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Cash back is a rewards benefit that many credit cards offer to cardholders. By taking advantage of it, youâll receive back a prespecified percentage of certain purchases you make. Many credit card companies will provide higher cash back rates on certain types of purchases, such as airfare, gas, food and more. Cash back is just one way that credit cards offer rewards, as mileage and points are some alternatives.
Before you spend too much money with your credit cards, make sure you have a financial plan in place. Speak with a financial advisor today.
What Is Cash Back?
The most commonly recognized style of cash back is what you have likely seen advertised as cash back credit cards. This specifically refers to earning a certain percentage of your credit card purchases back as cash rewards. However, cash back rates vary widely, as do the categories that they apply to.
You usually wonât see credit card cash back rates higher than 5%, while 1% is the typically minimum you will earn. Cash back categorization is significantly more complex though, with a merchant category code (MCC) system being the main organizing force.
MCCs run the entire cash back industry, as they ultimately decide how each purchase you make is classified. These designations coincide with cash back rates set by the issuer of your card. For example, you could use your card for a $50 dinner at a steakhouse, which has a ârestaurantâ code. If your card offers a 2% cash back rate on all spending at restaurants, youâd earn $1 cash back.
Familiar alternatives to cash back include point- and mile-based programs, though many cardholders are partial to cash back. Cash back affords cardholders an independence that is ideal, since you can redeem it for nearly anything.
Popular Cash Back Credit Cards
Discover, American Express, Mastercard and Visa all have cash back rewards credit cards available for prospective cardholders. Each abide by their own set of regulations, though card issuers decide on cash back rates, promotions and bonuses. Chase, Wells Fargo, Citi and Capital One represent some of the most active card issuers on the market today.
Below are a few examples of what you can expect to earn when looking for a cash back credit card:
Cash Back Credit Cards Card Name Cash Back Rates Cash Back Bonus Costco Anywhere Visa Card by Citi 4% cash back on eligible gas up to $7,000 per year, 3% cash back on eligible travel and restaurants, 2% cash back in-store and online with Costco and 1% cash back elsewhere None Bank of AmericaÂ® Cash Rewards credit card 3% cash back in a category of your choosing, 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases (up to a quarterly cap of $2,500 in combined grocery/wholesale club/choice category purchases) $200 bonus cash back for spending at least $1,000 over your first 90 days Capital OneÂ® QuicksilverÂ® Cash Rewards Credit Card Unlimited 1.5% cash back everywhere $150 cash back bonus when you spend $500 during your first three months Citi Double Cash Card 1% cash back on your purchases and another 1% cash back when you pay your bill None Capital OneÂ® SavorÂ® Cash Rewards Credit Card Unlimited 4% cash back on dining and entertainment, 2% cash back on groceries and 1% cash back elsewhere $300 cash back bonus for $3,000 spent over your first three months TD Cash VisaÂ® Credit Card 3% cash back on dining, 2% cash back at supermarkets and 1% cash back on everything else Earn $150 cash back when spending $500 within the first 90 days (See Terms) USAA Preferred Cash Rewards Visa Signature Unlimited 1.5% cash back on everything None Blue Cash Everyday Card from American Express 3% cash back on up to $6,000/year at U.S. supermarkets (then 1%), 2% cash back at U.S. gas stations and select U.S. department stores and 1% cash back on other purchases $150 bonus cash back for spending $1,000 over your first six months Getting Cash Back at Retailers
Picture this: youâre buying some groceries on a Sunday morning, but know youâll need $40 cash to fill up your car with some gas later. You could swipe your debit card at the supermarket and then head over to the ATM. Or you could ask for cash back right from the cashier, eliminating the extra errand.
The above situation represents the alternative definition of cash back. Itâs ultimately the use of a cash register as if you were swiping your debit card at the ATM. When you request cash back from a cashier, your bank account will be charged the amount you asked for. This enables the funds to be pulled from your account so the cash can be placed in your hand.
Although this generally only applies to debit cards, there are a few exceptions for credit cards. DiscoverÂ® allows cardholders to ask for cash back at more than 50 large retail stores without a transaction fee.
There are many benefits to utilizing credit card rewards programs. But spending money that technically isnât yours will always involve some level of risk. If youâre in good financial shape, though, cash back and other types of credit card rewards can help you take more vacations, save money on purchases and more.
Credit Card Tips
- Managing your credit cards and any debt you accumulate using them is a major part of your long-term financial outlook. Consider working with a financial advisor to make sure youâre managing your money with your goals for the future in mind. SmartAssetâs free matching tool can connect you with up to three advisors in your area. Get started now.
- If youâre someone who wants freedom when spending credit card rewards, you may prefer cash back to a points- or mileage-based reward system. However, keep in mind that cash back rates are sometimes less than those in point-centric programs.
Editorial Note: This content is not provided by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the authorâs alone, and have not been reviewed, approved or otherwise endorsed by the issuer.
Advertiser Disclosure: The card offers that appear on this site are from companies from which SmartAsset.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). SmartAsset.com does not include all card companies or all card offers available in the marketplace.
