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What’s a list of cash-back cards doing on a website called The Points Guy? It’s an excellent question, and there’s an excellent answer. With airfares so low — especially for domestic premium seats — and loyalty programs being devalued on a somewhat regular basis, cash can often be just as valuable to travelers as points and miles. At the very least, a great cash-back card should be another item in your credit card toolbox for those times when you’re not working on a sign-up bonus or can’t make your purchase fit into a bonus category.
In compiling this list, we kept two general principles in mind. First, every single card on this list has no annual fee. Not just in the first year, but ever. With so many options, there’s no reason to pay an annual fee for a cash-back card.
Second, given the intense competition in the credit card marketplace, a cash-back card should offer either 2% cash back on everything or some sort of bonus cash back that makes getting less than 2% on all purchases worth the tradeoff. Anything less is a cash-back card that doesn’t belong in your collection.
So with that in mind, here are our picks for the top cards that offer cash back in 2017…
1. Citi Double Cash Card
There’s something to be said for simplicity, and that’s exactly what the Citi Double Cash Card offers. It earns 2% cash back on each and every purchase — 1% when you make the charge and another 1% when you pay it off. No bonus categories, no rotating quarters, no caps. Nothing but 2% cash back all the time.
It’s easy to redeem your accumulated cash back, as any amount can be applied at any time as a statement credit or redeemed for a check. It’s also a MasterCard, so it’s accepted nearly everywhere on the planet. And of course, this card has no annual fee. Ever.
The only downsides to this card are the lack of any sign-up bonus and a 3% fee on foreign transactions, which means you won’t want to use it overseas. But otherwise, if your life is complicated enough already and you and/or your significant other don’t want to carry around an oversized wallet or purse while having to remember which card to pull out of it every time you’re standing in a checkout line, this is the card for you.
2. Chase Freedom Unlimited Card
We’re awarding high marks for ease of use, and the Chase Freedom Unlimited card also meets that criteria. It offers 1.5% cash back on all purchases, without any quirks, qualms or confusion.
Now, if you’re asking why you’d consider getting the Chase Freedom Unlimited at 1.5% cash back when you could get the Citi Double Cash card at 2% instead, there’s a very good reason. The 1.5% cash back on the Freedom Unlimited can be awarded as Ultimate Rewards points instead of pure cash.
Ultimate Rewards points are worth 1 cent per point each when redeemed for cash, so at 1.5 Ultimate Rewards points per dollar spent, the math works out to 1.5% cash back. But if down the line you decide you might prefer to use those points as true transferable Ultimate Rewards points instead of cash back, all you have to do is acquire a premium card from the Chase family such as the Chase Sapphire Preferred, and the points from the Chase Freedom Unlimited will combine into one big pile of transferable airline and hotel points that could be worth much more than 1 cent per point.
On top of that, if you decide at some point to pick up the ultra high-end Chase Sapphire Reserve card, the points earned from the Chase Freedom Unlimited will become redeemable for travel at a guaranteed rate of 1.5 cents per point through the Ultimate Rewards travel portal. That gives this card an effective return rate of 2.25 cents per dollar spent — 1.5 points per dollar times 1.5 cents per point — making it an even better deal than straight cash back from the Citi Double Cash card.
Of course, not everyone will want to get a second Chase card or redeem points for anything other than a statement credit, but if you think you might dip your toe in the points and miles game sometime in the future, the Chase Freedom Unlimited is a great card for later expansion options.
3. Chase Freedom
If you’re ready to get a little more complicated and employ a little bit of strategy, the original Chase Freedom card is a good way to truly maximize your cash back.
This card’s claim to fame is its rotating quarterly bonus categories, which offer an impressive 5% cash back on up to $1,500 in spend each quarter. The broad categories — such as restaurants, drug stores or gas stations — provide plenty of chances to put extra cash in your bank account every month.
