How to Choose the Best Cash Back Credit Card

Keep you eye on the annual fees, but don’t let them scare you away.  Doing the math means that a higher rewards or cash back rate can easily justify the fee if you are using your card regularly.  Sign up bonuses will often offset the cost of any annual fees as well.  The best cards offer higher rewards rates (up to more than 2%), and have even higher rewards rates (up to 5% back ) for certain categories of spending.

Characteristics of cash back cards to keep in mind:

Simple to cash in. No decisions to make, flights to book, or black out dates to deal with, just deposit the cash in your bank account or use it to pay you next credit card bill

Great Perks. A number of cash back credit cards offer valuable perks, like concierge services, access to airport lounges, rental car insurance, purchase protection and more.

Easy to understand. No longer do you have to wonder how the airline’s frequent flyer programs will change, and if you really can use airline miles to book a flight.  With cash back cards, your rewards currency is the almighty dollar and isn’t subject to changing rewards redemption policies

Signup bonuses.  While most airline or hotel credit cards offer impressive signup offers, cash back credit cards might sound less exciting, but are no less rewarding.  The Capital One Venture card will give you $200 as thank you points, just for signing up.

Higher APR. As is consistent with all rewards cards, cash back credit cards typically carry a higher interest rate than some other cards.  If you know you will be carrying a balance, you should consider low interest credit cards.

Redemption restrictions. Some cards are particular in the way that the cash back is redeemed.  Retail credit cards, the REI credit card and the  Costco American Express, will pay out your reward in the form of store credit, and will typically only pay out one time a year.

Good Credit is needed. Unlike bad credit credit cards, cash back rewards cards require good or excellent credit for approval.

Spending thresholds. Some rewards cards require you to purchase so much before you are eligible for your cash back rewards.   Don’t sign up for these cards unless you’re certain you’ll meet the threshold, and that the rewards rate is a good fit