How much cash back can you expect from your credit cards? For a long time, it was common to expect just 1 percent cash back, and you were doing great if you ever got as much as 2 percent back for certain purchases.
But the credit card industry is now so competitive that 2 percent is the new 1 percent, and you should never accept less than 2 percent back on featured bonus categories. In fact, there are now several cards—including Chase Freedom Flex℠ and Discover it® Cash Back— that offer 5% cash back on some of your credit card spending.
But is there anyway you can get 5 percent back on everything you buy? Maybe. But there are definitely strategies you can use to get 5 percent back more often.
What’s Ahead:
Seven credit cards that offer you 5 percent cash back—or more:
Chase Freedom Flex℠
This is one of the most popular reward credit cards available – with no annual fee – and one of the first to offer 5% cash back on select purchases. Cardholders can earn 5% cash back on up to $1,500 spent each quarter in rotating categories, 5% cash back on travel purchased through Chase Ultimate Rewards®, 3% cash back on dining and drugstores, and unlimited 1% cash back on all other purchases.
To be eligible to earn the 5% cash back, you need to log in to your Chase account once each quarter and “activate” the new bonus categories. Thankfully, you will receive the bonus cash back retroactively to the beginning of the quarter so long as you activate your bonus categories before the end of the quarter. There’s no annual fee for this card.
Discover it® Cash Back
Like the Chase Freedom Flex℠, the Discover it® Cash Back features 5% cash back on up to $1,500 spent each quarter that you activate on featured categories of purchases and designated merchants. In the third quarter of 2019 (July – September), Discover’s featured bonus categories are restaurants and PayPal. Like the Chase Freedom Flex℠, you also have to login once per quarter to activate your bonus categories, and you earn 1% cash back on all non-bonus purchases.
However, the Discover it® Cash Back does have a few interesting features that distinguish it from the Chase Freedom Flex℠. At the end of a new cardholder’s first year, Discover will match the rewards earned during that year, including the 5 percent bonus categories—giving you an effective 10% cash back.
In addition, the Discover it® Cash Back has no penalty interest rate or foreign transaction fees, and it will automatically waive your first late payment fee. There’s also no annual fee for this card.
The Target REDcard
The Target REDcard is a store card that you can only use at Target stores and online at Target.com. However, it offers 5 percent off all purchases—with exceptions for gift cards, prescription drugs, and shipping and handling.
But since many Target locations are both department stores and grocery stores, there’s the potential to get a 5 percent discount on a large variety of purchases throughout the year.
Other cardholder benefits include free shipping from Target.com and an extra 30 days for returns. There’s no annual fee for this card.
American Express Blue Cash Preferred
This card offers a whopping 6 percent cash back on up to $6,000 spent each calendar year at US grocery stores. You also earn 3 percent cash back at gas stations and select US department stores, and 1 percent cash back elsewhere.
However, there’s a $95 annual fee for this card, and the term “cash back” is a bit of a misnomer, as American Express gives you your cash back in “reward dollars” that can be redeemed for a statement credit, gift cards, or products available through their online portal.
Ink Business Cash® Credit Card
If you make money on the side in any way, you can also earn 5 percent cash back on many of your expenses.
This small business card offers 5 percent cash back on your first $25,000 spent in combined purchases at office supply stores and on cellular phone, landline, internet and cable TV services each account anniversary year.
You also get 2 percent cash back at gas stations and restaurants, and 1 percent cash back on all other purchases. There’s no annual fee for this card.
SimplyCash® Plus Business Credit Card
Here’s another small business card that gives you a chance to earn 5 percent cash back. You earn 5 percent at U.S. office supply stores and on wireless telephone services purchased directly from US service providers, on your first $50,000 of eligible spending each calendar year.
You also earn 3 percent cash back on your choice of one a spending category including gas stations, restaurants, shipping, and airfare, and 1 percent cash back on all other purchase. There’s no annual fee for this card.
Amazon Prime Signature Rewards Visa Signature Card
Amazon recently made changes to their branded Visa to make it a better deal for Prime members: Cardholders with eligible Prime accounts will now receive 5 percent back on all Amazon purchases. Since Amazon is the “everything” store, it’s possible to get a lot of what you need—and with two day shipping.
Tips to earn 5 percent cash back on the most purchases
Label your cards
If you carry several cards, and some feature bonus rewards, then you probably need a system to keep track of which cards earn bonuses on what products. This is especially true for cards that have rotating bonus categories like Chase Freedom Flex℠ and Discover it.
While there are some mobile apps that you can download to help you, I recommend simply putting a piece of masking tape on the top of your card and writing the names of the bonus categories on it.
Keep track of each card’s limits
Let’s face it, the credit card issuers are losing money when they give you 5 percent cash back. Therefore, many of them limit the number of purchases that qualify for this level of rewards.
In response, you need to touch base with your card issuer every now and then to make sure that you haven’t reached your limit. Which each of the cards that have a limit on your 5 percent returns, you’ll only earn 1 percent after you’ve reached the annual limit for eligible purchases.
Take advantage of special offers
Both Chase and American Express have rewards programs that offer more than just gift cards. American Express has a constantly updating list of “offers” from various retailers—from wireless companies to high-end wine services—that offer a certain amount back (or off) in exchange for spending so much money. (Beware, obviously, of the incentive to spend.)
Chase, on the other hand, has Shop Through Chase, which gives cardholders additional cash back at participating retailers if they access those sites via the Shop Through Chase interface. Customers can get anywhere from 1 to 8 percent back on purchases at places like J.Crew, Apple, and LL Bean.
Buy creatively
Remember that the 5 percent bonuses are for shopping at a particular merchant category, not for buying a certain type of thing. So if your card offers you 5 percent cash back at grocery stores, then you’ll still receive that bonus if you buy prescription drugs, flowers, or cleaning supplies there.
Likewise, office supply stores are full of furniture, school supplies, and electronics that you can earn 5 percent back from. Keep in mind your 5 percent bonus categories, and you can potentially earn bonus cash back on most of your purchases.
You also might use your card to buy gift cards (which are available at grocery stores, drug stores, and gas stations), and then use them throughout the year (when the card is no longer offering 5 percent back for that category).
Summary
As competition in the credit card industry grows more fierce, rewards for cardholders get more generous. With more cards out there offering more (either in everyday rewards or special bonus categories), it’s possible for the savvy consumer to get 5 percent back on much of what they buy.