What Are the Different Types of Cash Back Credit Cards?

You can choose from several types of cash back credit cards, and each one works a bit differently. Here's what you need to know about them:

Flat-rate cards. A flat-rate card pays the same amount of cash back on every purchase. You might earn 1.5% back on all purchases, for example.

Your options for redeeming cash back rewards with flat-rate cards are statement credits, checks or bank deposits. Some cash back cards provide other ways to redeem rewards, such as travel bookings, gift cards or products.

Flat-rate cards to choose from include:

Tiered cash back cards. These credit cards offer different cash back rates for different types of purchases. Most cards let you earn 1% to 6% back on eligible purchases. You might get 3% back on groceries, 2% on gas purchases and 1% on all other purchases, for instance.

Choosing this type of cash back card could allow you to earn a lot of rewards if you maximize your spending in each category. But read the fine print because the categories may have dollar limits and other restrictions.

Tiered cash back cards to choose from include:

Rotating category cards. Several cash back credit cards have 5% bonus categories that rotate quarterly. Common categories include groceries, gas stations, home improvement stores, and even Amazon and Uber purchases.

Some caveats: You may have to sign up online every quarter or you won't earn the bonus rewards. Also, the 5% bonus categories have dollar limits, so you will need to track your spending.

Rotating category cards to choose from include:

How Do You Compare Cash Back Credit Cards?

You might feel overwhelmed as you try to pick the right cash back credit card. Follow these steps to make the process easier:

1. Calculate your earning potential. You can earn rewards at different rates depending on what type of cash back card you use, where you make purchases and whether a category bonus applies. Analyze your spending and then look for a credit card that earns bonus rewards in the categories where you spend the most.

2. Factor in sign-up bonuses. Many cards attract applicants by offering sign-up bonuses. A cash back card with a large sign-up bonus can certainly help boost your earnings, but you'll need to know the spending requirement to receive it. If you can't get the bonus without spending more than you normally would, then the card probably isn't a good match for your wallet.

3. Subtract annual fees. Some cash back credit cards charge an annual fee, and the average fee is less than $100, according to U.S. News research.

Consider whether the earnings or benefits of using a card will more than offset an annual fee. If they don't, you likely will be better off with a no-fee card.

When an annual fee is waived the first year and then the fee comes due, you could ask the issuer to waive it for another year, request to downgrade to a no-fee card or cancel the card. You could also call the issuer and ask for a credit card retention offer, such as a statement credit or rewards to offset the fee.

4. Understand cardholder benefits. Many credit card issuers and card networks offer benefits beyond a rewards program. Benefits could include not only free credit score access but also extended warranties, concierge services, travel accident insurance policies, theft and fraud protections, and low-price guarantees.

Chase Sapphire Preferred Card users, for example, can get trip cancellation and interruption insurance, extended warranty protection, and auto rental collision damage waiver coverage, among other benefits.

How Can You Maximize Your Cash Back Rewards?

Here is how you can reap more rewards without necessarily spending more on your cash back credit card:

What Are Some Pros and Cons of Cash Back Credit Cards?

Pros:

Cons:

Is Cash Back From a Credit Card Taxable?

No. Since you have to spend money to receive cash back, it's considered a rebate and not taxable income.

Best Cards Summary

Discover it® Cash Back

Why this is one of the best cash back credit cards: The Discover it Cash Back offers 5% cash back each quarter in rotating categories, such as Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate. All other purchases earn unlimited 1% cash back. There is no annual fee. At the end of your first year as a cardmember, Discover will match all the cash back you earned. See our full review.

Bank of America® Customized Cash Rewards credit card

Why this is one of the best cash back credit cards: The Bank of America Customized Cash Rewards card lets you pick one category to earn 3% cash back, including online shopping or gas. Grocery store and wholesale club purchases get 2% back. You’ll also receive a $200 cash rewards bonus after spending $1,000 on the card in the first three months. See our full review.

