We all have expenses. Whether it’s gas for our commute, grocery shopping, entertainment, office supplies, or online shopping, Americans are constantly spending money. But while we’re spending, saving money by using specific credit cards for those same purchases is also possible. And money back in your pocket is never a bad deal.
While a single credit card that gets you 5% cash back on everything is hard to come by, there are plenty of ways to earn 5% or more in cash back on your purchases. Earning this great cashback rate does require a small amount of planning and strategy, though. So, in this article, you’ll learn how cashback rewards work and how you can save 5% or more on many of your everyday purchases.
- How cashback rewards work
- Credit Cards that will give you (at least!) 5% cash back
- Multiple cashback cards could get you 5% cash back more often
- The bottom line on these 5% cashback credit cards
How cashback rewards work
Earning cash back on your purchases is simple — you pay with your credit card, and you earn a percentage of each purchase back as “cash.” Scoring cash back is a great way to save money on expenses you’d normally pay for anyway. While some cards have general rewards like “1.5% cash back on all purchases,” other cards have specific spending categories like “6% cash back on groceries.” These savings may sound small, but they can make a real difference over the course of a year.
While some people argue that having a credit card that earns points or miles may be “better,” there’s nothing wrong with putting money in any form back in your pocket. For some time, I used cashback cards to save on my monthly bills, and it helped tremendously. So if you’re looking to open a new credit card and debating between cash back versus miles, going with cash back can be a great choice.
While high rates of cashback rewards aren’t typical, they do exist. If you’re wondering which credit card will give you 5% cash back on all your purchases, unfortunately, that’s hard to come by. However, there are some cards that have specific spending categories where you can earn even more than 5% cash back.
Keep reading, and I’ll show you the best cashback credit cards available and how you can use them strategically to earn the most cash back possible.
Credit cards that will give you (at least!) 5% cash back
|Card||Best for||Welcome bonus||Rewards rate||Annual fee|
|Blue Cash Preferred Card from American Express||U.S. supermarkets and U.S. streaming subscriptions||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|
|Chase Freedom Card||Rotating categories||$200 cash back bonus after spending $500 in the first 3 months||5% cash back in rotating bonus categories (up to $1,500 in combined purchases per quarter) and 1% cash back on all other purchases||$0|
|U.S. Bank Cash+ Visa Signature Card||Selected spending categories||$200 cash back after spending $500 in the first 90 days||5% cash back on two chosen categories (up to $2,000 quarterly), 2% cash back on one chosen everyday category, and 1% cash back on all other eligible purchases||$0|
|Discover it Cash Back Card||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|
|Chase Ink Business Cash Card||Select business expenses:
Office supply stores, plus internet, cable, and phone services
|Earn $500 bonus cash back after spending $3,000 in the first 3 months||5% cash back at office supply stores and on internet, cable, or phone services (up to $25,000 combined annually); 2% cash back at gas stations and restaurants (up to $25,000 combined annually); and 1% cash back on everything else||$0|
Blue Cash Preferred Card from American Express
With the Blue Cash Preferred Card from American Express, you can earn even more than 5% cash back on specific categories. This is one of the best credit cards for buying groceries, as you can earn 6% cash back on purchases with U.S. supermarkets (on up to $6,000 per year) and select U.S. streaming services. If you were to spend $4,000 a year on groceries for your family, along with $200 a year in streaming services, that would net you $252 cash back. The cash back earned is given as Reward Dollars that can be redeemed as a statement credit.
Some people avoid this card because it has a $95 annual fee. But after earning $252 in cash back from your spending and then subtracting the annual fee, you’ll still be left with $157 in cash back. That’s still nearly a 4% return on your spending, which is great. To add to the savings, this card also comes with a great welcome offer. You can earn a $250 statement credit after spending $1,000 on purchases in the first 3 months.
In addition, the Blue Cash Preferred Card from American Express is not only a great card for buying groceries, it’s also one of the best credit cards for gas.
