Credit card companies love to reward customers who use their cards regularly.
They offer cashback and other values-driven rewards to help customers save on their spending and earn neat benefits like free airline tickets and vacation packages.
Most rewards are tied to spending categories like groceries, gas, and streaming services. To earn the rewards, you’re encouraged to make regular purchases in the eligible categories. Once you’ve accumulated enough cashback rewards, points, and miles, you can redeem them for all types of gifts and statement credits.
In this article, we’ve gathered the five best rewards credit cards that can help you earn cashback and other high-value rewards.
Cashback is considered to be the most popular type of credit card reward available. It essentially allows you to earn a discount on your purchases.
What is it?
Cashback is a form of cash-based reward given by credit card companies to their customers for making purchases in certain categories.
Introduced in 1986 by the creators of the Discover credit card, cashback programs have evolved to include spending categories as diverse as gas, gym memberships, and drug stores.
Customers usually receive between 1-5% of each purchase in the form of cashback, which is paid out as credit statements at the end of each month or year. These can be used to reduce your credit card bill or deposited into a bank account and converted to cash. Some banks may allow you to convert them into rewards points or vouchers.
Why does it work as an incentive?
Cashback rewards work very well among customers because they’re quite easy to collect. Most of the time, the bank automatically recognizes the business you’re buying your products or services from. It identifies the cashback rate for the spending category the business is in and adds the equivalent dollar amount to your credit card account.
Also, cashback rewards usually don’t have the same amount of redemption restrictions as points-based rewards. You can almost immediately use the cashback rewards you’ve received to offset your purchases.
Depending on your bank, each eligible spending category may be given a different cashback rate. Some banks may just set one cash-back rate for all purchases.
Can cashback and value-driven rewards co-exist in the same card?
Most credit cards only come with one of two reward structures: cash back or value-driven rewards like points and miles. It’s believed that this separation exists to help each credit card crater to a specific audience.
Cashback credit cards are generally favored by customers who want to make decent savings on their purchases. Values-driven rewards cards, on the other hand, are more popular among customers who want travel and shopping lifestyle benefits.
Credit card companies use value-driven rewards to personalize the credit card experience and build customer loyalty. They’re usually offered as points or miles, which customers can collect and redeem for free flight tickets, hotel vouchers, and other benefits.
What are they?
You can think of values-driven rewards as points you receive for each dollar spent on your credit card.
One point is worth roughly about $.01 but many banks are generous with their points. Some banks give upwards of 50,000 points – equivalent to about $500 in cash value – as a credit card sign-up bonus to new customers.
Usually offered through credit card loyalty and membership programs, these points can be exchanged into larger, high-value gifts like free vacation packages. Most values-driven rewards are travel-oriented and require months’ or years’ worth of points.
How can consumers be incentivized to take these up?
Redeeming credit card points and miles is a bit more complicated than using cashback.
You’re usually only allowed to carry a certain number of points or miles over from one year to the next, which means you’re somewhat forced to redeem your points before they expire. And if you happen to miss a monthly balance payment, there’s a chance that you’ll have to forfeit your rewards.
These conditions can put some customers off values-driven rewards. But making them more flexible, such as by increasing the number of points you can carry over or expanding the types of gifts redeemable by points, could make customers more willing to get these types of cards.
What makes values-driven rewards genuine?
Many banks offer values-driven rewards through exclusive loyalty and membership programs, which helps customers feel like they are part of an elite club. They address customers by their name, send them regular offers and promotions, and give them access to special lounges, all of which help to create a rather genuine customer experience.
As the relationships between customers and their banks grow over time, customers become less likely to switch to other banks.
The best cards with cashback and values-driven rewards
Getting a credit card with cashback or values-driven rewards can help you make the most of your spending. The right credit card can help you start a fund for your dream vacation or save hundreds of dollars per year on everyday purchases. Here’s a look at the 5 best rewards credit cards.
Capital One Venture Rewards Credit Card
The Capital One Venture Rewards credit card is the ideal credit card for people who love to travel.
Upon signing up, you’re given a bonus of 60,000 miles, which is equivalent to about $1,000. Every dollar spent on purchases earns you an additional 2 miles. Once you’ve collected a decent amount of points, you can redeem them for statement credits that can be used at over 15 hotel and airline partners.
This credit card does come with a $95 annual fee, which is a bit on the pricier side if you don’t travel much. You’ll also need a credit rating between 670 and 850 to be eligible for this card.
American Express Gold Card
For those who love dining out at restaurants, the American Express Gold Card can be a treat.
You’ll earn 4x Membership Rewards points at most restaurants wherever you go, including takeout and delivery. You’ll also earn the same amount of points when you buy groceries at US supermarkets.
And that’s not all; it also comes with a $120 annual dining credit that can be used at major restaurant chains like The Cheesecake Factory and Shakeshack as well as a $10 per month Uber Cash allowance.
To get these rewards, you’ll need to pay an annual fee of $250. If you’re a big foodie, it could be well worth the cost.
Citi Double Cash Card
The Citi Double Cash Card has one of the highest-earning cashback rates for a cashback credit card. It helps you earn 1% unlimited cash back on every purchase made with the card and an additional 1% when you pay off the balance for that purchase. The cashback can be converted into Citi ThankYou Points at a value of $1 to 100 points. These can be redeemed for airline and hotel benefits.
This card comes with no annual fee but to earn your cashback at the end of the year, you’ll need to make all minimum balance payments on time. The variable APR for this card is between 13.99% to 23.99% and for the first 18 months, you’ll be given a 0% intro APR.
American Express Blue Cash Preferred Card
The American Express Blue Cash Preferred Card is another great credit card for earning cashback on everyday purchases. Designed with families in mind, this card helps you earn cashback on groceries, gas, streaming services, and public transportation services including taxi rides, rideshares, buses, and trains.
For groceries, you’re eligible to earn 6% cashback on up to $6,000 in purchases per year. Once this limit is reached, the rate will drop to 1% on all supermarket purchases. Gas and public transportation fares will earn you 3% cashback. For all other purchases, you’re eligible to earn 1% cashback.
As an intro offer, American Express will give cardholders $350 in credit and waive the first year’s annual fee. After that, you’ll have to pay $95 per year to use this card.
Discover it Student Chrome
The Discover it Student Chrome credit helps college students earn cashback on all purchases.
To apply for this card, you’ll just need to prove that you’re a college student. There’s no requirement for a FICO score or an annual fee. Better yet, Discover rewards you with a $20 statement credit each school year that your GPA is 3.0 or higher.
You’ll earn 2% cashback at gas stations and restaurants on up to $1,000 in combined purchases each financial quarter. For all other purchases, you’re automatically eligible to earn unlimited 1% cashback.
Try the Aspiration Zero for environmentally-friendly rewards and cashback you won’t find anywhere else
Issued by the sustainable neobank Aspiration, the Aspiration Zero is an eco-friendly credit card that helps you fight climate change with your spending habits.
For every purchase you make, you’re rewarded with a carbon offset tree that Aspiration plants on your behalf, helping you eliminate your carbon footprint.
Once you’ve made 60 or more purchases in a month with the Aspiration Zero, you receive 1% cash back on all purchases for that month. The Aspiration Zero is one of the few environmentally-friendly cards available today that gives you both cash back and values-driven rewards.
Try the Aspiration Zero today and make your money work for the planet.