any kind of travel partner. Still, this card is worth having for the bonus and cell phone protection.
card_name
Features:
- $150 cash back welcome bonus after you spend $500 in 3 months
- Unlimited 1.5% cash back on all purchases
- Purchase Protection: for up to 120 days after you make a purchase the item will be protected against damage or theft (limit of $500 per claim and $50,000 per account)
- Extended Warranty Protection: extends the time period of the U.S. manufacturer’s warranty by an additional year, on eligible warranties of three years or less
- Foreign transaction fee: 3%
- $0 Annual Fee
Why It’s Great:
Much like the Wells Fargo Cash Wise card, where the the Freedom Unlimited lacks (slightly) in everyday earnings it makes up for in benefits. Offering an attractive $150 welcome bonus plus protection and warranty benefits for purchases make this a great choice for most purchases. The best part about this card, however, is that the cash back can be converted to Chase Ultimate Rewards Points if you have a premium Chase card (card_name, card_name, or card_name). This means that all purchases are earning 1.5 Ultimate Rewards points, which can be transferred to travel partners for even more value.
card_name
Features:
- $150 (sometimes more) cash back welcome bonus after you spend $500 in 3 months
- 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate (See here for current categories.)
- Unlimited 1% cash back on all other purchases
- Purchase Protection: for up to 120 days after you make a purchase the item will be protected against damage or theft (limit of $500 per claim and $50,000 per account)
- Extended Warranty Protection: extends the time period of the U.S. manufacturer’s warranty by an additional year, on eligible warranties of three years or less
- Foreign transaction fee: 3%
- $0 Annual Fee
- Read full review: Award Travel Series: Chase Freedom Flex.
Why It’s Great:
The difference between the Freedom Flex and the Freedom Unlimited is that the Freedom Flex gets increased cash back for spending in specific categories which change every three months. If you are able to maximize those opportunities, you can earn $300 in cash back per year plus 1% back on all other purchases. This is fairly easy to do since, for example, you can generally pay ahead on utilities bills or purchase third party gift cards at grocery stores.
Much like the Freedom Unlimited card, the cash back from this card can alternatively be converted to Ultimate Rewards Points if you also have a premium (annual-fee-charging) card. 5x Ultimate Rewards points which can be transferred to airlines for another 2x in value (depending on the redemption) mean you’re really earning about 10% cash back when maxing out these categories. It’s hard to beat that.
Using Cash Back Rewards
Cash back is the most flexible rewards currency there is. The most common use of these rewards is a statement credit on your card account, which will reduce the amount you owe at the end of the month. The bank will also mail you a check for the amount, if desired.
Alternatively, rewards can be redeemed for gift cards through the bank’s portal (as explained in the last Award Travel Series post) but unless they are being offered at a discount it’s more convenient to take the reward as a statement credit.
The most useful option for award travel enthusiasts, though, is transferring to travel partners. Some no-fee cashback cards such as the card_name, card_name, and card_name, as mentioned, allow the ability to transform cash back earnings to their proprietary transferable currencies which are often redeemable for 1.5-2 cents per point. So, if you earn 2% cash back with the DoubleCash card and transfer that balance to Citi ThankYou Points which you use to book a flight at 2 cents per point, it’s like earning 4% cash back on your purchases. Note that to enable this option, you must have a premium (e.g. annual-fee assessing) credit card with the respective bank.
Example
During COVID19 precautions and beyond, you might plan your spending around particular credit cards that will offer the best bonuses. For example, use the card_name for Dining and Travel to earn 3x Ultimate Rewards points on all purchases as well as travel protections.
If you have any spending to do within the card_name quarterly categories, maximize your 5% (or 5x UR) earnings by paying ahead on bills or buying gift cards for future use.
For all other retail therapy, use your card_name to earn 1.5% (or 1.5x UR) per dollar spent.
When executed efficiently, you can earn multiple percentage points of return on nearly all your spending. What’s best about the aforementioned example is that your rewards can be used as cashback and directly credited to your account, or you can pool them all into Ultimate Rewards points and transfer to airline partners for future travel (best choice for most).
Flying Lufthansa Business Class using United miles transferred from Chase Ultimate Rewards, which were partially earned from the Freedom and Freedom Unlimited credit cards.
Final Thoughts
Having a good cashback card is an essential piece of your award travel portfolio – especially in times like these where flexible returns are of the utmost importance. The four cashback cards mentioned above represent some of the best options available and are most useful for purchases that don’t fall into regular category bonuses such as travel or dining. Even the best ones tend to not have annual fees but still offer valuable benefits such as cell phone protection and extended warranties. While they are not the ideal option for overseas purchases (most apply a 3% foreign transaction fee), they are hugely beneficial for other spending.
Personally, I use the card_name and card_name cards for my everyday nonbonused spend, as well as the card_name to max out its quarterly categories. Having the high rate of return and flexibility to transfer the earnings to travel partners is a huge benefit and something I greatly value as part of my reward earning strategy. You can’t go wrong with any of these options, but you are missing out some serious benefits if you’re not earning at least 1.5x rewards on all purchases.
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Editorial Note – Opinions expressed here are author’s alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.
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Here’s my strategy. 5.25% on most purchases, 2.625% on all the rest. With bank of america.
https://frugalprofessor.com/best-credit-card-rewards-strategy-2019-edition/
Also, 8.25% at Walmart + 9.25% at CVS:
https://frugalprofessor.com/boa-raise-cash-back-big-savings/
Taking it to the next level! Lots of potential with cash back and gift cards.
I pick door 2A. I also have a separate Visa car for Amazon purchases that yield 5% back. Those 3 cards strike the right balance between simplicity and cash back for me.
No mention of Amex Blue?
A great card for sure, but I wanted to keep things simple this time.
Every card I own pays me cash back, and all are used for specific purchases. 6% on groceries (including purchases of gift cards, etc) using Amex Cash card, 5% on quarterly revolving categories with Discover IT, 5% on gas with Sam’s Mastercard, 3% on online shopping with Bank of America Cash Rewards card, and various other cards that covers all my other needs at 1-3%. I have no difficulty keeping up with which is used where so it is all a game to me. Best of luck whichever strategy you and your readers are using.
Master mode!
For those with a Fidelity account, the no-fee Fidelity Visa effortlessly returns unlimited 2% on every purchase deposited directly into a specific savings, investment, or retirement account as cash.
You forgot Paypal credit card. 2%, no annual fee and no foreign transacation fees.
Hey GCC recent college grad here. Worked throughout school to pay down student loans, and finished school with 9k. Listened to a podcast were you stated you used 0% interest credit cards to pay off your loans. I’ve never used a credit card before and was warned sternly about not using them. But man it does sound very efficient. Could you break down that process. Any cons or things I should look out for. It all just sounds too good to be true. Thanks again!
I wrote about that here: Clawing Out of Debt.
There are people who should never use credit cards – people with poor impulse control or terrible financial management. If you don’t pay off the 0% offers within the year or whatever, you can be charged back interest at a rate much higher than the loan rates… so it requires a small amount of planning. Other than that, not really any downside. There is a lot of downside to never using credit cards.
“a lot of downside to never using credit cards”:
In USA, only the homeless leave home without them.
“Wouldn’t be seen dead-beat without one.”