Why You Should Have A 2% Cash Back Card

Money is king with regards to bank card rewards. Most rewards credit score cardholders (55 %) made a money again redemption between Feb. 2022 and Feb. 2023, in keeping with a Bankrate survey. That compares with simply 16 % who redeemed for a free resort keep and 13 % who secured a free flight.

I’m a giant proponent of money again bank cards myself. I respect the power to get a reimbursement on purchases I’d have made anyway. In contrast to many journey playing cards, money again playing cards are typically very easy. There’s additionally common attraction — who couldn’t use additional cash, proper? And most money again playing cards don’t cost annual charges.

Particularly contemplating the excessive value of residing as of late, getting a rebate on all the things you purchase can add up. In 2023, my household racked up greater than $2,300 in money again utilizing money again playing cards.

After all, in the event you carry a steadiness, you must prioritize your rate of interest, because the common bank card price is over 20 %. Concentrate on paying off your debt on the lowest attainable value (maybe through a high steadiness switch card). As soon as that’s performed, then you possibly can go after rewards extra aggressively.

What’s one of the best bank card to have?

The excessive finish of the mass-market money again house is 2 % again on each buy. Examples embrace the Wells Fargo Lively MoneyⓇ Card (2 % money rewards on purchases) and the Citi Double MoneyⓇ Card (which technically provides 1 % again if you purchase one thing and one other 1 % if you pay it off). The PayPal Cashback Mastercard* is one other intriguing choice; it provides 3 % money again if you take a look at with PayPal and a couple of % money again on different purchases.

For those who can keep away from curiosity by paying your bank card payments in full, it’s arduous to high a easy no-annual-fee card that provides you a minimum of 2 % money again on each buy. I was afraid to offer that reply. It’s somewhat boring, proper? I used to call flashier playing cards just like the Chase Sapphire ReserveⓇ and The Platinum CardⓇ from American Categorical. Individuals would at all times nod after I talked about perks equivalent to airport lounge entry and first-class upgrades. And people are nice playing cards — for some individuals.

However even with all of their varied credit and advantages, the very fact is, they’re costly playing cards to carry. Most individuals can’t (or received’t) spend that a lot on an annual payment ($550 or $695 per yr, respectively) for a bank card. Actually, most of us don’t journey sufficient to maximise the advantages anyway.

Area of interest choices with even greater money again rewards

There are some under-the-radar choices that give much more than 2 % again on each buy. For instance, the Farmers Insurance coverage Federal Credit score Union Crystal VisaⓇ* provides 3 % money again on each buy made in a cardholder’s first 12 months with the cardboard (as much as $10,000 in purchases per month-to-month billing cycle). That drops to a still-strong 2.5 % money again on all the things (as much as the $10,000 month-to-month spending cap) in yr two and past. There’s a $99 annual payment which is waived the primary yr. Anybody can be a part of Farmers Insurance coverage Federal Credit score Union by changing into a free member of the American Client Council, although an even bigger impediment is that potential cardholders must have a checking or financial savings account with the credit score union, too.

The Alliant Cashback VisaⓇ Signature Credit score Card* additionally provides 2.5 % money again on all the things as much as a $10,000 month-to-month spending restrict. However whereas the Farmers Insurance coverage card doesn’t provide any rewards past the $10,000 month-to-month restrict, the Alliant card nonetheless provides a good 1.5 % again. The Alliant Cashback Visa Signature doesn’t assess an annual payment, however cardholders are required to have an Alliant Excessive-Price Checking account with e-statements, a minimum of one month-to-month digital deposit and a median each day steadiness of $1,000 or extra.

If you wish to keep away from annual charges

The Uncover itⓇ Miles card offers 1.5X miles on all purchases and, as a welcome provide, it matches all miles earned throughout the first yr, on the finish of the primary yr. This card might basically be used as a 3 % money again card within the first yr (dropping to 1.5 % after that). Miles may be redeemed for assertion credit and checking account deposits (mainly money again) and likewise used to offset journey purchases.

For those who’re solely going to make use of one card over the lengthy haul, then I’d vote for a card just like the Wells Fargo Lively Money, Citi Double Money or PayPal Cashback Mastercard that basically provides 2 % money again on most (or all) purchases with out an annual payment. Frequent PayPal customers might push their blended return effectively over 2 % since PayPal purchases earn 3 % again.

For those who’re keen to place up with some further restrictions, equivalent to redeeming right into a separate account held with a specific monetary establishment, then the ConstancyⓇ Rewards Visa SignatureⓇ Credit score Card*, TD Double UpSM Credit score Card* and SoFi Credit score Card* match the invoice, too.

Or, like I stated, the aforementioned Farmers Insurance coverage and Alliant choices is likely to be even higher in the event you’re keen to pay the annual payment and leap by these further hoops.

The multi-card technique

For those who’re a maximizer who’s keen to juggle completely different playing cards for various purchases, you possibly can earn 3, 4, 5, generally even 6 % money again on sure purchases.

As an example, I’m an enormous fan of the Blue Money Most popularⓇ Card from American Categorical. It provides 6 % money again at U.S. supermarkets (on as much as $6,000 in annual spending, then 1 % after that). Cardholders additionally get 6 % money again on choose U.S. streaming subscriptions and three % money again on U.S. fuel station purchases and public transit. However since different eligible purchases earn simply 1 % money again, that’s the place having a 2 % card comes into play.

To start out, determine the place you spend probably the most cash and lean into these classes (groceries, eating, journey, fuel or one thing else). No matter it’s, maximize it. However since most playing cards with profitable bonus classes solely give 1 % money again on “all the things else,” your 2 % money again card is a wonderful complement.

The underside line

There’s a great place for a no-annual-fee 2 % money again card in each pockets, whether or not it’s the cardboard you pull out for each buy or a part of a mix-and-match technique.

Have a query about bank cards? E-mail me at and I’d be joyful to assist.

*The details about the PayPal Cashback Mastercard®, Farmers Insurance coverage Federal Credit score Union Crystal Visa, Alliant Cashback Visa Signature Credit score Card, Constancy® Rewards Visa Signature® Credit score Card, SoFi Credit score Card and TD Double Up℠ Credit score Card has been collected independently by The cardboard particulars haven’t been reviewed or authorized by the cardboard issuer.

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