The Best Cash Back Rewards Card of 2016: Free Money, Please

We can’t argue with free money, and we guess you can’t either. 

Our hunger for a little extra spending is what drives us to sign up for cash back cards; well, that and the endless offers we get in the mail for $100 sign-up bonuses and extra rewards for using our credit cards at grocery stores and gas stations.

There are a lot of similarities with credit cards in the cash back category, but there are some distinct differences as well. It can be pretty annoying to have to sort through all the fine print to figure out which cards are better than others.

Thankfully, we’ve sorted through all that fine print to help you know which card is best. And it’s from all that research that we’ve created our Best Cash Back of 2016 award. Here are the contenders: 

To come up with the cash-back champ, we examined six different credit cards according to seven important categories. Here’s a chart of each card and category:

  BankAmericard Cash Rewards Capital One Quicksilver Citi Double Cash AmEx Blue Cash Preferred Discover It Chase Freedom Unlimited
Intro cash offer $100 after $500 spend $100 after $500 spend None $100 after $1,000 spend, plus up to $200 on 5% of travel buys Match on 1st-year cash back $150 after $500 spend
Intro APR 0% for 12 months 0% for 9 months 0% for 18 months 0% for 12 months 0% for 12 months 0% for 15 months
General cash back rate 1% 1.5% 2% (1% plus 1% on paid balances) 1% 1% 1.5%
Bonus categories? 2% grocery/wholesale clubs, 3% gas No No 3% groceries, 2% gas 5% in rotating categories, changes every 4 mths. No
Limit on cash back? Yes, $2,500 in all 3 categories combined No No Yes, $6,000 on groceries Yes, $1,500 per quarter No
Permanent APR 13.24%-23.24% (Penalty APR up to 29.99%) 13.24%-23.24% (no) 13.24%-23.24% (Penalty APR up to 29.99%) 13.24%-23.24%(Penalty APR up to 29.49%) 11.24%-23.24% (no) 13.24%-23.24% (no)
Best perk 10% deposit bonus Visa Signature enrollment Citi Price Rewind None Free FICO score Chase Ultimate Rewards redemption

Here’s a quick explanation of each category:

  • Intro cash offer – Amount of free cash you get for signing up and the amount you have to spend to get it
  • Intro APR – If and how long they offer 0% APR
  • General cash back rate – How much you get for everyday purchases not included in bonus categories
  • Bonus categories – Purchases like gas and groceries that get you more cash back than the general rate
  • Limit on cash back – Max amounts you can get back on general/bonus purchases
  • Non-intro APR – Interest rate after promo period.
  • Best perk – Something awesome that’s not part of the intro offer or cash-back rates

We’ll pick a winner from each category and assign it points. Since there are six cards, the winner of the category will get 6 points, second place will get 5, third will get 4 and so on.

We’ll double the points for the cash back/bonus rate category since it’s the most important. The winner will be the card with the most points.

During this article we’re going to talk about how much cash back you can get over the course of the year. Our estimates are based on the Bureau of Labor Statistics’ 2015 numbers for the income of an average American household. Here’s what we’re saying the average American spends per year on their card: 

  • About $25,000 overall
  • About $4,000 on groceries
  • About $2,000 on gas
  • About $1,400 on travel*

*This is according to financial site Value Penguin, who estimates Americans spend 2% of their yearly budget on travel.

Those numbers will come in handy later when we talk about bonus percentages for gas and groceries. 

Now, for the first category in our contest…introductory cash back!

Intro Cash Offer Winner: Discover it

This category included some straight-up cash along with a few non-traditional offers. Sorting out which card was best took a little math, but we’ve found our winner. Here’s the list: 

  1. Discover it: $600 (bonus categories incl.)
  2. Chase Freedom Unlimited: $150
  3. Blue Cash Preferred: $170
  4. BofA Cash Rewards/ Quicksilver: $100
  5. Citi Double Cash: $0

The Discover it was our top choice, but it may not be yours if you’re looking for a quick bonus. The Discover’s intro offer is all about one year down the road when they double any cash back you’ve racked up during the year. So, while you won’t get $100 or $150 in a few months, you will get, according to average spending habits, about $600 at the end of the year.

Also, remember that any bonus purchases you make (more on that in a few sections) will get 5% and then be matched, making them 10% purchases the first year.

The Chase Freedom Unlimited was the clear choice for second even though its intro offer is lower than the AmEx. Why did it get ranked higher than the AmEx? Great question. 

