In general, cash-back credit cards with no annual fee have few drawbacks. Pros and cons of a cash-back card with no annual fee Credit cards that charge annual fees typically offer additional benefits, whether it’s a higher rewards rate or other perks, which could make it worth the cost, as long as you pay your full balance on time each month. For instance, if your card has a $75 annual fee, you’d have to spend $3,750 per year to earn your fee back if you receive 2% rewards on those purchases. If you tend to charge hundreds or thousands of dollars a month, a card with an annual fee can pay for itself in rewards. Consider other benefits that may be valuable to youĪre you looking for a card with no balance transfer fee or a 0% introductory APR? Do you want features like purchase protection, cellphone insurance or travel perks? Research the cards you’re considering to weigh the pros and cons of each. Otherwise, a flat-rate rewards card could deliver the most cash-back for you.
If you want a card for flexible spending and have a system to keep track of the categories, a card with rotating categories might be best. Decide the rewards structure that most benefits you Do the math to determine where you spend the most money. To do this, look at your recent bank statements and existing credit card statements. Determine your top spending categoriesĭo you dine out frequently? Take a lot of road trips? Or do you want a card that rewards you regardless of what you buy? Choose a card that fits your spending habits to maximize rewards. Follow these steps to choose the right cash-back card. How to choose the right cash-back cardĬhoosing the right cash-back card depends largely on your spending habits and what other benefits you look for in a credit card. It’s important to read the fine print before you choose your cash-back credit card. Other feesĬredit cards may charge late fees or cash advance fees. Otherwise, you might find yourself with more credit card debt. You should also refrain from using your cash-back card to earn rewards until the balance transfer is paid off. If you complete a balance transfer, you’ll likely have to pay a balance transfer fee of 3% to 5%. Some cash-back credit cards have balance transfer offers that let you move a balance from another credit card to your cash-back card, typically at a low introductory APR. Some cards offer a 0% introductory APR on purchases for a specified time as long as you make the minimum monthly payment, but once that expires, you’re generally subject to the card’s standard APR. If you don’t pay your balance in full when your bill comes due each month, you’ll accrue interest on the remaining balance. However, most cash-back credit cards have other fees, which could wipe out any rewards you’ve earned. You also don’t have to worry about spending a minimum amount of money to earn enough rewards to cover the annual fee and make the card worth carrying. “No annual fee” simply means that you don’t have to pay an annual fee to carry and use the credit card.
What does no annual fee on a cash-back credit card mean? Common categories include spending at gas stations, restaurants and grocery stores. These cards offer higher cash-back rates in specific spending categories that don’t change. Tiered cash-back cards are best for people who want to use a rewards card for a specific purpose. The simplest cash-back card to use, a flat-rate cash back card delivers the same value, typically 1% to 2%, on every qualifying purchase, regardless of the spending category. Rotating categoriesĬards with rotating spending categories, like Chase Freedom Flex and Discover it Cash Back, let you earn higher cash-back rates in categories that change quarterly - as long as you activate them. Others offer a flat-rate for every qualifying purchase. Some have spending categories or tiers of points depending on what you purchase. Types of cash-back credit cardsĬash-back credit cards vary in how they calculate rewards. In general, 1% cash back equals one cent of rewards per dollar spent, but rates can vary by card issuer and offer. With cash back cards, you earn a percentage for every dollar you spend. Some card issuers allow you to redeem your rewards for gift cards or merchandise, as well. Most often, you’ll receive cash back in the form of a statement credit, although you may be able to request a check or direct deposit into your bank account. What is a cash-back credit card?Īs the name implies, a cash-back credit card offers a percentage of money back on eligible purchases. 1% cash back on eligible purchases right away.