Photo credit: Â©iStock.com/SIphotography, Â©iStock.com/MJ_Prototype, Â©iStock.com/Juanmonino
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The Bank of AmericaÂ® Cash Rewards credit card made waves in early 2019 when it started offering cardholders the option to earn cash back on online shopping purchases. It’s still one of the only credit cards that rewards online shopping purchases so broadly. However, there are plenty of cards that reward online purchases from specific retailers or types of retailers.
With so many products available online, this can be a very lucrative bonus category. Whether you want to earn cash back on your grocery delivery or on your boutique hauls, you have plenty of credit cards to choose from.
But how exactly does an online shopping bonus category work? By understanding just how this bonus category works and what purchases qualify, you can get more out of your rewards card and boost your earning potential.
See related: The best credit cards for online shopping
How online purchases are identified
When a merchant or card processor sends a transaction to your credit card issuer, it is identified in a few different ways. Each merchant is assigned a merchant category code (varies by card network), to help issuers recognize which category your purchase falls under. But the transaction information is also classified as being made online or in-person.
If a transaction is noted as being made online, your issuer can then check the merchant category code to ensure the purchase meets any restrictions. Then, you receive any bonus points or cash back.
Which purchases count toward an online shopping bonus?
shopping portals offer points or cash back for making purchases at your favorite store through their link. By using one of these sites to make your online purchases, you can earn airline miles, hotel points or cash back on top of credit card rewards.
Pay using a merchant app
If you frequent merchants such as Starbucks that allow you to pay through their app, use this option whenever possible to rack up online shopping bonus category rewards on in-person purchases. You may also double-up on rewards this way by earning both credit card rewards and loyalty points with the retailer.
Use a cash back or rebate program
Cash back programs like Ibotta and Rakuten can help you squeeze every bit of cash back out of a single purchase. Each program works differently, but most allow you to shop online or within a mobile app, where you can browse cash back deals with specific retailers.
If you use your credit card to make a purchase through one of these programs, you can earn cash back twice â once with your credit card issuer and once with the cash back program.
See related: Our guide to the best cash back and rebate apps
Keep a close eye on your cardâs terms and conditions
Each issuer has its own set of restrictions for which purchases qualify as online shopping. To make sure you arenât missing out on rewards, check your credit cardâs terms and conditions regularly and note any changes.
Cards that offer an online shopping bonus category
A few cards offer bonus points or cash back on online shopping, including the Bank of America Cash Rewards card.
Bank of AmericaÂ® Cash Rewards credit card
- 3% cash back on a category of choice (gas, online shopping, dining, travel, drug stores or home improvements and furnishings)
- 2% cash back on groceries and wholesale club purchases
- $2,500 combined limit on 2% and 3% categories each quarter
- 1% cash back on other purchases
||$200 online cash rewards if you spend $1,000 in first 90 days
|Estimated yearly rewards value ($1,325 monthly spend)
The Bank of America Cash Rewards card also allows cardholders to change their 3 percent bonus category once per calendar month. So if you spend more on online shopping one month, but will spend more on dining the next, you have the flexibility to adapt your rewards as your spending changes.
When it comes to credit card rewards bonus categories, online shopping is one of the most flexible options out there. By understanding which purchases rake in points and cash back, you can get even more out of your card.
See related: How merchant category codes can help you leverage card rewards, Bank of America Cash Rewards cardholders can now choose how they earn rewards
Paying the annual fee on a credit card doesn’t mean you’re wasting your money.
In fact, the top travel and rewards credit cards offer welcome bonuses that are worth considerably more than their annual fees, and that’s on top of the cardholder perks and benefits you can receive.
Case in point: The Chase Sapphire Preferred Card* charges $95 per year, yet the sign-up bonus of 60,000 points is worth $750 on its own. Meanwhile, the more luxurious Chase Sapphire Reserve charges a $550 annual fee, but the sign-up bonus is worth $750 in travel, and you get perks like a $100 Global Entry/TSA PreCheck credit every four years, Priority Pass Select membership (valued at $429), a $300 travel credit and more.
Still, a problem can arise when you can’t use the benefits your card offers â or when you cannot (or don’t want to) pay the annual fee anymore.
In that case, you should know credit card issuers can be surprisingly receptive to cardholders who may not be excited about paying their credit card’s annual fee another year. With this in mind, you have some options that can help you avoid annual fees, get something in return or switch credit cards altogether.
See related: When is a credit card annual fee worth it?
You may have more power than you think
According to Howard Dvorkin, CPA and chairman of Debt.com, itâs always worth it for consumers to negotiate their credit card fees or terms. Whether a consumer will get their fees waived is another question, but “it never hurts to ask,” he said.
This is especially true in light of the coronavirus pandemic. As we all know, credit card issuers have been fairly generous when it comes to offering struggling customers relief, with some extending options for deferred payments or waived fees. As an example, a March 2020 statement from Capital One CEO Rich Fairbank noted that the bank was offering assistance to its customers, such as “waiving fees or deferring payments on credit cards or auto loans.”
Dvorkin says consumers can improve their chances of getting their annual fee waived if they have a history of responsible credit use. In some cases, it may be possible to have an annual fee waived altogether, while in others, an account credit may be offered to take the sting out of the fee.
