When making a purchase, there’s a good chance you’re using cash. In fact, according to a recent FinanceBuzz survey on how Americans pay for purchases, millennials are likely to have paid for something with cash in the last month. Additionally, millennials and Gen Xers are more likely to use a debit card than a credit card when paying for purchases.
But what if those spending habits mean you’re leaving money on the table? You might be surprised to discover how much you could be earning each time you swipe — when you responsibly use the right cashback credit card.
Imagine that you could earn at least 3% cash back just by using a credit card. Here’s how to do it and the best 3% cashback credit cards we can recommend.
- How cashback rewards work
- The best cards for getting (at least) 3% cash back
- Multiple cashback cards could get you 3% cash back more often
- The bottom line on cashback credit cards
How cashback rewards work
When you use a cashback rewards card, you get some of your purchase amount back. If you have a card that gives you 3% cashback rewards on gas and you spend $200 on gas this month, you’ll receive $6 back. That might not seem like a lot, but think about all the other purchases you make.
For example, the average consumer spent $17,684 on food and transportation in 2018, according to the Bureau of Labor Statistics. If you’d earned 3% cash back on all of those purchases, you’d be $530.52 richer. Sounds good, right?
As long as you pay off your balance each month so you aren’t paying interest, cashback rewards provide you with a way to get a little extra money. And many people like the idea (and the simplicity) of getting cold, hard cash back instead of earning miles or points.
While not every credit card offers a high rate of cash back, good cashback cards do exist. In this article, we’ll take a look at the best 3% cashback cards — and how to maximize their use.
The best cards for getting (at least) 3% cash back
|Card name||Best for||Welcome bonus||Rewards rate||Annual fee|
|Blue Cash Preferred Card from American Express||Groceries||Earn a $250 statement credit after spending $1,000 on purchases in the first 3 months||6% cash back at U.S. supermarkets (for first $6,000 per year) and on U.S. streaming services, 3% at U.S. gas stations and on eligible transit, and 1% on other purchases||$95|
|Bank of America Cash Rewards Credit Card||Category of your choice||Get $200 cash rewards bonus after spending $1,000 in the first 90 days||3% cash back on the category of your choice; 2% cash back at grocery stores and wholesale clubs (on the first $2,500 spent each quarter in the 2% and 3% categories combined); and 1% cash back on all other purchases||$0|
|Discover it Cash Back||Rotating categories||Automatically get an unlimited dollar-for-dollar match of any cash back you've earned at the end of your first year||5% cash back in quarterly rotating categories (including gas stations, grocery stores, restaurants, and Amazon.com), up to quarterly maximum; 1% cash back on all other purchases||$0|
|Capital One® SavorOne® Cash Rewards Credit Card||Dining and entertainment||Earn a $150 one-time cash bonus after spending $500 in the first 3 months||3% unlimited cash back on dining and entertainment, 2% at grocery stores (excluding superstores like Walmart and Target), and 1% cash back on all other purchases||$0|
|HSBC Cash Rewards Mastercard Credit Card||Cashback bonus||Earn 3% cash back during your first year (on up to $10,000 in spend) then 1.5% cash back||3% cash back (on the first $10,000 in purchases) for 12 months, then unlimited 1.5% cash back on all purchases||$0|
Blue Cash Preferred Card from American Express
One of the most generous cashback programs out there, the American Express Blue Cash Preferred offers 6% cash back at U.S. supermarkets (for first $6,000 per year) and on U.S. streaming services, 3% at U.S. gas stations and on eligible transit, and 1% on other purchases. Plus, you can earn a $250 statement credit after spending $1,000 on purchases in the first 3 months. That’s a fairly generous offer that only enhances the value of this card.
Even though there’s a $95 annual fee for this card, the expense can be well worth it. In fact, if you spend $6,000 on purchases at U.S. supermarkets during the year, you’ll be eligible for $360 in cash back — more than enough to offset the annual fee. Additional spending in other categories can make that cashback amount even bigger.
If you don’t like the annual fee, though, you still have the option of the Blue Cash Everyday Card from American Express, which comes with no annual fee and allows you to earn up to 3% cash back on purchases.
Bank of America Cash Rewards Credit Card
With the Bank of America Cash Rewards Credit Card, you can choose which category works best for your 3% cashback bonus. Choose from earning rewards for gas, online shopping, dining, travel, drug stores, or home improvement or furnishings. With this card, you can pick the category where you’re likely to do the bulk of your spending — and reap the benefits.
You’ll earn 3% cash back on the category of your choice; 2% cash back at grocery stores and wholesale clubs (on the first $2,500 spent each quarter in the 2% and 3% categories combined); and 1% cash back on all other purchases. You’re limited to $2,500 in combined 3% and 2% cashback purchases each quarter, but that still allows you to earn a high rewards rate on $10,000 in purchases each year.
There’s no annual fee with this card, and you can get $200 cash rewards bonus after spending $1,000 in the first 90 days.
