I started my credit card journey as a new teacher on a shoestring budget. I'll never forget the relief I felt when I realized I could redeem my first American Express Membership Rewards bonus for gift cards to buy a professional wardrobe. I didn't care or have the mental energy to learn that this wasn't technically the most valuable use of those points — I was just happy I could stop stressing about that expense.
I quickly realized I needed to keep my card strategy simple while I adjusted to the harsh realities of adulthood, so I set my sights on cash-back rewards. I got the Citi Double Cash® Card (see rates and fees), which allowed me to earn 2 cents back on every dollar I spent outfitting my classroom (shoutout to teachers buying their own pencils). You'll earn 2% cash back on purchases ; 1% when you buy and 1% as you pay. Then, I could redeem my rewards for whatever expense I faced, from my share of a group beach trip to an unexpectedly high electric bill.
The simplicity and flexibility of cash-back earning and redeeming were perfect for me then. But even now, after a decade of traveling on credit card rewards and with almost 20 cards in my wallet, I still love the versatility of cash-back rewards.
Here's why you might want to take a page out of my cash-back book.
Increase cash flow
It's easy to get caught up in the glamor of aspirational travel that travel rewards credit cards make possible. Who wants to talk about electric bills when we can talk about flying across the world in a lie-flat seat?
However, when you're on a limited budget and an unexpected expense comes up, having a stash of cash rewards you can redeem is just as exciting as booking a dream trip. If you're in a season of tight finances, a cash-back card is a perfect way to build in some cushion and be better prepared for whatever comes up, as long as you follow our first commandment of credit cards and pay off your balances in full each month.
Related: The best cash-back credit cards
Keep things simple
We get it if you want to use your rewards to book complicated multi-stop, open-jaw, international airline award redemptions using airline award chart sweet spots. And we can help you reach that goal.
But when life gets chaotic, figuring out how to maximize your travel rewards can feel overwhelming. For those times, cash back is the way to go.
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Each cash-back card is different, but they almost always have more straightforward earning structures and redemption options than their travel rewards counterparts. Typically, you can use the rewards to offset charges on your credit card statement, so you can use them without having to spend hours checking for award availability.
Related: How to redeem cash-back rewards from your credit card
Complement your points and miles
Trip costs can add up even when you're using points and miles to travel. In many cases, you still have to pay cash for taxes and fees on award redemptions, and you'll need to pay for your meals, transportation and activities while you travel.
These expenses are harder to cover with points and miles, but you can put them on your cash-back card and redeem your rewards for a statement credit to cover these expenses. This way, you can use credit card rewards to cover even more of your trip and minimize out-of-pocket costs.
Related: How to travel on a budget
Maximize your purchases
In some cases, you can add a cash-back card to your portfolio to supplement your travel rewards cards. For instance, the Chase Freedom Flex is a cash-back card earning 5% back on quarterly categories. If you also have a card that earns transferable Chase Ultimate Rewards points, like the Chase Sapphire Preferred, you can combine your rewards from both cards and transfer them to Chase's 14 loyalty partners.
This combination maximizes your earnings since the Freedom Flex usually earns bonus points on purchases that would only earn 1 point per dollar on the Sapphire Preferred. Capital One and Citi also allow you to transfer your cash-back rewards to points and miles with the right card pairings, so you have several options to use cash-back cards to boost your travel rewards balances.
Related: The best credit card pairings
Infrequent travel
There could be several reasons travel might not be a focus for you right now, such as being between jobs or caring for loved ones. While it can be great to stockpile some travel rewards for when you're ready to hop back on a plane, cash-back cards give you rewards you can use regardless of your life circ*mstances.
If you're grounded for a bit, cash-back rewards offer flexibility that might work better for your current lifestyle.
Related: The best credit cards for everyday spending
The best cash-back credit cards
When choosing a cash-back card, it's easiest to get one without an annual fee. That way, you're earning rewards from the start without worrying about whether you're earning enough to justify the annual fee cost. If you're unsure where to start, check out these options.
Citi Double Cash® Card
The Citi Double Cash® Card (see rates and fees) earns 2% on all purchases (1% when you buy and 1% as you pay), so you know you're getting a good return on your purchases without having to worry about whether they fall into a bonus category.
For more details, check out our full review of the Citi Double Cash.
Apply here: Citi Double Cash
Capital One SavorOne Cash Rewards Credit Card
The Capital One SavorOne Cash Rewards Credit Card (see rates and fees) earns 3% back on dining, entertainment, grocery store purchases and eligible streaming services (excluding superstores like Walmart® and Target®), 5% Cash Back on hotels and rental cars booked through Capital One Travel (terms apply), and 8% Cash Back on Capital One Entertainment purchases. It earns 1% back on all other purchases.
New card members can earn a one-time $200 cash bonus after spending $500 on purchases in the first three months from account opening.
For more details, check out our full review of the Capital One SavorOne.
Apply here: Capital One SavorOne
Blue Cash Everyday® Card from American Express
The Blue Cash Everyday® Card from American Express earns 3% back on the first $6,000 spent per year at U.S. supermarkets (then 1%), 3% back on the first $6,000 spent per year on U.S. online retail purchases (then 1%), 3% back on the first $6,000 spent per year at U.S. gas stations (then 1%) and 1% back on all other purchases.
In addition, new card members earn a $200 welcome bonus after spending $2,000 on their card within the first six months of card membership.
For more details, check out our full review of the Blue Cash Everyday.
Apply here: Amex Blue Cash Everyday Card
Bank of America® Customized Cash Rewards credit card
The Bank of America® Customized Cash Rewards credit card earns 3% back in your monthly choice of the following categories: gas and EV charging stations, dining, online shopping (including cable, streaming, internet, and phone services), travel, drug stores or home improvement. It also earns 2% back at grocery stores and wholesale clubs and 1% back on all other purchases. After you spend $2,500 in the combined bonus categories each month, you'll earn 1% back on these purchases.
New card members receive a $200 online cash rewards bonus after making at least $1,000 in purchases in the first 90 days of account opening.
For more details, check out our full review of the Bank of America Customized Cash Rewards card.
Apply here: Bank of America Customized Cash Rewards card
Bottom line
Regardless of your current spending habits and goals, you'll benefit from keeping a cash-back card in your wallet. Whether you're looking for simplicity or ready to level up your current portfolio, cash-back cards offer the flexibility you need.
Related reading:
- Cash back vs. travel rewards points: How to choose a credit card
- How to choose a cash-back credit card
- Store vs. cash-back credit cards: Which one should I get?
- How do cash-back credit cards work?
- Are cash-back cards worth it?
Updated 08/22/23
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.
