Are cash back credit cards worth it?


Many credit card companies today are wooing potential customers with offers of hundreds and even thousands of dollars in cash back bonuses. Are cash back credit cards really a good deal? How can you know if you should switch to a cash back credit card?  Before you open one in hopes of reaping in a cash back bounty, ask yourself the following questions.

Read more: 10 purchases you should always make with a credit card

What’s the annual fee?

Some credit cards reward their cardholders with a no-annual-fee credit card. Others, not so much. In fact, in my research I found a few cards with annual fees between $500 and $1,000 — even higher for adding additional cardholders. Before you sign up for a cash back credit card, check the fine print for the annual fee. Often, unless you are a mega spender, those high annual fee credit cards aren’t worth opening.

If there is an annual fee, you’ll need to weigh what you estimate you’ll receive in cash back bonuses against the dollar amount of the annual fee. If you think you’ll earn more in cash back bonuses than you’ll pay for an annual fee, the card could be a good deal. If not, you’re just throwing money away. Also, there’s plenty of cash back cards that offer no annual fee, so check out those cards first before considering a card that has one.

How much do they pay in cash back?

Each card has different parameters regarding what percentage of purchases they’ll pay in cash back. For most purchases, you’ll receive between 1% and 2% cash back, however many cards offer a higher cash back percentage for certain categories, such as gasoline purchases, restaurant purchases or department store/specialty store purchases.

It’s wise to compare each card’s cash back percentage categories to your own family’s spending habits before choosing a cash back card.

(Editor’s note: Clark has long recommended a website called to find the best cash back card for your specific spending habits.)

Also, it’s important to note that most cards have cash back limits. When comparing cards, note what the total cash back limit is for each company’s card.

What is the interest rate for the card?

This is another very important detail in the search for the best cash back credit card. While some cash back cards have reasonable interest rates of 10% to 12%, others carry astronomical rates of 25% or more. Again, it’s important to read the fine print before accepting any credit card offer so you can be sure you’re signing up for the best interest rate possible.

It’s also important to be sure that the amount of interest you’re paying each month doesn’t outweigh the amount of your cash back bonuses.


If you’re in the habit of paying your credit card balances in full each month, a cash back credit card is a great deal and you won’t have to worry about paying interest. However, if you have a habit of carrying card balances over from one month to another, you may want to think twice about applying for a cash back card in order to avoid paying more interest than you would on other cards. If you can find a cash back bonus card that carries a lower interest rate than your current credit card, it might be worth the switch. As always, we encourage you to work hard to pay off your credit card debt if you’re carrying balances from month to month.

Getting a great deal on a cash back credit card

If you’ve assessed the above parameters and decided that a cash back credit card is in your best financial interest, it’s important to shop around for the best cash back credit card deal. Here are two cash back bonus cards that we use regularly at my house.

The Citi Double Cash Back Card

From the Citi Website: ‘The Citi Double Cash card is a cash back card that rewards you with cash back TWICE with 1% unlimited on purchases plus 1% as you pay for those purchases. Learn why this has become one of Citi’s top cash back credit cards.’

The Citi Double Cash Card also boasts a 0% APR on balance transfers for the first 18 months (no cash back on balance transfers, however), no annual fee and occasional promotional offers when cash back bonus percentages are increased.

The Fidelity Rewards Visa Signature Card

The Fidelity Rewards Visa Signature Card boasts a nice 2% unlimited cash back on all purchases. Also, reward points never expire. Other benefits of the Fidelity Rewards card include:

  • No annual fee
  • Concierge services
  • Zero Fraud Liability
  • Signature travel and shopping offers

Both of these cards are rated among the top cash back bonus credit cards on the market today.

Cash back rewards cards can be a great way to bring a bit of extra income into your home, provided you’ve followed the parameters above and ensured that interest paid and annual fees won’t negate your cash back bonus rewards. Consider using a cash back rewards card for your monthly purchases as one of many steps to help you get one step closer to financial independence.

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