Although the world is a pretty crazy place and there’s a lot out there to worry about these days, we can at least find solace in the fact that we’re living in a golden age of cash-back credit cards, right?
The basic principle of cash-back cards is simple: when you make a purchase, a percentage of what you spend will come back to you in the form of a statement credit, a direct deposit into a bank account, or even an old-fashioned paper check sent in the mail. As opposed to the complex reward systems often offered by travel credit cards, for instance, the return of some cold, hard cash is pleasantly straightforward!
That being said, there are still some considerations to make when contemplating the huge variety of cash-back credit cards available to consumers today. Chief among them is the fact that you’ll need a good credit score at the very least in order to get approved for the most desirable cards. Generally speaking, the high 600s is considered the bare minimum; a score in the 700s is even better. If you’re not quite at this level yet, you might first consider some other cards in order to keep improving your score.
Even with a strong credit score, however, you still have to choose between the many cash-back cards out there. In this article, we’re going to look at three of the most popular choices: the Chase Freedom card, the Discover It (stylized as Discover it) card, and the Citi Double Cash card. None of these cards charges an annual fee, so it’s all about the rewards here!
So, which of these three is the best choice for you when it comes to making everyday purchases? Continue reading to find out.
But First, an Important Note…
Cash-back credit cards are an excellent way to put some money back in your pocket, but only if you use them responsibly! There are two main ways in which cash-back cards can actually hurt rather than help you financially.
First, new users of cash-back credit cards often fall into the trap of simply spending more money than they used to largely because it’s enticing to watch those cash rewards stack up. It’s important to remember that cash-back cards only return a small percentage of the money that you spend, and so you’ll never truly “make” money by making more purchases! Cash-back credit cards work best for your finances when you only make the same purchases that you would have made without them.
Additionally, cash-back cards only help you financially if you pay them off before you’re charged interest on your purchases. Even 5% cash back pales in comparison to APRs of over 20%, which is what many of these cards offer users even with good credit scores. With that in mind, we won’t be discussing interest rates in our reviews of these cards. If you’re interested in learning more about them, you can follow the links to the cards’ individual webpages located earlier in this article.
Now, on to the good stuff!
Chase Freedom Card
The Chase Freedom card (not to be confused with the Chase Freedom Unlimited card) is one of the most popular cash-back credit cards available today, and for good reason. It offers 1% cashback on every purchase that you make, as well as 5% cashback on quarterly categories that rotate every three months throughout the year.
So far this year, these categories have included:
Quarter 1: Gas stations, tolls, drug stores
Quarter 2: Home improvement stores, grocery stores
Quarter 3: Gas stations, select streaming services
Although card users have no say regarding what categories will earn this fantastic 5% cashback, you can see that these are categories that most of us spend quite a bit of money on throughout the year.
It’s important to remember that in order to receive this 5% cash-back, you have to actively enroll your card in the new offer every three months. This process takes less than a minute, but it does require you staying on top of things in regard to your credit card.
Finally, it’s also worth noting that the Chase Freedom card offers a $150 sign-on bonus if you spend $500 on purchases within three months of opening your card. This is a one-time deal, but an extra $150 is certainly nothing to sneeze at.
Discover It Card
Simply put, the Discover It card works very similarly to the Chase Freedom card. You’ll receive 1% cashback on all purchases, plus 5% cashback on categories that rotate quarterly throughout the year. Like in the case of the Chase Freedom card, you can receive this 5% cashback on up to $1,500 of spending per quarter.
So far this year, these categories have included:
Quarter 1: Grocery stores
Quarter 2: Gas stations, ride-sharing services
Quarter 3: Restaurants, PayPal
One key difference between the Discover It card and the Chase Freedom card is the sign-on bonus; the Discover It card will double all the cashback that you receive during your first year! If you spend a lot with this card, that can potentially equal a lot of money.
Citi Double Cash Card
Whereas the Chase Freedom card and the Discover It card function quite similarly, the Citi Double Cash card does something else; it offers a flat rate of 2% cashback on every purchase you make! To be more exact, you receive 1% cashback when you make a purchase and another 1% cashback when you pay your bill.
Although 2% seems less appealing than 5% at face value, these savings apply across the board, not just on certain categories. Additionally, with the Citi Double Cash card there’s no need to stay on top of things by enrolling in new categories every three months.
It’s worth noting that the Citi Double Cash card doesn’t offer a sign-on bonus, but once again, simplicity is key here!
At the end of the day, there’s no bad choice among these three cards. None of them feature any fees annual or otherwise, so if used responsibly they can all play a role in your credit card portfolio.
If you’re looking for a straightforward cash-back card that you’ll never have to think twice about, the Citi Double Cash card is arguably the best choice on the market today. If you’re serious about collecting as much cashback as possible, it might even make sense to carry all three cards! You can use the Chase Freedom card and the Discover It card to earn cashback on their respective categories, and you can then use the Citi Double Cash card for all other purchases.
All three of these cards can help your finances, as long as you’re using them responsibly. Just make sure that you’re not spending above your means and that you’re paying your bills on time!