Some credit card issuers even have their own “retention offers” meant to entice you into keeping your card. For example, American Express is known for offering a set number of points for customers who agree to renew their card and pay an annual fee for another year. Sometimes a specific amount of spending is required on the card as well.
On the FlyerTalk website, you’ll even find a running guide of retention offers from several different card issuers, including Amex. After you dig through it, you can find that, as recently as January 2021, at least one person was offered 50,000 Membership Rewards points to renew their Platinum Card from American Express.
See related: Which cards earn American Express rewards points?
6 tips for negotiating annual fees
But how do you make sure you have as much leverage as possible? We interviewed the experts to find out their best tips for negotiating credit card fees:
1.Â Use the card
Lending expert John Li of Fig Loans says you’ll have the best chances at negotiating your credit card’s annual fee if you use your card frequently.
“At the end of the day, doing so makes the bank money, and a steady flow of transactions puts you in front of the credit card issuer as a worthy customer to build a long-term professional relationship with,” he says.
2. Be respectful
Dvorkin recommends keeping a level head before you pick up the phone. Take the time to state your case, but don’t fly off the handle if you don’t get your way.
“Credit card issuers get angry calls from cardholders all the time, so it helps consumers to be positive when calling to get a fee waived,” he says.
3. Negotiate by phone
While some card issuers like American Express have an online chat feature, you may have better luck negotiating with a customer service agent over the phone. In fact, phone agents can usually perform more services on your behalf versus agents you speak to via online chat.
4. Have a legitimate grievance
Nishank Khanna, CEO of business lender Clarify Capital, says you’ll have a better shot at negotiating if you have a compelling reason for not wanting to pay an annual fee.
“If youâre having this conversation with your lender to begin with, youâll want to be able to articulate a logical reason for why you deserve to have the fee removed or reduced,” he says. “Customer service representatives are often receptive to legitimate reasons and may have a policy in place to help accommodate customers with specific concerns or circumstances.”
5. Leverage the competition
Khanna also says you can point to other card issuers that may have a better deal right now. Have competitors waived their fees? If youâre looking to knock off a fee on a travel credit card because you havenât been able to use the card during the pandemic, for example, you should find out how other card issuers are handling the situation.
6. If youâre not satisfied, call again
Persistence can pay off when it comes to negotiating credit card fees and terms. Not only that, but you don’t have to accept the first “no” you receive. If you don’t get the answer you want, you can always try the famous “HUCA” method, which asks you to hang up and try again. You may be connected to a different agent who is more agreeable.
See related: Does applying for a credit card by phone boost approval odds?
What to do when the issuer won’t budge
If you are trying to negotiate an annual fee but can’t seem to make any progress, keep in mind that other options may make just as much sense.
For starters, Dvorkin says consumers who find they cannot negotiate their cardâs annual fee should consider opening a credit card that doesn’t have an annual fee and closing their old one.
Note that closing a credit card can lower your credit score by reducing your overall available credit. Depending on how high the cardâs credit limit is and what balances you have on other cards, this could raise your credit utilization ratio and lower your score. But this may be a risk worth taking if you can no longer afford your cardâs annual fee.
Also, keep in mind some card issuers might let you downgrade your credit card to another card they offer that doesn’t charge an annual fee. You will probably earn a lower rewards rate and get fewer perks if you take this route, but moving your line of credit to a different card won’t cause damage to your credit score like closing an account can.
*All information about the Chase Sapphire Preferred Card has been collected independently by CreditCards.com and has not been reviewed by the issuer. This offer is no longer available on our site.
Many of us are avoiding travel during the pandemic.
But if you have to shelter in place under quarantine once you get to your destination, wouldnât you rather do it in an environment that at least seems more within your control?
If the choice is between a hotel where you must trust your experience to a faceless corporation or a local host you can talk to through homestay sites like Airbnb and Vrbo, the latter may be the better option for these times (provided you donât violate their party guidelines).
Whatever option you choose, credit card issuers now reward homestays with points and cash back in the same way theyâve long doled out rewards for hotels and other travel expenses.
These are the best cards on the market for homestays like Airbnb.
See related: Strategies for planning 2021 travel
Wells Fargo Propel American ExpressÂ® card: Best no-annual-fee, high rewards option
Chase Sapphire Reserve: Best introductory bonus
Bank of AmericaÂ® Premium RewardsÂ® credit card: Best for bonus rewards
Capital One Venture Rewards Credit Card: Best flat-rate miles card
Amazon Prime Rewards Visa Signature card: Best for online shopping
Discover itÂ® Miles: Best no-fee option
Wells Fargo Propel American ExpressÂ® card: Best no-annual-fee, high rewards option
TheÂ Wells Fargo Propel American Express cardÂ includes arguably one of the highest rates of return on points for some of the most popular redemption categories out there, including homestays like Airbnb and Vrbo.
The greatest advantages of this card â besides earning 3 points per dollar spent on some popular spending categories â are that thereâs no point limit or expiration, no annual fee and no rotating categories that you constantly have to remind yourself to activate. You get three times the points in the relevant categories all the time without restriction, with travel â including all homestays â and transit being one of those prominent categories.