The Unlimited’s cash back is a straight-up $150 offer; spend $1,000 and you’ll get the money. The AmEx’s intro offer is $100, plus 5% cash back on travel purchases in the first three months. The average American spends around $1,400 per year on travel. If you spend all that money during the intro period on the AmEx, you’d get $70. 

There’s a good chance you won’t spend your entire travel budget during the first three months, which is why we ranked the Unlimited above the AmEx, while ranking the AmEx above the BankAmericard Cash Rewards and Quicksilver cards and their $100 intro offer. 

Intro APR Winner: Citi Double Cash

This category had a couple of great cards that were above 12 months of 0% interest, a logjam in the middle ground and one card at the bottom. Here are the results: 

  1. Citi Double Cash: 18 months
  2. Chase Freedom Unlimited: 15 months
  3. BofA Cash Rewards/ AmEx Blue Cash/ Discover: 12 months
  4. Capital One Quicksilver: 9 months

The Citi Double Cash is the clear winner here, finishing three months ahead of the Freedom, a full half-year ahead of the Bank of America, AmEx and Discover cards, and it doubled up the intro-APR offer of the Quicksilver. 

Our guess is that the Double Cash is offering such a long intro-APR period to make up for the fact that cardmembers don’t get the up-front cash bonuses the other cards offer. 

General Cash Back Rate + Bonuses Winner (2 years): Citi Double Cash

This category is where things get tricky because certain types of purchases will get more cash back than others. So, to make this as simple as possible, we’ve used the Bureau of Labor Statistics numbers to figure out how much cash back you can get in two years, including bonuses.

We’re using two years to offset the Discover it’s promotional cash-matching in the first year. Here are the results:

  1. Citi Double Cash: $1,000
  2. Discover it: $900
  3. Quicksilver/ Freedom Unlimited: $750
  4. AmEx Blue Cash: $700
  5. BofA Cash Rewards: $660

The big winner here is Citi’s Double Cash card, with a straightforward $1,000 in cash back after two years. The key here is that you pay off your balances in full because you only get cash-back matches on balances you pay off.

In second is Discover’s card, due to its hefty first-year doubling. We tallied up the bonus categories, added them to the 1% purchases and got $300 per year, but the first year is double because of the promotion.

Quicksilver and Freedom Unlimited are tied for third, while AmEx and the BofA card finished in fourth and fifth, respectively.

The big lesson here is not to be fooled by rotating categories. Cards with one cash-back percentage took three of the top four spots. While 1.5% may not be as exciting as 5% bonus categories, it certainly pays out a lot more….and you don’t have to keep track of which categories are giving you bonuses.

Another tip: Judge a card by its four-year value. For example, the Discover it is great the first two years because of their first-year matching program. After two years, you’ll get $150 more in cash back than the Quicksilver and Freedom Unlimited. However, after five years, you’ll get $1,800 back while the other two cards will get you $1,875. 

The same principle applies to travel rewards cards. Capital One’s Venture card gets you more miles over time (annual fees included) than the Chase Sapphire Preferred and the Chase Sapphire Reserve.

Limit on Cash Back Winner: Capital One/Citi/Chase

Some of the cards in the competition place limits on how much you can earn in certain categories. Some don’t. Here are the final standings on cash-back limits: 

  1. Quicksilver/ Double Cash/ Freedom Unlimited: None
  2. AmEx Blue Cash: $6,000 on groceries
  3. Discover it: $6,000 combined from four different bonus categories
  4. BofA Cash Rewards: $2,500 

This category is not as important as the others, simply because the average American household doesn’t spend enough money in any of these categories to max out their cash rewards. That being said, if you have a huge family and spend tons of money (or you’re super wealthy and spend freely), the unlimited cash-back rewards from the Capital One, Citi and Chase cards are a great perk.

Related: 4 Types of Credit Cards Responsible Consumers Use for Big Rewards

Permanent APR Winner: Discover it

This category would seem like it’s tough to judge; after all, all but one of the cards has an APR range of 13.24%-23.24% (based on your credit history, income, etc.). 

However, some of these cards have a penalty APR that kicks in when you pay late, and that’s what separates the best from the worst: 

  1. Discover it: 11.24%–23.24% (no penalty)
  2. Freedom Unlimited/ Quicksilver: 13.24%–23.24% (no penalty)
  3. AmEx Blue Cash Preferred: 13.24%–23.24% (Penalty APR up to 29.49%)
  4. BofA Cash Rewards/Citi Double Cash: 13.24%–23.24% (Penalty APR up to 29.99%)

The Discover card wins out here because it’s best APR is two percent better than the Freedom Unlimited and Quicksilver; none of the three have penalty APR’s either.

