Is a Cash Back Credit Card Worth It?

You likely use a credit card to pay your bills and shop because it’s convenient; there’s no need to write checks or carry cash. Instead, you just swipe or tap your credit card to complete a transaction.

But with the best cashback credit cards, there’s an added bonus: You can earn money just for doing your regular shopping. Over the course of a year, the amount of cash back you earn can be substantial.

If you’re wondering “is a cashback credit card worth it?”, here’s what you need to know to maximize your rewards.

How do cashback credit cards work?

A cashback credit card is one of the most popular types of credit cards available. With a cashback card, you earn a percentage of your purchase’s price every time you use your card to pay for a transaction.

At the end of your statement billing period, the card issuer credits you the cash back you earned during the previous month. You can redeem your cash back for electronic deposits to your bank account, statement credits, and even gift cards.

Let’s look at an example to see how it works. According to the Bureau of Labor Statistics, the average household spends $4,464 on food consumed at home. With the Blue Cash Preferred^® Card from American Express, you can earn 6% cash back at U.S. supermarkets (for first $6,000 per year, after that 1%) and on select U.S. streaming services, 3% cash back at U.S. gas stations and on eligible transit, and 1% cash back on other eligible purchases. (Cash back is received in the form of a statement credit.)

So, since you can earn 6% back at U.S. supermarkets (for first $6,000 per year, after that 1%) and on select U.S. streaming services, that means if you used your Blue Cash Preferred to pay for $4,464 worth of groceries over the course of a year, you’d earn a total of $267.84 in rewards. 

Pros and cons of cashback credit cards

Is a cashback credit card worth it? Here are six pros and cons to consider:

Pros

• You can earn cash back on your routine expenses: If you use a cashback card with no annual fee and pay off your statement balance in full each month, you’ll earn free money on essentials like gas, groceries, and even your utility bills.
• You could qualify for valuable sign-up bonuses: Many cashback cards offer lucrative sign-up bonuses. For example, with the Discover it^® Cash Back, Discover will match all the cash back you’ve earned at the end of your first year. There’s no limit to how much the company will match; if you earn $500 in cash back, Discover will double it to $1,000.
• Some offer shopping benefits: When you use your cashback card to pay for your purchases, you may also get access to shopping protections, such as extended warranties and purchase protection.

Cons

• You’ll likely need good-to-excellent credit to qualify for the best offers: The cashback cards with the highest rates of return typically require you to have good-to-excellent credit to qualify.
• They may have a high APR: If you carry a balance, be aware that cashback cards can have higher-than-average APRs (annual percentage rates). To avoid costly interest fees, pay off your statement balance in full each month.
• Cashback cards may have limited benefits: Cashback cards tend to offer few travel benefits. If you travel often, you may be better off with a travel rewards card so you can take advantage of perks like car rental insurance, airport lounge access, and travel accident insurance.

What are the different types of cashback cards?

There are several different types of cashback cards available, including the following:

Flat-rate cards

With a flat-rate card, you earn a fixed cashback rate on every purchase you make. For example, you’ll earn 1.5% cash back with the Capital One Quicksilver Cash Rewards Credit Card.

Rotating-category cards

Rotating-category cards offer higher cashback rates on spending categories that change each quarter. Spending categories frequently include gas stations, restaurants, grocery stores, and home improvement stores. For example, the Chase Freedom Flex^® allows you to earn 5% cash back on rotating quarterly categories you activate (on up to $1,500 spent) and travel purchased through Chase Travel℠; 3% cash back on drugstore purchases and dining at restaurants (including takeout and eligible delivery service); and 1% cash back on all other purchases.

Bonus-category cards

Bonus-category cards offer a higher rate of return in certain spending categories year-round and a lower flat rate on your other purchases. For example, the Bank of America^® Customized Cash Rewards credit card allows you to earn 3% cash back in the category of your choice and 2% cash back at grocery stores and wholesale clubs (up to $2,500 in combined choice category/grocery store/wholesale club quarterly purchases) and 1% on all other purchases.