The card also charges no foreign currency conversion fee, so buying things abroad is less expensive. If that werenât enough, hereâs what you also get:
- 3 points per dollar spent on travel and transit purchases
- 3 points per dollar spentÂ on eating out and ordering in
- 3 points per dollar spent on gas and rideshares
- 3 points per dollar spentÂ on select streaming services such as Hulu, Netflix, Sirius XM and Spotify Premium
- 1 point per dollar spentÂ everywhere else
- No annual fee
- No points limitÂ or expiration
- Premium access to presale tickets, offers and protections from American Express
- 20,000 points when you spend $1,000 in the first three months
Chase Sapphire Reserve: Best introductory bonus
Before the Wells Fargo Propel card debuted,Â Chase Sapphire ReserveÂ was the go-to credit card option for Airbnb fans. It offers a 50,000-point introductory bonus when you spend $4,000 in your first three months of membership. Those points are worth up to $750 when you book travel through Chase Ultimate Rewards.
Though equipped with fewer spending categories offering 3X points and carrying a large annual fee of $550, the benefits of the Chase Sapphire Reserve card are more specifically geared toward frequent travelers.
At the same time, that large annual fee is offset by a $300 annual credit that will reimburse any travel expense â including Airbnb. And from June 1, 2020, to June 30, 2021, gas station and grocery store purchases count toward the travel credit.
Add to that a $100 credit covering the application toÂ Global Entry/TSA Precheck every four yearsÂ and the annual fee is almost completely offset in the first year.
Meanwhile, there are even more travel benefits:
- 50,000 bonus points after you spend $4,000 in the first three months (worth up to $750 in travel)
- 3 points per dollar spent on travel (excluding purchases covered by the $300 travel credit)
- 3 points per dollar spentÂ on dining (including delivery and takeout) and travel; $1,000 in grocery purchases, including eligible pick-up and delivery services, from Nov. 1, 2020 to April 30, 2021
- Complimentary airport lounge accessÂ through Priority Pass Select Membership
- Trip cancellation/interruption insurance
- Primary car rentalÂ insurance
- Lost luggage reimbursement
Bank of AmericaÂ® Premium RewardsÂ® credit card: Best for bonus rewards
While the points per dollar offered byÂ Bank of America Premium Rewards credit card on travel and Airbnb are fewer than the credit cards above, the sign-up bonus and up to $200 in annual statement credits make it a decent option, even with less flexibility on what qualifies as a credit than the credit cards above.
This card should absolutely move to the top of your list if you are already a Bank of America Preferred Rewards client. That designation automatically increases your return even higher than what the other credit cards above offer on travel and dining â you can get a rewards bonus of up to 75%.
Combine that with a generous sign-up bonus and the Bank of America Premium Rewards is one of the most potent rewards cards for Preferred Rewards clients.
The card includes:
- Introductory bonus: 50,000 points when you spend $3,000 in the first 90 days (worth up to $500 in free travel)
- 2 points per dollar spent on dining and travel purchases, including Airbnb and Vrbo
- 1.5 points per dollar spent on everything else
- Get up to $200 in travel statement credit rewards, including $100 for incidental spending per year and $100 toward a TSA Precheck/Global Entry application every four years
- No foreign transaction fees
- Bank of America Preferred Rewards clients earn up to 3.5 points per dollar on travel and dining purchases and up to 2.62 points per dollar on all other purchases
- $95 annual fee
Travel loyalty programs offer extended perks in pandemic
Capital One Venture Rewards Credit Card: Best flat-rate miles option
The Capital One Venture Rewards Credit CardÂ is remarkably similar to Bank of Americaâs Premium Rewards card, right down to the $95 annual fee, but without the additional benefits afforded to Bank of America Preferred Rewards clients.
However, Capital One Venture Rewards offers 2 points per dollar spent on every purchase, not just travel and dining.
- Earn 60,000 travel miles after you spendÂ $3,000 in purchases in the first three months â equaling $600 in travel credit
- Earn 2 miles per dollar spentÂ on every purchase, every day
- Points can be redeemed for statement creditÂ on travel purchases, including Airbnb
- $95 annual fee
- No foreign transaction fees
Amazon Prime Rewards Visa Signature card: Best for online shopping
You may be wondering why the Amazon Prime Rewards Visa Signature card is on a list highlighting the best credit cards for AirBnb, Vrbo and other homestays.
Shouldnât this card be limited to the âbest credit cards for online shoppingâ list? Not when Amazon offers Airbnb gift cards and the Amazon Prime Rewards card gives you 5% cash back on Amazon.com purchases as long as you have a Prime membership, which essentially acts as the annual fee ($119).
Just purchase an AirBnb gift card from Amazon with the card, and itâs as if you are getting 5% cash back for your AirBnb stay when you apply the gift card towards it. Itâs the highest rate on this list, Amazon or not.
