Cash Back Credit Card Guide and Survey For 2013
Credit Card Survey - We have just completed out 2012 cash back credit card survey, where we have surveyed and investigated 19 cash back credit cards in the market (as new cards appear, we will add them to the results). Out of this survey, we are doing a report here about the state of cash rebate credit cards. Here is our outline.
Table of Contents
Editors Choice - For those who don't want to read everything!.
Understanding Cash Back Formula
How Cards Pay Your Cash Rebates?
Caps on Rebates
Editor's Choice - Our Top Pick
Most cash rewards credit cards offer a generic 1% cash rebates for every dollar that you spend on the card. The better ones offer better rebates when you spend on certain categories. The better cards can be separated into two camps. The first group of cards are what i would call rotating category cards. These cards offer 5% rebates on certain categories of expenses which change every quarter. They also have online shopping portals where you can earn anywhere from 2% to 20% with their shopping partners. The second group of cards are those that offer more than 1% rebates on certain categories the whole year round. The rebates tend to range from 2% to 3%. Below are our best recommendations. We're sure one or a combination of them will suit your spending needs and earn you the most rebates.
The Blue Cash Everyday® Card from American Express is arguable the best cash back card for earning cash back on everday purchases like gasoline at US stand-alone gas stations and US stand-alone supermarket the whole year round. Unlike cards with "rotating categories, you can earn cash back all year round and not just each quarter with specific categories. I personally have this card also and the customer service is excellent.
The "Preferred" version of the Blue Cash series has got an annual fee but gives card members higher cash back. Depending on your spending level, this might work out better for you than the regular "Everyday" version. In fact, this one is pays the most cash back on grocery shopping. (See Review
When Discover introduced this card in 2012, it was followed by tons of ads over the air waves. New features were introduced and the new design is pretty cool as well. But as I furthered investigated this card, I've come to the conclusion that this is arguably the best card for earning cashback alongside the Blue Cash. Best to read our review to better understand this card.
The TrueEarnings® Card from Costco and American Express is another card we recommend to Costco members (especially Costco Executive Members). The reason is because you can earn extra cash back on gasoline, dining and travel. To see why it makes for Costco members to get this card, reader our review of having a costco membership
Before you go on trying to choose from such a wide selection, it is best that you first understand the different types of cash rebate cards that are available in the market today. Let's go through the different types of cash rebate formulas that credit card issuers offer these days.
Basic Rebates (1%) - Most generic money back cards offer 1% rebates on all purchases that are made on the card. This is the standard for most rebate cards.
Tier Rebate System - Some impose tiers on their rebate formula. That means that you have to spend above a certain amount every year to earn maximum rebates. This isn't necessary bad because cards like that tend to offer higher rebates. One example is the Blue Cash from American Express, which pays 5% rebates on some items only after you spend $6,500 on their card. Below that, the rebate you earn is slightly less.
Reverse Tiers - While some cards pay you the best rebates after you spend a certain amount on the card, some actually give you less rebates when your spending exceeds a certain amount.
More than 1% Rebates on Certain Items - The better cash rebate cards pay more than 1% rebates on certain types of spending. Such items include gasoline spending, spending at supermarkets, drugstore, utilities, travel, restaurants. They range from 2% to 5%. You typically want to choose these cards rather than the ones that simply pay you 1% on everything.
How Cards Pay Your Cash Rebate?
Different credit card issuers present their customers with different ways to redeem their cash rebates.
Statement Credits - Some credit card issuers pay you back the rebates you have earned in the form of statement credits. Many gasoline credit cards used to do this by rolling your statement credits to the following months statement. Hence, the next months statement is actually low by the amount of rebates you have earned the previous month. Some cards like the Blue Cash from American Express gives you a statement credit on the anniversary date. So for one month in the year, cardholders will find that they will have a month where their bill is lower than usual because of the rebates.
Rebate check by request - Some rebate credit cards require the card holder to call the customer service center to have a rebate check mailed to them. Very often, you need to have earned a minimum amount of rebates for them to write the check (usually $50).
Automatic rebate checks - Some cards will simply write you a check automatically once you have earn a certain amount.
Automatic Bank Account Credit - Some cards will automatically debit your bank account once you have earned a certain amount of rebates.
Caps on Rebates
No Caps - The better cash back cards usually have no limits to how much you can earn. For those who spend a lot, this will be an important feature.
Monthly or Annual Cap - Some cards cap the amount of rebates you can earn either monthly or annually. This is not necessarily a bad thing (it just depends on how much you spend versus what is the cap). You can also get more than one rebate card to get around any rebate caps, or if you have a spouse, simply get two identical cards. Some of the caps apply to all types of purchases while some may only apply to certain categories of expenses. For example, when gas prices were skyrocketing not too long ago, some rebate cards capped the rebates they paid only on gasoline spending.
Below is a summary of the results of the survey
|Card||Rebate Formula||Caps on Rebates||Annual Fee||Comments|
|Capital One® No Hassle Cash(SM) Rewards - Good Credit||2% cash back on purchases at gas stations and major grocery stores and 1% cash back on all other purchases||Unlimited Rebates||$0||n.a.|
|Capital One® No Hassle Cash(SM) Rewards||25% annual bonus on the cash you earn during the year. 1% cash back on every purchase||Unlimited Rebates||$0||Editor's Choice - if you have average credit|
|HSBC Platinum Mastercard® with Cash Back Rewards||Earn 1% rebates for every dollar you spend.||Unlimited Rebates||$0||n.a.|
|HSBC Platinum Mastercard® with Cash or Fly Rewards||Earn 1 point for every dollar you spend. Points can be redeemed for airline tickets or cash rebates||Unlimited Rebates||$0||n.a.|
|Bank of America Cash Rewards Credit Card||Earn 1% rebates on all purchases.||Unlimited Rebates||$0||n.a.|
|Bank of America Efectiva Visa||Earn 1% rebates on all purchases.||Up to $600 a year||$0||n.a.|
|Bank of America Financial Rewards Visa||Earn 1% rebates on all purchases.||Up to $600 a year||$0||n.a.|
|Bank of America® Acelerated Cash RewardsTM American Express® Card||Earn 1.25% rebates on all purchases.||Unlimited Rebates||$0||n.a.|
|Bank of America Money Return Visa||Earn 10% rebates on all interest charges you incur during calendar year||Unlimited Rebates||$0||n.a.|
|Motley Fool® Cash Back Platinum Plus® Visa® Card||Earn 1% rebates on purchases||Unlimited Rebates||$0||n.a.|
|Schwab Bank Invest First Visa Credit Card||Earn 2% rebates on purchases - rebates will be deposited in Charles Schwab account||Unlimited Rebates||$0||Consider if you have a Schwab Account|
|Wells Fargo Cash Back Visa||Earn 1% rebates on all purchases.||Unlimited Rebates||$0||n.a.|
|National City Bank Everyday Rewards Elite Visa||Earn 4% rebates on gasoline (up to $250 in net monthly gasoline expenditure), 3% on cinema and movie rentals, 2% on grocery restaurant and fast food. Earn 0.25% on first $10,000 in spending other purchases. Earn 1% after $10,000 in spending||Unlimited Rebates||$0||Looks impressive at first glance, but the Costco is a much better card|