Now, you won’t necessarily want to make this your “primary” credit card, because outside of the bonus categories, it earns only 1% cash back for other purchases. But if you can remember to use it primarily when making purchases in the current quarter’s categories and pair it with another card that earns a little more on other purchases, it can be a real winner.
And like the Chase Freedom Unlimited, the Chase Freedom awards its cash back as Ultimate Rewards points, making them transferable to Chase’s travel partners when combined with another card from the Ultimate Rewards family.
4. Discover it Card
Discover is a pioneer in the world of cash-back cards, and in some ways it’s trying to combine the best of both worlds when it comes to the Discover it Card. Like the Chase Freedom, the card has its own set of rotating 5% quarterly categories that can be maximized with up to $1,500 in spend each quarter, and earns 1% cash back on all other purchases.
But this card suffers slightly from the fact that it can’t be connected to a travel points program like the Freedom cards. While this isn’t a problem if your only interest is cash back, the card is also hampered by being a Discover card, which isn’t anywhere near as widely accepted as Visa, MasterCard or even American Express.
Fortunately, Discover has an answer for these downsides. After you’re approved for the Discover it Card, all your cash back will be doubled at the end of the first year. That includes everything — both the 5% categories and the 1% on everyday purchases — which means this card can earn a whopping 10% cash back on up to $6,000 in purchases in its quarterly categories plus 2% cash back on everything else in year one. That’s like getting the best of both the Citi Double Cash and the Chase Freedom cards in one.
With a deal this good, it’s no wonder Discover will only let you have it for the first year, after which you’ll be earning cash back at the regular 5%/1% rates. But if you don’t already have a Discover it, for at least the first 365 days this card can beat all its cash-back competitors.
5. Fidelity Rewards Visa Signature Card
The Fidelity card doesn’t get a lot of publicity or notice, but it’s one of the other options that earns 2% cash back on all purchases without any bells or whistles. For many years this was an American Express-branded card, which made it slightly less attractive as far as universal acceptance at merchants.
But last year Fidelity switched this card’s issuer from FIA to Elan Financial Services, and as part of that change, the card became a more commonly used Visa, which makes it more attractive to keep in your wallet as a primary card. It also has a slightly more attractive 1% fee on foreign transactions, which is not bad for a no-annual-fee card (though we still recommend using a card with no foreign transaction fees when outside the country).
Why doesn’t this card rank higher on this list? Because redeeming the cash back earned by this card requires jumping through an extra hoop. In order to get this card’s maximum value, you have to deposit the cash back into a Fidelity account. It doesn’t have to be a brokerage account — as retirement, college savings and cash management options are all offered as options — and you can even make deposits directly into a friend or family member’s Fidelity account. But this extra step does make the rewards from this card slightly more difficult to use.
6. Costco Anywhere Visa Card by Citi
Given the popularity of the biggest warehouse club in the US, no list of cash-back cards would be complete without the Costco Anywhere Visa Card by Citi.
As with the Fidelity Rewards Visa, last year saw the Costco credit card account switch from an American Express to a Visa, making it easier to use outside Costco as well as in it. But while Citibank suffered a near customer meltdown when it first took over the account, now that the dust has settled, it’s clear the bank also made significant improvements to the earning structure of this card.
The best news on the Costco Anywhere Visa is the 4% cash back it earns at gas stations up to $7,000 per year in spend. But just as impressive, it also offers 3% in the travel and restaurant categories, and that cash back has no annual cap. Those are the identical 3x bonus categories offered by the Chase Sapphire Reserve, so this card is certainly in good company.
Of course, if you’re a Costco shopper, this card will also reward you with 2% cash back at both the physical stores and online at costco.com. And if you choose to make this your primary card, you’ll still get 1% everywhere else, though more likely you’ll want to pair it with a card that earns more outside of Costco and merchants in the bonus categories.
Bottom Line
Those are our top cash-back cards for 2017, and it’s terrific to see so many great options. Now that you’ve got a complete list of them, you can make an educated decision about what warrants an application this year.
Source: thepointsguy.com