Youâll receive the following additional benefits:
- 5% cash back on Whole Foods and Amazon purchases (with Prime membership)
- 2% cash back on purchases at drugstores, gas stations and restaurants
- 1% cash back on all other purchases
- A $100 Amazon gift card upon credit card application approval
- No foreign transaction fees
- $500,000 travel accident insurance
- $3,000 per passenger lost luggage reimbursement
- Baggage delay insurance of up to $100 a day for three days
- Extended warranty coverage for an additional year
See related: How to pay off Amazon purchases over time
Discover itÂ® Miles: Best no-fee option
Though the points per dollar on this card are lower than any other credit card on the list,Â Discover it MilesÂ gives you much more freedom in how you can manage your points and account.
You can redeem miles in any amount, your miles donât expire even if you close your account and 1% of your miles can be converted directly into cash for your bank account.
Discover it Miles offers:
- 1.5 miles for every dollar spent on every purchase (matched at the end of the first year)
- Points can be redeemed for statement creditÂ on travel expenses, including Airbnb, gas stations and restaurants.
- Miles can be converted into cashÂ at rate of 1 cent per mile and transferred directly into your bank account
- Redeem miles in any amount
- Miles never expireÂ and you donât lose them even when you close your account
- No late payment fee or penalty APRÂ on your first late payment, up to $40 thereafter
- No foreign transaction fees
- No annual fee
- 0% APR on purchases for 14 monthsÂ (11.99% to 22.99% variable APR after that)
One of the questions Iâm asked the most is, âWhich credit card should I get?â
Thereâs not a one-size-fits-all answer, but hereâs how to narrow it down:
Which credit card to choose if you carry a balanceÂ
If youâre in credit card debt, then you need to prioritize your interest rate over rewards. TheÂ average credit card charges 16.05%. It doesnât make sense to pay interest just to earn 1%, 2% or 3% in cash back or travel points.
If you have credit card debt, forget about rewards for now. You can avoid interest for up to 18 months with the right balance transfer card. And some card issuers (especially credit unions) charge ongoing (non-promotional) rates as low as the 6%-9% range. Donât chase rewards if youâre revolving a balance.
If you have credit card debt, I recommend these cards:
- Citi SimplicityÂ® Card*: 18-month 0% intro balance transfer offer; transfers must be completed in the first four months; 3% balance transfer fee ($5 minimum); 0% introductory purchase APR for 18 months; regular variable APR of 14.74%-24.74%
- Wells Fargo Cash Wise VisaÂ® card: 15-month 0% intro balance transfer offer on qualifying balance transfers; intro balance transfer fee of 3% or $5 (whichever is greater); transfers must be made within 120 days to qualify for intro offer; 0% intro purchase APR for 15 months; regular variable APR of 14.49%-24.99%; regular balance transfer fee of 5% or $5 (whichever is greater)
- BankAmericardÂ® credit card: 12-billing-cycle 0% intro APR balance transfer offer; must complete the transfer within 60 days of opening the account; 3% or $10 transfer fee, whichever is greater; introductory 0% purchase APR for 12 billing cycles; regular variable APR of 12.99-22.99% on purchases and balance transfers
See related: Balance transfer cards with no transfer fee
Which card to pick if you donât have any credit card debtÂ
Now weâre on to the fun stuff! The key questions at this juncture focus on how much effort you want to put in, how you spend your money and what you want to get out of your rewards.
Some people treat credit card rewards like a game. Itâs fun for them, and they spend time looking for the best deals and juggling multiple cards. Yet about three-quarters of credit card holders prefer simplicity and would rather use the same card or two as widely as possible, we found in an August 2019 survey.
You wonât get the best rewards with that approach, but you can still do pretty well. Here are my favorite flat-rate cash back cards:
- Alliant Visa Signature Card: 2.5% cash back on every purchase with a $99 annual fee (waived your first year)
- CitiÂ® Double Cash Card: Essentially 2% cash back on everything (technically 1% when you buy and 1% when you pay it off); no annual fee
If you make more than $20,000 in credit card charges in a typical year, the Alliant Credit Union Visa Signature is a better bet despite the annual fee.
Which card to pick if you’re willing to put in a little work to earn better rewardsÂ
Dividing your spending among multiple cards is the best way to reap higher returns. At this stage, you need to consider how you spend your money. Different cards incentivize different types of spending (e.g., travel, restaurants, groceries, entertainment).
You also need to think about your desired redemption. Cash back has the broadest appeal (after all, who couldnât use a little more cash?), although travel rewards are usually the most valuable. Some 49% of U.S. adults have at least one cash back card, 20% have an airline or hotel rewards card and 19% have a general travel rewards card,Â our research shows.
Chase Sapphire Reserve,Â the American ExpressÂ® Gold Card, theÂ Citi PremierÂ® CardÂ and theÂ Capital One Venture Rewards Credit Card).
Each of these issuers has more than a dozen airline and hotel transfer partners, plus you can book an even wider variety of flights and hotels directly through the card companies. These programs provide tons of flexibility, and in terms of cents per point, they generally offer higher returns than cash back cards.
As you can see, picking the right credit card for you is an individual decision. Iâll leave you with two more thoughts:
Youâre doing well as long as youâre avoiding credit card debt and redeeming rewards for something thatâs valuable to you.
Not everyone wants to fly to the Maldives in first-class and stay in an overwater bungalow. Even if it yields fewer cents per point, a free flight to grandmaâs house or cash back on everyday purchases could make more sense for your particular situation.