Discover it Cash Back
Each quarter, the Discover it Cash Back announces a different spending category that earns 5% cash back. You’ll want to check the calendar each quarter to see which purchases provide a higher earnings rate. For example, one quarter might result in 5% cash back on restaurant and PayPal purchases, while another might earn 5% at Amazon.com. You might also get higher cashback earnings for gas or groceries in a certain quarter. However, there’s a quarterly maximum. Once you reach that threshold, you’ll earn 1% cash back on any further purchases.
Rather than offering a sign-up bonus based on spending during the first few months of having your account, the Discover it Cash Back actually pays out a bonus at the end of your first year, matching all the cash back you’ve earned.
This card also comes with no annual fee.
Capital One SavorOne Cash Rewards
If you do a lot of your spending on dining and entertainment, the Capital One SavorOne Cash Rewards Card might be the right choice for you. Get 3% unlimited cash back on dining and entertainment, 2% at grocery stores (excluding superstores like Walmart and Target), and 1% cash back on all other purchases. On top of that, you can earn a $150 one-time cash bonus after spending $500 in the first 3 months.
If you don’t mind paying an annual fee of $95, you can instead get the Capital One Savor Cash Rewards Card, which offers 8% cash back on tickets purchased through Vivid Seats (through January 2022), 4% unlimited cash back on dining and entertainment, 2% at grocery stores (excludes superstores like Walmart and Target), and 1% cash back on all other purchases. Plus, for the rest of 2019, this card also offers a monthly statement credit for a Postmates Unlimited membership. Plus, you can earn $300 cash bonus after spending $3,000 in the first 3 months.
HSBC Cash Rewards Mastercard
Rather than messing with categories and other restrictions, the HSBC Cash Rewards Mastercard offers 3% cash back (on the first $10,000 in purchases) for 12 months, then unlimited 1.5% cash back on all purchases. The real value comes in that ongoing anniversary bonus. Even with the regular rate of 1.5% cash back, you can earn a pretty hefty bonus each year.
This card comes with no annual fee and also has the benefit of a 0% APR (annual percentage rate) introductory offer on balance transfers. If you want to earn cashback rewards while paying down high-interest debt, this card might not be a bad choice.
Multiple cashback cards could get you 3% cash back more often
If you really want to make the most of your cashback cards, it makes sense to create a strategy where you use multiple cards based on when you’re most likely to get maximum rewards.
To make this work, you need to have an idea of your spending and look ahead to see when rotating categories are scheduled. For example, you might get the American Express Blue Cash Preferred and plan to spend the maximum $6,000 at U.S. supermarkets. However, you know you’ll probably spend more than $6,000 in groceries for the entire year, so maybe you check to see which quarter your Discover it Cash Back Card is offering a 5% cashback category that includes online stores where you could buy groceries. For that quarter, you use the Discover card, and the rest of the time, you use the Amex Blue Cash Preferred.
Once you reach the $6,000 limit for the Amex Blue Cash Preferred and the relevant quarter has passed with Discover, you can use either the Bank of America Cash Rewards Credit Card or the Capital One SavorOne Cash Rewards to keep getting 2% on groceries.
Here’s an example of how it could all potentially look:
|Card name||Rewards category||Date range||Spending limit|
|American Express Blue Cash Preferred||6% on groceries||Year-round||Up to $6,000 on purchases in the 6% cash back reward category|
|Discover it Cash Back||5% at Walmart.com, Amazon.com, and Target||October through December 2019||Up to $1,500 in purchases each quarter|
|Bank of America Cash Rewards Credit Card||3% on a category of your choice||Year-round||Up to $2,500 in purchases each quarter|
The bottom line on cashback credit cards
There’s no one right card or way to get at least 3% cash back with a credit card. In fact, which credit card (or cards) you use depends on your priorities and expectations.
Before choosing any credit card, make sure you review your own spending habits. What categories are you most likely to spend in? Where does your money go each month? Could you make the most cash back on groceries? Or a different spending category? When you understand how you use your money, you’re more likely to make a decision that makes sense for you.
It’s also important to be honest with yourself regarding how likely you are to be organized about your credit card spending. For example, while getting 5% in rotating categories might be nice, you might not want the hassle of remembering to log in each quarter to register for the higher earnings. You may be better off getting a couple different cards that offer higher year-round tiers in your most-used categories or opting for cards with unlimited cashback rewards instead.
On the other hand, for some consumers, creating a list of when they can get the best cashback rewards is a fun hobby and worth a little extra time. There’s nothing wrong with either approach. Just know who you are and what works best for you.
Finally, if you get involved in cashback rewards, it’s vital you only spend what you plan to. Don’t make extra purchases just to get the cash back. If you end up carrying a balance, there’s a good chance the interest you pay will end up offsetting any rewards you earn. Create a spending plan and then make sure you only use your credit cards to buy what you planned — and pay off the balance each month.
Once you get into the habit of maximizing your cashback rewards, you’ll be surprised at the benefits.
#1 Cash Back at Supermarkets
- $250 statement credit welcome offer
- 6% cash back on U.S. streaming services and at U.S. supermarkets
- 3% cash back at U.S. gas stations and on eligible transit
- 0% intro APR on purchases
- Terms apply