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The Blue Cash Preferred card from American Express is a tiered cash-back card, with bonus categories including US supermarkets.

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  • Some cash-back cards, like the Citi® Double Cash Card, earn the same amount of cash back on every purchase you make.
  • Other cards, like the Blue Cash Preferred® Card from American Express, have bonus categories, so you can earn more cash back on certain purchases. 
  • The other two types are cash-back cards with bonus categories that change every quarter, and cards that let you customize where you earn the most rewards.
  • Read Insider’s guide to the best cash-back credit cards.

When most people think about the different types of credit cards, they typically think of cash-back cards, secured credit cards, premium credit cards, and travel cards.

Personally, when I first got a credit card a few years ago, I didn’t understand the differences between these broad credit card categories, let alone the differences between the specific types of cash-back credit cards. I jumped straight in and applied for the Discover it® Cash Back.

Don’t get me wrong, it was a great credit card, and worked out well for me. But I got lucky in that regard. The right way to do it would have been to understand my options and take a few basic steps before applying for a credit card.

A cash-back credit card offers a percentage-based cash reward for every dollar you spend using the card. For example, the Capital One Quicksilver Cash Rewards Credit Card offers 1.5% cash back on all purchases.

When deciding on which credit card to apply for, it’s important to understand the four major types of cash-back credit cards available to you.

Insider’s Featured Cash Back Credit Cards

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Earn unlimited 2% cash rewards on purchases.

$200 cash rewards bonus after spending $1,000 in purchases in the first 3 months from account opening

Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.

$200 cash back after spending $1,500 on purchases in the first 6 months of account opening

5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. 5% cash back on travel purchased through Chase Ultimate Rewards®. 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1% cash back on all other purchases.

$200 after spending $500 on purchases in the first three months from account opening

We’re focused here on the rewards and perks that come with each card. These cards won’t be worth it if you’re paying interest or late fees. When using a credit card, it’s important to pay your balance in full each month, make payments on time, and only spend what you can afford to pay.

1. Flat-rate cash-back cards

A flat-rate credit card is the most common and basic type of cash-back credit card. A flat rate card gives you the same percentage discount on every dollar you spend no matter the category of spending. It’s what most people think of when they think of a cash-back credit card.

Most cards in this category will offer 1.5% to 2% cash back for every dollar spent. For example, a 1.5% cash back card would reward you with $1.50 for every $100 you spend using the card.

Examples include:

2. Cash-back credit cards with bonus categories

A cash-back credit card with bonus categories, also known as a tiered credit card, offers different percentages of money back depending on the type of purchase you’re making.

For example, the Blue Cash Everyday® Card from American Express is a tiered cash-back card that offers 3% cash back at U.S. supermarkets on up to $6,000 per calendar year (then 1% back), 3% cash back at U.S. gas stations on up to $6,000 per calendar year (then 1% back), 3% cash back on online retail purchases on up to $6,000 per calendar year (then 1% back), and 1% cash back on everything else (cash back is received in the form of Reward Dollars). 

The important piece to note is that the “all other” spending reward is typically less than a flat-rate credit card, so you need to make sure that you will spend enough in the higher reward categories to offset that difference.

Other tiered cash-back cards include:

  • Blue Cash Preferred® Card from American Express — Earn 6% cash back at U.S. supermarkets (on up to $6,000 per calendar year, then 1% back), 6% back on select U.S. streaming subscriptions, 3% back at U.S. gas stations and on transit, and 1% back on everything else (cash back is received in the form of Reward Dollars).  The annual fee is $95 
  • Capital One Savor Cash Rewards Credit Card
    — Earn 4% cash back on dining, entertainment, and eligible streaming services, 3% back at grocery stores, and 1% back on everything else

3. Rotating bonus category cash-back cards

A rotating category credit card was my first credit card — the Discover it® Cash Back.

Most cards in this category offer 1% cash back on every purchase, except for the bonus categories of the quarter. In most cases, the card will offer 5% in cash back on these categories, and you’ll usually earn 5% back on up to $1,500 in spending per quarter (from October 1 to December 31, 2022, you can earn 5% cash back at Amazon.com and on digital wallets on up to $1,500 in purchases after enrollment, then 1%).

Typical categories that are eligible for bonuses include gas stations, grocery stores, Amazon, and more.

The most popular cash-back cards with rotating bonus categories are the Discover it® Cash Back and the Chase Freedom Flex℠. Both cards earn 5% cash back on quarterly bonus categories (on up to $1,500 in purchases each quarter, then 1% back) and 1% cash back on everything else. The Chase Freedom Flex card’s Q4 2022 bonus categories are PayPal and Walmart, and the Discover it® Cash Back card’s Q4 bonus categories are Amazon.com and digital wallets. 

4. Cash-back cards with customizable bonus categories

Last on the list is the most complex type of cash-back card.

A customizable card is like a tiered credit card, but you get to choose which spending category gets the higher reward. It’s an awesome perk that ensures you get rewarded for your specific spending habits.

The most popular example of a cash-back card with customizable rewards categories is the Bank of America® Customized Cash Rewards Credit Card
. It earns 3% cash back from your choice of category from the following list of options:

  • Gas
  • Online shopping
  • Dining
  • Travel
  • Drugstores
  • Home improvement/furnishings

You’ll also earn 2% cash back at grocery stores and wholesale clubs, and 1% back on everything else. Your bonus cash back is capped at $2,500 in spending per quarter, after which you’ll earn 1% cash back. 

How to pick the right type of cash-back card for you

Picking a credit card isn’t rocket science, but there are a couple of things that can help you make an informed decision and earn the most rewards from your credit card.

One of those things is understanding what your options are, like the four types of cash-back credit cards listed above. Another is taking these four simple steps when researching and applying for your next card:

Step 1: Check your credit score

First things first, you need to know your credit score before applying for a credit card.

Many cash-back and premium credit cards require good or excellent credit scores. If you don’t have a good credit score right now, you might be better off applying for a credit card designed for someone with fair credit and taking the time to build up your credit score.

Step 2: Analyze your past spending

Understanding your spending habits is important to ensure you pick a credit card that will reward your spending.

For example, the majority of my credit card spending is on dining out, travel, and groceries. Since I don’t commute to work in a car, I don’t spend much money on gas, and I don’t do a whole lot of online shopping either.

It sounds pretty simple (because it is), but when I pick a new credit card, I pick one that will reward my spending categories and not one that offers great gas or Amazon rewards.

Step 3: Decide on the right type of card

This is where understanding the four types of cash-back credit cards comes into play.

If you’re seeking a simple and straightforward option, then a flat-rate or even tiered credit card is your solution. You may not get the absolute most possible rewards, but you’ll earn a steady stream of cash back with minimal effort.

If you’re open to optimizing your spending and putting in some work to maximize rewards, then a rotating category credit card or customizable category credit card could be right for you.

Step 4: Find your card and apply

Once you’ve done the research to understand your credit score, your spending habits, and the type of cash-back card you want, it’s time to narrow down your options and find the best card that fits your needs.

And then … apply! Here’s our guide to the best cash-back credit cards, and even a list of top small-business cash-back cards to consider.

Don’t forget to take advantage of all the perks that your new credit card has to offer. Also, remember that arguably the most important piece of advice with credit cards is to use them responsibly. Once you receive your card, make sure to spend within your means and pay the card off on time and in full every month.

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