You should absolutely consider sign-up bonuses when evaluating credit cards, but donât lose sight of the fact that your credit card strategy should be a long-term pursuit. Especially if youâre new to credit, focus on ongoing value rather than card churning.
* Information about Citi Simplicity has been collected independently by CreditCards.com. The issuers did not provide the details, nor are they responsible for their accuracy.
On Jan. 20, 2021, Chase announced a new card art option for the Amazon Prime Rewards Visa Signature card featuring Whole Foods Market and added a limited-time sign-up bonus offer for those who prefer to shop at Whole Foods in-store.
Amazon has become a leader in grocery shopping during the pandemic, with consumers avoiding grocery stores due to health safety concerns â not to mention the convenience of shopping from a web browser. Amazon Prime members can enjoy speedy free delivery, as well as get access to online shopping at Whole Foods Market and special member deals when shopping in-store.
They can also count on extra savings if they carry the Amazon Prime Rewards card from Chase â or if theyâre looking to apply in the next few weeks.
Hereâs what you need to know.
Amazon Prime Rewards Visa Signature card
Our rating: 3.8Â out of 5
Score required: Good to excellent
Type of card: Cash back
Spending categories: Amazon, Whole Foods, restaurants, gas stations, drug stores
- 5% back on Amazon.com and Whole Foods purchases
- 2% back on restaurant, gas station and drug store purchases
- 1% back on other purchases
- $70 Amazon.com gift card upon approval or $100 statement credit after spending $100 at Whole Foods in first 2 months
- No annual fee
Our take: While the Amazon Prime Rewards card offers excellent cash back on Amazon and Whole Food purchases, it might not be the best choice for customers who don’t currently have a Prime membership and aren’t looking to subscribe.
A new Whole Foods card design and limited-time offer
Chase introduced a new card design option for new Amazon Prime Rewards cardholders, featuring Whole Foods Market art. New cardmembers with an eligible Prime membership can choose the new design when they apply for the card. If youâre an existing cardholder and would like to switch to the new design option, you can call in to request a new card after Jan. 22, 2021.
If you frequently shop at Whole Foods in-store, the new limited-time introductory offer can also be exciting news for you. Through March 3, 2021, new Amazon Prime Rewards Visa cardholders can earn a $100 statement credit after spending $100 in Whole Foods Market stores in the first two months from account opening. Alternatively, they can still choose the standard $70 Amazon gift card offer as a sign-up bonus.
Considering the standard bonus is lower, the new temporary offer might be a better deal. On the other hand, if you avoid shopping in-store or normally use Amazon Fresh for buying groceries, the gift card might make more sense for you.
Should I start shopping at Whole Foods if I have an Amazon credit card?
If you already shop at Whole Foods, the 5% back with the Amazon Prime Rewards Signature Visa and 10% off specially marked items is a good deal. The discounts, though, donât make Whole Foods cheaper than other grocery stores.
In fact, according to a study from 2019, Whole Foods remains the most expensive grocery store with its prices at 34% above Walmart, which was reported to have the lowest prices overall. If your goal is to save on groceries, Whole Foods is evidently not the best option â even if you carry the Amazon Prime card.
Other cards to consider
The Amazon Prime Card isnât the only option you should consider if you often shop on Amazon or at Whole Foods.
See related: Which is the best card to use on Amazon.com purchases?
For instance, with the Chase Amazon.com Rewards Visa card, you can get a $50 Amazon gift card upon approval and earn 3% on Amazon and Whole Foods purchases, 2% percent at restaurants, gas stations and drugstores and 1% on all else. If you donât have a Prime membership and arenât looking to subscribe, this is a good option, since the card doesnât require for a cardholder to be a member.
If you do have a membership and shop on Amazon a lot, the Amazon Prime card is a better deal. With 5% for purchases made at Whole Foods and on Amazon, 2% at restaurants, gas stations and drugstores and 1% on all else, this card is hard to beat for Amazon and Whole Foods lovers.
If youâre looking for a card to buy groceries, consider the Blue Cash PreferredÂ® Card from American Express that could save you more than with the Amazon Prime Visa at Whole Foods. Why? Blue Cash Preferred cardholders earn 6% cash back at U.S. supermarkets (up to $6,000 in purchases per year, then 1%).
See related: Best credit cards for grocery shopping
Now you can stack your rewards at Whole Foods, earning cash back and the limited-time bonus with the Amazon Prime Card, and you can get extra savings from the loyalty program. Whether it makes sense to shop at Whole Foods, even with rewards cards and the loyalty program, is up to you.
Itâs shopping season, and millions of us who arenât out shopping in stores right now are sitting in front of our computers buying out the internet. It doesnât matter if youâre shopping for groceries or gifts â if shopping is on your to-do list this month, youâre in luck.
With retail stores scrambling for shoppers, the cash-back craze gone wild and banks offering up to 10 points per dollar on some purchases to entice consumers to use their credit cards, the opportunities for stacking deals upon deals has reached fever pitch.