The bottom line: If you’re spending consistently at U.S. supermarkets and pay for U.S. streaming subscriptions, this card could make a difference in your budget.
Chase Freedom Card
For anyone looking to earn valuable cash back, the Chase Freedom Card is a must-have for its rotating categories. Each quarter, Chase announces new spending categories that can earn you 5% cash back in rotating bonus categories (up to $1,500 in combined purchases per quarter) and 1% cash back on all other purchases. If maximized, you’ll earn $75 every three months, which adds up to $300 in yearly savings.
The only catch is you’ll need to activate these spending categories each quarter. You’ll get an email alert prior to the start of the quarter, though. You can also activate the categories in your account portal.
In 2020, the categories for spending are the following:
- January through March: Gas stations; internet, cable and phone services; select streaming services (includes Netflix, Sling, Vudu, FuboTV, Apple Music, SiriusXM, Pandora, Spotify, Hulu and ESPN+)
- April through June: Grocery stores, gym and fitness club memberships
- July through September: Amazon.com, Whole Foods
- October through December: Walmart, PayPal
These potential savings come with an intro 0% APR (annual percentage rate) for 15 months on purchases. Also, the card comes with a generous sign-up bonus of $200 cash back bonus after spending $500 in the first 3 months and a $0 annual fee.
The bottom line: If your spending is more flexible or your budget tends not to be heavy in one area (like groceries or gas), the Chase Freedom Card is a great choice to earn you significant cash back.
U.S. Bank Cash+ Visa Signature Card
U.S. Bank tends to be a bit overlooked in the credit card world, but the U.S. Bank Cash+ Visa Signature Card shouldn’t be skipped. It packs a punch with its 5% cash back on two chosen categories (up to $2,000 quarterly), 2% cash back on one chosen everyday category, and 1% cash back on all other eligible purchases. This card is similar in concept to the Chase Freedom, except you get to choose your two preferred spending categories rather than having them assigned.
The 5% quarterly categories you can choose from for 2019 are as follows:
- TV, internet, and streaming services
- Fast food
- Cell phone providers
- Department stores
- Home utilities
- Select clothing stores
- Electronic stores
- Sporting good stores
- Movie theatres
- Gyms and fitness centers
- Furniture stores
- Ground transportation
Since you can select your spending categories each quarter, using this card is a great way to strategize your purchases ahead of time. If you know you’ll be traveling and eating out during July through September (Q3), you can select those two categories to earn up to 5% cash back. If you were to maximize the spending categories at $2,000 with 5% cash back, you could earn up to a maximum of $100 cash back each quarter.
On top of the 5% categories, you can also earn unlimited 2% cash back on one of these three categories you can select from:
- Grocery stores
- Gas stations
While the 2% categories are a nice addition, they’re not the best feature of this card, in my opinion. The other cards on this list all surpass this earning rate in similar categories.
The bottom line: If you have larger purchases across various categories or are planning specific purchases in the categories listed above, the U.S. Bank Cash+ Visa Signature Card is the card for you.
Discover it Cash Back Card
The Discover it Cash Back Card also comes with rotating categories. Keep in mind that these spending categories also need to be activated in your account portal. Once you activate your rewards category, you’ll earn 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.
The 5% categories for 2019 for the Discover it Cash Back Card are the following:
- January through March: Grocery stores
- April through June: Gas stations, Uber, and Lyft
- July through September: Restaurants and PayPal
- October through December: Amazon.com, Target, and Walmart.com
What does all this mean? Well, if you were to spend $1,500 each quarter in the designated categories, you’d end up with $300 in cash back at the end of the year. To add to the savings, you’ll automatically get an unlimited dollar-for-dollar match of any cash back you've earned at the end of your first year. This would put you at a remarkable $600 in cash back.
While there are incredible earning opportunities with the Discover it Cash Back Card, there are even more perks you get. You’ll have an intro 0% APR on purchases for 14 months. You will also have an intro 0% (for transfers that post to your account by by October 10, 2020) for 14 months.
