Depending on your preferred redemptions, comparing other types of credit card rewards alongside cash-back credit cards may be valuable in deciding on your next card.
Cash Back vs. Travel Rewards
Travel rewards, such as airline miles or hotel points, can be strategically redeemed to get outsized value. Every travel program has sweet spots where a single point or mile could be worth five or ten cents each when redeemed tactically. However, this assumes you’re well-versed in the program’s strengths—and have the flexibility to take advantage of them.
Compare this to cash-back credit cards, which offer stable value. You don’t have to hunt for the most valuable redemptions or worry about getting below-average value. It’s also much simpler and doesn’t require a time investment in order to redeem rewards.
Read more: Best Travel Credit Cards of 2024
Cash Back vs. Flexible Bank Points
Many card issuers offer proprietary points instead of traditional cash back. These programs, like Chase Ultimate Rewards or Citi ThankYou points, build in flexibility. When you earn credit card points, you can redeem them as cash back (often, but not always, equivalent to 1%) or for other rewards through the program. A common redemption option is to book travel through the points portal to get 25% more value with every point. You may also be able to transfer points to partnering travel loyalty programs, effectively earning travel rewards.
Once again, cash back is the easiest and most straightforward option. However, credit card points usually have one or more different redemption options that are still relatively simple yet provide a greater return. Compared to cash back’s fixed redemptions, the flexibility of these points is their greatest attribute.
Find The Best Credit Cards For 2024
No single credit card is the best option for every family, every purchase or every budget. We've picked the best credit cards in a way designed to be the most helpful to the widest variety of readers.
Study: During Unemployment, Credit Card Debt Takes Precedence Over Some Other Loan Payments
The two debt payments that take precedence for Americans are mortgages and credit cards, according to a Forbes Advisor survey conducted by Talker Research in July 2024. If they were to lose a job, 27% of survey respondents selected that they’d make credit card payments a top priority, beating out auto or student loans.
Since credit card APR can easily be double or triple that of other types of loans, it’s a smart idea to pay as much toward your card debt as possible. Some cash-back cards offer an introductory 0% APR on new purchases, should you need to buy something unexpected. Others may offer 0% APR on balance transfers, which can be a useful tool if you already have a card balance you can’t fully pay down.
The one thing that all cash-back cards have in common is the ability to earn rewards that can be redeemed exactly as they sound: as cash. Requesting your cash back as a statement credit will lower your card balance and take some pressure off your finances. Many cards also offer cash-back redemptions as a direct deposit or mailed check so you can make payments toward other obligations as well.
Are Cash-Back Credit Cards Worth It?
Cash-back cards generally fall into one of three categories:
- Flat-rate rewards, such as 2% cash back on every purchase.
- Rotating-category rewards, such as 5% cash back on a selection of purchase categories that update every quarter, then 1% cash back on remaining purchases.
- Fixed-category rewards, such as 6% cash back on groceries, 3% cash back on gas or 2% cash back on restaurant purchases, then 1% cash back on remaining purchases.
Pro Tip
Choose a rewards card that fits your spending habits naturally. If you spend plentifully on restaurants, you’ll want a card to reward dining but might not need a card with elevated rewards on groceries.
The best type of cash-back card will vary depending on your purchase habits. If you have a large amount of purchases in a specific category, such as groceries or gas, it makes sense to find a card that offers bonus cash for your frequent purchases. But if you want a “set it and forget it” card, a flat-rate cash-back card will likely make more sense for you. If you want to maximize your cash-back earnings, consider pairing a flat-rate card with one that offers a rewards-earning bump for where you shop most often.
To view rates and fees for Blue Cash Preferred® Card from American Express please visit this page.
To view rates and fees for Blue Cash Everyday® Card from American Express please visit this page.
ÂąEligibility and Benefit level varies by Card. Terms, Conditions and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by AMEX Assurance Company.
²Eligibility and Benefit level varies by Card. Terms, Conditions and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by AMEX Assurance Company. Car Rental Loss or Damage Coverage is offered through American Express Travel Related Services Company, Inc.