Right now, there are more stackable offers for online shopping than Iâve ever seen in all my years of points wrangling. There are so many offers, in fact, that some days I find myself in shopping paralysis trying to decide which credit card to pair with which offer and accompanying points or cash back portal to get the best return. These are the good kinds of 2020 problems that put money back into your pocket.
See related: Not traveling anytime soon? Hereâs what do to with your points and miles
Getting started with deal-stacking
If youâve never heard of deal stacking, itâs just a fancy term for using multiple coupons or deals to maximize your savings or earnings on one purchase. In the travel-rewards world, we also like to call it the double or triple dip.
Getting started with deal stacking is as easy as considering each and every one of these three steps or âstacksâ anytime you make a credit card purchase.
Stack 1: Check for credit card offers and register if needed
Always choose the card that will earn the most points per dollar spent in your purchase category. And donât forget to register for any special offers from your credit card to earn bonus points or discounts. These offers are usually easy to find by logging into your credit card account.
Stack 2: Shop using cash back- or points-earning portals
Before you buy online, always access the online store via a shopping portal like Ibotta or Rakutan rewards if youâre looking for cash back. If youâre collecting points, try the portal of your favorite airline, hotel group or bank program.
A tool like Cash Back Monitor can help you decide which portal will offer you the best return for each purchase youâre planning to make.
Stack 3: Scan your receipts for more rewards
After you make your purchase, scan your receipt into an app like Fetch Rewards or CoinOut to accrue points that can be turned into gift cards for more shopping â and even more savings.
Deal-stacking in practice
My friend Angel Trinh over at Pennywise Traveler is a rock star on deal-stacking and loves to share tutorials on her stacking successes. Because points-stacking is best explained through example, hereâs how sheâs stacking up deals for her Amazon purchases this month using her American ExpressÂ® Gold Card.
Putting into practice the first stacking principle, when Trinh checked her American Express Gold Card account this month, she saw that she was targeted with an offer to earn 8 Membership Rewards points per dollar on Amazon purchases (up to 3,000 points). She registered her card for the offer, then set out to spend $375 â the amount it would take to max out the bonus to earn the full 3,000 points.
âFor American Express, the best way to maximize deal stacking and to save money is to add AmEx offers to your account,â Trinh explains. âYou can add a maximum of 100 offers to your account for discounts.â
In checking out, Trinh acted on this offer and opted to pay 1 Membership Reward point (a single cent) towards the cost of the items in her cart. Even though this was a single cent, it triggered a 10% discount on her full purchase! This offer added an additional savings of $37 back on the $375 spent to max out her 8x American Express offer â stacked on top of the 3,000 Membership Rewards points already earned.
After maxing out points and saving 10% using steps one and two, Trinhâs final deal-stack for her Amazon shopping was to check for additional cash back returns using Fetch Rewards.
Because Amazon receipts are only digital, no physical scanning is even required. You simply link your Amazon account to Fetch Rewards, and after youâve completed your online shopping, use the app to trigger an automatic scan for your Amazon receipts. The number of points earned varies based on what youâve purchased and from which store and allows you to cash out your accrued earnings with gift cards.
Deal-stacking is easy to start, not too hard to master and can certainly help you put more money back in your pocket â while also putting presents under the Christmas tree this year. Happy holiday shopping!
Sending cash to friends and family? Before you reach for that credit card, grab a calculator. Itâs time to do a little math.
With most everything you purchase online or through apps, credit cards have the edge. With plastic, you have chargeback rights. If youâre overcharged or receive the wrong item, broken merchandise or nothing at all, your card issuer will make it right. And if you use a rewards card, you collect points or miles, too. Win-win.
But itâs different story when youâre sending money through peer-to-peer platforms. Many of them (like Google Pay, Popmoney and Zelle), donât allow consumers to use a credit card to send cash.
Others (like Cash App, PayPal and Venmo), allow credit cards but also charge a fee for the privilege â often about 3%.
See related: How to choose a P2P payment service
The hidden costs of using credit cards to send money
Choose a credit card to send money and you might also end up paying additional fees to your card issuer. Thatâs because the combination of some peer-to-peer apps with certain cards are coded as cash advances, rather than purchases.
For many cards, that cash advance code triggers a higher interest rate that kicks in the moment you make the transaction, as well as a separate cash advance fee thatâs often $10 or 5% of the transaction â whichever is higher. (Currently, the average interest rate for cash advances is 24.8%, while the average APR for purchases is 16.05%.)
So the combination of peer-to-peer service fees, credit card cash advance fees and that higher interest rate (with no grace period) could make sending a few hundred dollars a bit more costly than youâd planned.
No chargeback rights with credit cards
The real kicker: Unlike other venues, you donât have chargeback rights when you use credit cards to make peer-to-peer money transfers.
When you present your credit card in an online or brick-and-mortar store, thereâs a merchant involved â and the law provides chargeback rights for your protection in case you donât get what you were promised in the deal. But in a peer-to-peer money transfer, thereâs no merchant, so currently the laws donât give consumers any chargeback rights, says Christina Tetreault, manager of financial policy for Consumer Reports.
