Are cash back credit cards worth it?
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MMS is all about unlocking the value of airline miles, hotel points and transferable rewards. You can save thousands of dollars on airfare with the miles you earn from the best airline credit cards. You can earn weeks of free hotel stays with the best hotel credit cards. You can book free cruises, rental cars, Airbnb and much more with the best rewards credit cards. But you’ll still need to buy meals, pay tolls, cover parking fees, purchase tours, etc.
That’s why there should always room in your wallet for cash back credit cards.
Are cash back credit cards worth it?
You might say cash back credit cards are the most versatile of all travel cards. They collect a currency far more flexible than any airline mile or hotel point. You can redeem your rewards for literally anything, which means you can truly achieve absolutely 100% free travel.
Cash back is an extremely important part of the miles and points enthusiast’s travel arsenal. You can even rack up the cash surprisingly fast by opening one the best cash back credit cards or one of the best business credit cards that earns cash back. Let’s look at a few popular cash back credit card bonus categories. You’ll see how easy it can be to simply use the right card for the spending you’d do anyway.
No matter who you are, you’re pretty well guaranteed to spend hundreds of dollars on groceries each month. The Blue Cash Preferred® Card from American Express is perhaps the best grocery credit card, earning a whopping 6% cash back at U.S. supermarkets (6% back on up to $6,000 in purchases per calendar year, then 1% cash back. Terms apply). If you spend an average of $500 per month at the supermarket (my family of two spends nearly that), you’ll spend a full $6,000 each year, and earn $360 back. Cash back is received in the form of Reward Dollars that can be redeemed for statement credits.
This card does come with a $0 introductory annual fee for the first year, then $95 (see rates and fees), so you should deduct that from your final earning total. In short, this card can net you $255+ in bonus cash for making purchases you plan to make anyway.
In a similar vein, the Blue Cash Everyday® Card from American Express has no annual fee (see rates and fees) and earns 3% cash back for the same purchases (3% cash back on the first $6,000 spent at U.S. supermarkets, then 1% cash back. Terms apply). With this card, you can potentially earn $180+ if you spend $6,000 on groceries at U.S. supermarkets each year. Cash back is received in the form of Reward Dollars that can be redeemed for statement credits.
If you spend more than $3,170 per year at the supermarket (~$265 per month), you’ll do better by using the Amex Blue Cash Preferred.
Gasoline is another unavoidable expense among we the majority. Fortunately, this category pops up with relative frequency as a rotating bonus category of the Chase Freedom® and the Discover it® Cash Back. They earn 5% back on select categories each quarter (5% on up to $1,500 in spend each quarter you activate, then 1% back).
It’s hard to beat 5% for gas. But as stated above, you won’t receive that return all year long. One thing to note is that gas stations sell much more than gasoline. You’ll get 5% back when making purchases at their convenience stores, as well.
The only other notable best gas credit card has already been mentioned: The Amex Blue Cash Preferred earns unlimited 3% back at U.S. gas stations. Nothing to write your mother about, but the return is a good complement to all the money it’s saving you in groceries.
The information for the Chase Freedom and the Discover it Cash Back card has been collected independently by Million Mile Secrets and has not been reviewed by the card issuer.
Entertainment isn’t a category in which everyone spends a lot, dissimilar to groceries or gas. “Entertainment” is also a broad word, and may include more than you think.
The Capital One Savor Cash Rewards Credit Card earns 4% cash back on entertainment, which includes things like movies, plays, concerts, sporting events, tourist attractions, theme parks, aquariums, zoos, dance clubs, pool halls or bowling alleys and record stores. It even includes video rental locations, which will come in handy for those of you who power your car with your feet. The card also offers 4% cash back on popular streaming services.
The Capital One Savor even offers 8% back on Vivid Seats (through January 2023), which is basically another version of StubHub. It’s good for sporting events, concert tickets, etc. The card does have a $95 annual fee. You should examine the Capital One Savor card benefits before you apply to ensure the Savor annual fee is worth it for you.
Another entertainment expense, which seemingly grows more costly by the month, is music and video streaming services. The Amex Blue Cash Preferred earns unlimited 6% cash back on select U.S. streaming subscriptions (Hulu, Netflix, Amazon Prime, HBO, Apple Music, Pandora, etc.).
It’s hard to estimate the total cash back you’ll earn from entertainment, as spending will vary drastically by the cardholder. I estimate my family spends around $950 on these sorts of purchases annually. Using the right card, I can receive $57 cash back.