The bottom line: The Discover it Cash Back Card is great for someone looking to spend in the designated categories heavily in their first year. It’s also good for those who may also need an intro APR for their purchases.
Chase Ink Business Cash Card
If you’re a small business owner looking to save on your business expenses, the Chase Ink Business Cash Card could be a great fit for you.
With the Chase Ink Business Cash Card, you’ll earn 5% cash back at office supply stores and on internet, cable, or phone services (up to $25,000 combined annually); 2% cash back at gas stations and restaurants (up to $25,000 combined annually); and 1% cash back on everything else. This card also offers 5% cash back on each dollar spent on Lyft rides.
Also, you can get earn $500 bonus cash back after spending $3,000 in the first 3 months. With this earning potential, you could easily put thousands of dollars back into the bottom line of your business.
Along with these earnings, this card will protect you during your travels with coverages such as auto rental collision damage waiver (primary coverage) and roadside assistance.
The bottom line: The Chase Ink Business Cash Card is excellent for a business owner looking to add hundreds of dollars to their bottom line.
Multiple cashback cards could get you 5% cash back more often
While using just one of the cards listed above could save you a significant amount of money, none of them has the potential to maximize every single one of your purchases.
We all spend money in many different areas. From shopping, gas, grocery stores, eating out, and entertainment, there’s plenty of cash being spent — and cash back to be earned. Unfortunately, there’s no single credit card that will earn you at least 5% in all of these categories. However, there’s still a way to get 5% cash back more often.
If you were to use these three cards simultaneously, you could easily achieve that goal of 5% cash back. Here’s an example strategy for a regular consumer that could earn you over $1,000 in cash back over the course of one year.
|Card name||Blue Cash Preferred Card from American Express||Discover it Cash Back||Chase Freedom Card|
|Rewards category||6% at U.S. Supermarkets and on U.S. streaming subscriptions||5% on rotating categories||5% on rotating categories|
|Estimated yearly spending||$6,000||$6,000 ($1,500 each quarter)||$6,000 ($1,500 each quarter)||Total money spent = $18,000|
|Cash back earned||$360||$300; plus, in the first year, Discover will match all cash back earned, so double this to $600||$300|
|Net cash back earned||$265||$600||$300||Total cash back earned = $1,165|
While spending $1,500 quarterly on each of the rotating categories can seem a bit daunting, you can accomplish it through planning:
- For example, Q4 is the holiday season where people tend to spend a lot of money on gifts. This is likely why Discover has the categories for that time period set as Amazon.com, Target, and Walmart.com. So when you’re price shopping, make sure to factor in the cashback savings you’ll get on your gifts if you shop at one of those websites.
- Similarly, if the Chase Freedom Card has the category of groceries set for April through June, you could plan to stock up on all your canned goods and non-perishables during that time to get the most out of your cashback potential without unnecessary spending.
If you were to adopt the multi-card strategy outlined above, you could earn $1,165 in cash back over one year. On your spending of $18,000, that’s a 6.5% return. This doesn’t even take the potential welcome bonuses of the Blue Cash Preferred and Chase Freedom cards into consideration, so earnings can soar even higher.
Just be sure to never spend money just for the sake of earning cash back. To make the most of cashback rewards, you need to pay off your balance each month. Otherwise you’ll be paying interest fees, and that would defeat the whole purpose of saving money on your expenses.
The bottom line on these 5% cashback credit cards
The cashback hobby is a great one, as you can feel the immediate impact in your wallet. That said, there’s no “best” cashback credit card. The best cashback credit card is the one that will earn you the most for your expenses.
When deciding on your next move, consider a credit card (or cards) that reflect your lifestyle, typical expenses, and financial needs. Hopefully this article gave you some insight into which cards might be a good fit for you and how you can use multiple cashback cards together to maximize your savings.