âThe chargeback right requires a merchant,â says Tetreault. âOne of the hoops a consumer has to jump through is to try and work it out with the merchant.â
If you use a peer-to-peer service and send the wrong amount or send the money to the wrong person, most platforms advise that the only way to get it back is to contact the recipient and ask them to return it. And thatâs often the same whether you use a credit card, debit card, bank account or funded account on the platform.
âBe doubly sure when youâre sending the money that youâre putting in the correct information,â says John Breyault, vice president of public policy, telecommunications and fraud for the National Consumers League. âItâs still a buyer beware world when it comes to peer-to-peer.â
If youâre sending money and want to use a credit card, it pays to do a little sleuthing first. Check out the peer-to-peer site. Does it allow users to send money with a credit card? If so what, if any, fees does it charge?
On some platforms (PayPal is one), you could see similar fees for using a debit card â while sending from a bank account or funded account on the platform is free.
The good news is that many peer-to-peer platforms clearly disclose it when thereâs an extra charge to use a credit card, says Tetreault. With Venmo, for example, youâll get a pop-up message.
Harder to decipher: Will credit card transactions on the platform be treated as a cash advance? If your preferred platform doesnât post this information, you might need to contact customer service. (And how quickly and easily you get an answer can tell you a lot, too.)
Ask your card issuer the same question: Are peer-to-peer money transfers on the platform youâve chosen treated as a cash advance? If they are, whatâs the interest rate, and whatâs the cash advance fee?
âWhat I would suggest is to ask that question, via email, of your financial institution,â says Tetreault. âIt may be in their FAQs. And you want to save that email. If you have it in writing, if thereâs an issue later, youâre better positioned to contest that fee.â
But âthe hard truth is you may not be able to find out ahead of time,â she says.
Another solution: Opt to use a credit card issued by a credit union.
âWith credit unions, the APR is usually the sameâ for purchases and cash advances, says John Bratsakis, president and CEO of the Maryland and District of Columbia Credit Union Association.
Likewise, with American Express cards you pay your regular interest rate and no cash advance fees on peer-to-peer transfers, says Elizabeth Crosta, vice president of public affairs for American Express.
And credit cards from U.S. Bank register peer-to-peer money transfers as regular purchases â with no cash advance fees or cash advance APRs, says Rick Rothacker, spokesperson for the bank.
See related: How do credit card APRs work?
Whatâs your reason for using a credit card?
Take a good look at the reason youâre using a credit card, too. If you want chargeback rights, thatâs not an option. If youâre doing it for the rewards, will the value of those points or miles be eaten up by extra fees or a higher interest rate you have to pay to use the card?
And if youâre using a card because you donât have the cash, that might be a good reason to rethink the idea of sending money in the first place.
Thatâs a huge red flag, says Bruce McClary, vice president of public relations at theÂ National Foundation for Credit Counseling.
âThe need to convert credit into cash is what really gets my attention â because that hints at a lack of savings,â he said. âItâs a reality a lot of people are facing, especially now.â
Cash advances arenât as expensive or risky as payday loans and car title loans, but they should be among your last resorts. If you’re looking for short-term relief, you could ask your credit card issuer for help, or find out if you qualify for a personal loan. You could also borrow from a family member or trusted friend, but be wary of the potential relationship toll if you can’t pay them back.
Getting cash from credit cards
Fifty-two percent of Americans report that the pandemic has damaged their finances, according to a recent survey by the NFCC. More than a fifth of those had to tap savings for everyday expenses, while 16% increased their credit card spending.
And thatâs a sign of financial stress, says McClary. âIt means that, in some situations, they have run out of savings.â
There are ways you can use your card to get cash, though.
Cashing in rewards
Some rewards cards from issuers such as Chase, Bank of America and US Bank let you deposit cash-back rewards directly to your bank account.
And Wells Fargo also will let you deposit its Go Far Rewards directly into another Wells Fargo customerâs account, says Sarah DuBois, spokesperson for the bank.
Many credit cards let you convert rewards into retail gift cards. So a pile of points can help a friend or family member buy much-needed groceries or a few holiday presents.
Or simply âbuy a gift card for someone,â says Bratsakis.
Retailer-specific gift cards and gift cards issued through local and regional retail associations and malls often come with no fees â meaning every dollar you spend goes toward your gift.
While you can get a cash advance or use convenience checks from your card issuer, both those options often come with fees and higher interest rates. Not a smart money move, especially in the current economy.
While some lenders may offer convenience checks with deferred interest, thatâs not the same as âno interest,â says Bratsakis. Also, if you donât pay the loan in full, will you owe the full interest retroactively?
âThatâs where consumers have to be careful,â he says. With a convenience check or even a cash advance, âthatâs usually where consumers can get themselves into trouble if they canât pay it off and get hit with deferred interest.â
See related: What is deferred interest?
When it comes to peer-to-peer payments, cash really is king. You can then put it into a funded account with the money transfer platform or your bank account. And most peer-to-peer platforms let you do this for free.
âThe safest way to use these services is to send money person-to-person and be diligent about getting all the details correct so it doesnât go to the wrong person,â says Tetreault.
Only send to people you trust and know in real life, she says. âAnd before sending money make sure you understand what, if any, fees you might incur.â