The information for the Capital One Savor Cash Rewards card has been collected independently by Million Mile Secrets. The card details on this page have not been reviewed or provided by the card issuer.
If you find yourself developing carpal tunnel in your index finger from all the unremitting “Buy Now” buttons you click on Amazon, consider the Discover it Cash Back or the Chase Freedom. As ever, they earn 5% back on select categories each quarter, which sometimes means online stores like Amazon.
For example, from Oct. to Dec. 2020, the Discover it Cash Back will earn 5% back (5% on up to $1,500 in spend each quarter you activate, then 1% back) with Amazon.com, Walmart.com and Target.com. That’s handy for the holiday season.
Other non-bonus spending
There will always exist spending categories that will simply not fall into a credit card bonus category. In these cases, you should have a trusty cash back card that earns a flat rate on all purchases.
The Citi® Double Cash Card earns 1% cash back when you make a purchase, and 1% cash back when you pay your balance. In other words, it effectively offers 2% cash back for all spending. It’s a fantastic card to keep, as it’s got no annual fee.
The Discover it® Miles also functions as a cash back card. You can redeem the rewards you earn for credit towards travel expense or redeem them for cash back. Either way, the miles are worth one cent each.
Every dollar you spend with your card will earn you unlimited 1.5x miles (1.5% back) toward future travel rewards. Here’s the kicker, though. After your first 12 billing cycles, Discover will match the miles you earned during the first year of card membership. That means you’re effectively earning unlimited 3x miles (or 3% back) on all purchases for an entire year. Pretty fantastic.
The information for the Discover it Miles has been collected independently by Million Mile Secrets. The card details on this page have not been reviewed or provided by the card issuer.
Cash back cards with the biggest bonuses
The best cash back welcome bonuses are not necessarily attached to the best cash back credit cards. Here are the current biggest bonuses:
- Ink Business Cash Credit Card – $750 bonus cash back after you spend $7,500 on purchases in the first 3 months from account opening. Read our Ink Business Cash credit card review.
- Ink Business Unlimited Credit Card – $750 bonus cash back after you spend $7,500 on purchases in the first 3 months from account opening. Read our Chase Ink Business Unlimited review.
- Capital One Savor – $300 cash back after you spend $3,000 on purchases within the first three months of account opening.
- Amex Blue Cash Preferred – Earn a $300 statement credit after you spend $3,000 in purchases on your new card within the first six months of card membership. Terms apply. Read our Blue Cash Preferred review.
- Bank of America® Cash Rewards credit card – $200 cash bonus after you spend $1,000 in purchases in the first 90 days of account opening.
There are plenty of cards that will give you a sizable return for purchases you have to make anyway. It’s smart to have a cash back strategy to accompany your miles and points goals. You can use the best credit cards for travel on travel transactions to earn bonus points, and use a few of the best cash back credit cards for spending that won’t earn you bonus miles or points. It’s your ticket to a truly 100% free vacation.
For rates and fees of the Blue Cash Preferred Card, please click here.
For rates and fees of the Blue Cash EveryDay card, click here.
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Blue Cash Preferred® Card from American ExpressAPPLY NOW
Blue Cash Preferred® Card from American Express
Earn a $300 statement credit after you spend $3,000 in purchases on your new Card within the first 6 months.
$0 intro annual fee for the first year, then $95.
Buy Now, Pay Later: Enjoy $0 plan fees when you use Plan It® to split up large purchases into monthly installments. Pay $0 plan fees on plans created during the first 12 months after account opening. Plans created after that will have a plan fee up to 1.33% of each purchase amount moved into a plan based on the plan duration, the APR that would otherwise apply to the purchase, and other factors.
Low intro APR: 0% for 12 months on purchases from the date of account opening, then a variable rate, 13.99% to 23.99%
6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%).
6% Cash Back on select U.S. streaming subscriptions.
3% Cash Back at U.S. gas stations and on transit (including taxis/rideshare, parking, tolls, trains, buses and more).
1% Cash Back on other purchases.
Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit.
0% on purchases for 12 months
$0 introductory annual fee for the first year, then $95.
Editorial Note: We're the Million Mile Secrets team. And we're proud of our content, opinions and analysis, and of our reader's comments. These haven’t been reviewed, approved or endorsed by any of the airlines, hotels, or credit card issuers which we often write about. And that’s just how we like it! :)