Chase Freedom Unlimited®

Why this is one of the best cash back credit cards: Chase Freedom Unlimited charges no annual fee. It earns 5% cash back on travel purchased through Chase Ultimate Rewards, 3% cash back on dining and drugstore purchases and 1.5% cash back on all other purchases. Additionally, you can earn 5% cash back on grocery store purchases (not including Target(R) or Walmart(R) purchases) on up to $12,000 spent in the first year. If you get this card and spend $500 within three months of opening it, you can earn a $200 bonus. See our full review.

Chase Freedom Flex℠

Why this is one of the best cash back credit cards: Chase Freedom Flex delivers 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. You’ll also earn 5% back on travel purchased through Chase, 3% back at drugstores and restaurants, including takeout and delivery, and 1% back on other purchases year-round. Additionally, you can earn 5% cash back on grocery store purchases (not including Target(R) or Walmart(R) purchases) on up to $12,000 spent in the first year. See our full review.

Blue Cash Everyday® Card from American Express

Why this is one of the best cash back credit cards: The Blue Cash Everyday Card from American Express rewards you with cash back on day-to-day purchases. You'll earn 3% cash back at U.S. supermarkets on up to the first $6,000 per year in purchases, then 1% back. Purchases at U.S. gas stations and select U.S. department stores earn unlimited 2% cash back. Plus, you'll get unlimited 1% back on other purchases with no annual fee. Cardholders receive a $200 statement credit after you spend $2,000 in purchases on your new Card within the first 6 months. See our full review.

Blue Cash Preferred® Card from American Express

Why this is one of the best cash back credit cards: The Blue Cash Preferred Card from American Express offers cash back on everyday purchases. Cardholders earn 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases and then 1% back. Select U.S. streaming subscriptions earn 6% cash back; transit and U.S. gas stations earn 3% cash back; and other purchases earn 1% cash back. See our full review.

Discover it® chrome

Why this is one of the best cash back credit cards: This card caters to consumers who want to earn cash back on gas and dining purchases. You'll earn 2% cash back at gas stations and restaurants on up to the first $1,000 in combined purchases quarterly. After that, you'll earn 1% back, along with unlimited 1% cash back on all other purchases. There's no annual fee and rewards never expire. See our full review.

Citi® Double Cash Card - 18 month BT offer

Why this is one of the best cash back credit cards: This card earns a flat 1% cash back on purchases and 1% cash back when cardholders make payments for those purchases, with no spending category restrictions, no cap on how much cardholders can earn and no annual fee. See our full review.

Amazon Rewards Visa Signature Card

Why this is one of the best cash back credit cards: The Amazon Rewards Visa Signature Card is a cash back rewards credit card designed for frequent shoppers of Amazon.com and Whole Foods Market. The card earns 3% cash back at Amazon.com and Whole Foods Market, 2% at drugstores, gas stations and restaurants and 1% on all other purchases. When the card is paired with an eligible Amazon Prime membership, cash back earnings at Amazon.com and Whole Foods Market increase to 5%. This card does not charge an annual fee. See our full review.

U.S. Bank Cash+™ Visa Signature® Card

Why this is one of the best cash back credit cards: The U.S. Bank Cash+ Visa Signature Card has no annual fee and offers cardholders a three-tiered cash back rewards program. You’ll earn 5% cash back on the first $2,000 in combined eligible net purchases each quarter in two categories of your choice and 2% cash back on your choice of one everyday category. All other eligible net purchases earn 1% cash back. When you make $500 in eligible purchases within 90 days of opening an account, you'll earn $200. See our full review.

Take a look at the U.S. News methodology to see how we rank the best credit cards.

Best Cash Back Credit Cards Methodology

U.S. News has been helping consumers make money decisions for decades. For our Best Cash Back Credit Cards list, we factor in overall satisfaction data, cash back earning rates, annual fees, APRs and sign-up bonus values. The satisfaction data is based on an annual nationwide survey.

Our top picks may earn a flat cash back rate for all types of purchases or a bonus rate when you spend in certain categories. Consider how you spend to determine which would be the best card for you.

Cash Back Credit Cards FAQs