5 cashback cards — compared

If you’re looking for a cashback credit card that works for your lifestyle, consider these five popular options:

Card name	Welcome offer	Excellent for	Reward rate	Annual fee
Chase Freedom Unlimited® 4.7 FinanceBuzz writers and editors score cards based on a number of objective features as well as our expert editorial assessment. Our partners do not influence how we rate products.	Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year)	People who want to earn plentiful cashback with no annual fee	6.5% cash back on travel purchased through Chase Travel℠, 4.5% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service and 3% cash back on all other purchases (on up to $20,000 spent in the first year). After your first year or $20,000 spent, earn 5% cash back on travel purchased through Chase Travel℠, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service and unlimited 1.5% cash back on all other purchases	$0
Chase Freedom Flex® 4.7 FinanceBuzz writers and editors score cards based on a number of objective features as well as our expert editorial assessment. Our partners do not influence how we rate products.	Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening	Cardholders who can remember to track and activate rotating spending categories	5% cash back on rotating quarterly categories you activate (on up to $1,500 spent) and travel purchased through Chase Travel℠; 3% cash back on drugstore purchases and dining at restaurants (including takeout and eligible delivery service); and 1% cash back on all other purchases	$0
Blue Cash Preferred® Card from American Express 5.0 FinanceBuzz writers and editors score cards based on a number of objective features as well as our expert editorial assessment. Our partners do not influence how we rate products.	Earn a $250 statement credit after spending $3,000 on eligible purchases in the first 6 months	Cardholders who spend a significant amount of money at supermarkets and gas stations	6% cash back at U.S. supermarkets (for first $6,000 per year, after that 1%) and on select U.S. streaming services, 3% cash back at U.S. gas stations and on eligible transit, and 1% cash back on other eligible purchases	$0 intro annual fee for the first year, $95 per year thereafter Terms apply
Capital One Savor Cash Rewards Credit Card 4.9 FinanceBuzz writers and editors score cards based on a number of objective features as well as our expert editorial assessment. Our partners do not influence how we rate products.	Earn a limited-time $250 cash bonus after you spend $500 on purchases within the first 3 months from account opening	People who spend a significant amount of money at restaurants	3% cash back at grocery stores (excluding superstores like Walmart® and Target®), on dining, entertainment and popular streaming services; 5% back on hotels and rental cars booked through Capital One Travel (terms apply); 8% cash back on Capital One Entertainment purchases; and 1% cash back on all other purchases	$0
Capital One Quicksilver Cash Rewards Credit Card 4.5 FinanceBuzz writers and editors score cards based on a number of objective features as well as our expert editorial assessment. Our partners do not influence how we rate products.	Earn a one-time $200 cash bonus after you spend $500 on purchases within 3 months from account opening	People looking for a flat-rate card with no annual fee	1.5% cash back on every purchase, every day; and 5% cash back on hotels and rental cars booked through Capital One Travel (terms apply)	$0

Common questions about cashback credit cards

The bottom line

Is a cashback credit card worth it? As long as you can use your card wisely, absolutely! Using a cashback credit card on your everyday purchases can help you earn valuable rewards and put more money back in your bank account.

Cash Back at U.S. Supermarkets

Blue Cash Preferred^® Card from American Express

5.0

FinanceBuzz writers and editors score cards based on a number of objective features as well as our expert editorial assessment. Our partners do not influence how we rate products.

Blue Cash Preferred^® Card from American Express

Learn How to Apply

See rates and fees | Terms Apply

Current Offer

Earn a $250 statement credit after spending $3,000 on eligible purchases in the first 6 months

Annual Fee

$0 intro annual fee for the first year, $95 per year thereafter

Rewards Rate

6% cash back at U.S. supermarkets (for first $6,000 per year, after that 1%) and on select U.S. streaming services, 3% cash back at U.S. gas stations and on eligible transit, and 1% cash back on other eligible purchases

Benefits and Drawbacks

Benefits

• High cashback rates at U.S. supermarkets, U.S. gas stations, eligible transit, and U.S. streaming subscriptions (cash back is in the form of Reward Dollars that can be redeemed as a statement credit)
• Introductory APR for purchases and balance transfers
• $7 monthly statement credit toward an eligible Disney bundle subscription (subject to auto renewal) of $9.99 or more (enrollment required)

Drawbacks

• Cap on highest reward category limits what you can earn
• Welcome offer is a little lackluster compared to other cards
• Has foreign transaction fee

Card Details

• Earn a $250 statement credit after spending $3,000 on eligible purchases in the first 6 months
• 6% cash back at U.S. supermarkets (for first $6,000 per year, after that 1%) and on select U.S. streaming services, 3% cash back at U.S. gas stations and on eligible transit, and 1% cash back on other eligible purchases
• Intro purchase 0% APR offer: 0% for 12 months then 18.49% - 29.49% (variable)
• Intro balance transfer 0% APR offer: 0% for 12 months then 18.49% - 29.49% (variable)
• Terms apply