AmEx finishes ahead of the bottom two cards because their penalty is 0.05% lower, and there’s a chance they’ll remove the penalty after six months. The other two cards don’t mention a set time to review the account and change the penalty APR.

To give you an idea of how much APR matters, we’ll need to frame it in the context of the average debt a person with a credit card balance has: $16,000 over about four cards. Per card balance: $4,000. 

Over the course of a year, a difference in APR of 2% will cost you $80 a year on a $4,000 balance. So, you can see why the Discover it’s best APR (11.24%) can save you a nice chunk of change compared to the rest (13.24%). 

And if your penalty APR kicks in and you pay 29.99% a year instead of 13.24%, you could end up paying as much as $640 extra, which nearly cancels out your entire cash rewards from the Bank of America card. 

Best Perk Winner: Citi Double Cash

Perks are those benefits you get from a card that aren’t part of the intro offers. We narrowed down this category even further by not allowing perks available on more than one card.

For example, both the AmEx Blue Cash and the Citi Quicksilver have travel and shopping protection, so those perks cancelled each other out:

  1. Citi Double Cash: Price Rewind
  2. BofA Cash Rewards: 10% cash-back bonus
  3. Capital One Quicksilver: Visa Signature program
  4. Chase Freedom Unlimited: Chase Ultimate Rewards
  5. Discover it: Free FICO score 
  6. AmEx Blue Cash Preferred: None

After reading this post from the New York Times, we decided to put the Citi card first because of Citi’s Price Rewind program. Basically, if you buy something with your card and the price drops within 60 days of your purchase, you can get reimbursed for the price difference. The Times article pointed out that the average saving on Price Rewind is about $80 on products purchased for $1,000 or more.

In second is the Bank of America card. We put it there because you get a 10% redemption bonus when you deposit your cash rewards in a Bank of America account. Based on yearly averages, that bonus will put an extra $66 in your pocket.

Capital One customers get enrollment into the Visa Signature program, which gives nice perks at more than 900 luxury hotels around the world.

The last three in this group have pretty uninspiring benefits: the Freedom Unlimited’s link to the Chase Ultimate Rewards program, free FICO score access with Discover and nothing much to speak of from AmEx.

See Also: Good Credit Scores and How to Get There

The Best Cash Back Card of 2016: Citi Double Cash

The race for the best cash back card was really close to the final category. In fact, the Discover it was leading the Citi Double Cash by one point after five rounds. However, it was that perks category that pushed the Citi card into the lead for good on the home stretch. Here are the final point totals…the double-value category is in bold and italics:

  1. Citi Double Cash: 33 [1, 6, 12, 6, 2, 6]
  2. Discover it: 30 [6, 4, 10, 2, 6, 2]
  3. Freedom Unlimited: 27 [5, 5, 8, 6, 5, 3]
  4. Quicksilver: 27 [3, 1, 8, 6, 5, 4]
  5. AmEx: 19 [4, 4, 4, 3, 3, 1]
  6. Bank of America: 17 [3, 4, 2, 1, 2, 5]

Overall, we think the Citi Double Cash card is a solid choice. As we talked about a few sections ago, the cards without rotating categories tend to provide the consumer with much better cash-back returns. This card is no exception, as we predict it can put about $500 in your pocket every year for as long as you own the card.

Both the Freedom Unlimited and Quicksilver finished with 27 points, but we decided to put the Unlimited in third because it offers $50 more in its intro cash bonus offer.

The American Express Blue Cash Preferred finished in fifth. The card fared pretty well in the first two categories, but its low cash-back earnings over the course of two years ended its chance at victory, as did its poor perks.

Bank of America finished last in this competition; it’s not the first time one of the bank’s credit cards occupied the basement in our rankings. The BankAmericard Travel Rewards was one of the worst cards in our Best Travel Rewards Card of 2016 competition. 

If you want to learn more about rewards credit cards, feel free to check out the travel rewards competition we just mentioned, as well as our Best Hotel Rewards Card of 2016 and Best Airline Rewards Card of 2016. 

We’ve also got a great collection of credit card reviews, where we lay out each card’s offer, terms/conditions, reviews and more.

J.R. Duren

J.R. is an award winning journalist who uncovers the hard truths about personal finance, health and fitness through in-depth research and interviews with experts.


comments powered by Disqus

Want to Learn to Shop Smarter and Scam-Proof Your Life?

Join over 2 million HighYa readers who receive weekly how-to guides, tips & reviews and get a FREE COPY of our 145 Scam Hacks e-book. Enter your email below to get started!