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Cash Vs. Credit Card: a Comprehensive Comparison

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Published: Sep 7, 2023

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Compare And Contrast Cash And Credit Cards (Essay Example)

Have you ever wondered if using cash is better than using a credit card? A vital factor if you decide to use cash or a card is the purpose of this essay for everyone to look at those similarities and the differences on whether to decide to choose as your form of payment on your next purchase.

There are numerous differences between credit and cash, but there are also similarities whether you prefer to use cash or credit they are both a global form of payment when you make any purchase. Also, neither cash nor credit is the value in and of itself, but the value that is assigned to a piece of paper or a piece of plastic to show the fruits of your hard work. Therefore, you can purchase your daily needs with either cash or credit not because they have any real value, but because society has assigned them a value.

When we think about cash, everyone is first. Today, currently the world cannot survive without cash. We cannot survive without money/cash, but there are many ways in which we can use money. The advantage of using cash is that you are limited to how much you spend, for example, if you don’t have enough cash in your wallet, you cannot buy the product if there is not enough cash. Whereas if you have a credit card you are more likely to spend more because you can just; insert, tap, or swipe that capital. Another advantage of using cash is you don’t have to pay bills monthly whereas for a credit card you must pay bills monthly and if you forget to pay one of your bills then you would have to pay late fees for that. Another advantage of using cash is that not all companies accept credit cards, some establishments only accept cash or certain credit cards. 

Overall cash has many advantages, using cash is easier, you have the money when you need it, and you don’t need to worry about paying bills monthly but as I mentioned before it is up to the person to decide what they choose and how to spend their money.

Like cash, credit cards also have their benefits. As mentioned before credit cards are another way to spend money. If you pay your credit card bill on time this improves your credit scores. Having a good credit score has a lot of benefits. You can save on car insurance, looks good on job applications, you can lease housing effectively, and have access to cheaper utility service. However, with the cash, you cannot reap some of these benefits. When you use rewards credit cards, you can earn cashback or other incentives whereas using cash you cannot have these benefits. And finally, the biggest advantage of having a credit card is that if you lose your credit card or if it is stolen you can easily track it or freeze the credit card so that the person who has the card cannot withdraw or spend the money, but with the cash, you cannot do that, once the cash is stolen then it is gone, and you may not be able to get it back. Credit cards also have advantages like cash has its advantages. They are easy to carry around, you can spend how much money you want, you don’t have to limit your spending. You can get a lot of benefits from having a good credit score and so many more advantages

Since the start of the 21st century and as of today, identity theft is one of the highest crimes committed within the world and the United States. As the future of technology advances the more relaxed, we get with securing our identities and ourselves from hackers. Hackers can now infiltrate banking programs, social media platforms, and credit card platforms. Not only to get our money but to get personal information, and even sometimes your Social Security Number, and of course your place of residence. It should be everyone's intention to raise public awareness regarding identity theft. Unlike facial recognition and fingerprints which are unique to individuals, they cannot transfer to another for their use to get personal data Social Security numbers, bank account information, credit card information, telephone numbers, and any other valuable identifying data that can be used to profit from at the victim's expense. 

If you ask several random individuals if they would prefer cash or using credit you will receive many answers some may go for the latter. The stance on using cash over credit cards varies in the aspect of the user, even though cash and credit cards have the same meaning, there are many differences and similarities between them. The debate between which is better to use on a day-to-day basis is ongoing. However, they both have valid arguments depending on the type of person you ask. With the rise of being able to utilize credit a lot easier, millennials and Generation Z are more likely to say credit, and boomers and Gen X are more likely to go with cash. 

As a victim of identity theft, I know the feeling of losing valuable information for the gain of other individuals, I never once have been a victim of losing my identity through cash or leaving something behind somewhere. There have been many times throughout my life where I have assisted other individuals and found information on how to report and how to identify fraud or financial transactions that may be fraud when they lose or leave behind a credit card or their information is stolen as well. This leads me to believe that it's safer to carry cash over credit when it comes to protecting your identity; some people will carry up to four or five different credit cards at one point instead of carrying cash. If you lose cash, it's simply gone but if you lose or misplace your credit cards, you are putting your identity at risk. Now, when you have a credit card, you have the convenience of calling the bank, having them freeze your account, or disabling your card which stops whoever has your card from making a purchase. Often the bank will reimburse you when you if you have fraud protection. 

Carrying cash over a credit card can also cut down your spending habits if you stick to a budget, then that budget in cash will be all you have. One of the biggest factors with carrying a credit card or depending on how many credit cards you carry is the utilization. In an article by bankrate.com, they stated that “Most credit experts advise keeping your credit utilization below 30 percent, especially if you want to maintain a good credit score. This means if you have $10,000 in available credit, your outstanding balances should never exceed $3,000.” Now there have been many reports of fraud transactions simply because individuals do not recognize something on their bill. 

When you carry cash, you are less likely to spend as much money on things because you watch the money disappear with every purchase you make. When utilizing a credit card; you tend to spend more money because you don't see the money leaving your account. I have asked many of my coworkers and family members which method they prefer, and many did state that they prefer carrying cash just because it allows them to keep up with how quickly they spend their money. Another way in which the two are different is whether you pay an interest rate. Some may be high, where you spend way more in paying back that money or they could be less, but you would still have to pay back the money or the minimum at the end of the month. When you purchase with cash; you pay the cost of the item right then and there and nothing more. You do not have to worry about interest payments or monthly payments. Another big significant difference between cash and credit is that with a credit card you can make purchases with money you simply do not have. It is basically, money borrowed. 

In conclusion, you can see that there are differences and similarities between credit and cash. The decision to use either or both solely depends on the individual and what they prefer. You are the one who makes the purchase; you have the power to utilize either cash or credit to buy something that depends on your lifestyle and your habits. I use both at times, but it is based on the type of investment I am making in myself, for instance, if I am paying for gas I utilize a credit card because the cost is low, but the risk is high due to the possibility of hackers utilizing scam or card readers off of the gas pump, but when I am eating out I tend to use cash because I like to see the fruits of my labor and when I tip it’s in cash. For a big purchase such as buying a vehicle or utilizing some store credit, I will use the credit card to make monthly payments to avoid having to deal with the big upfront cost or having to deal with going somewhere to make a payment every month. Cash and credit both have a value, and that value is what you decide to do with it and what you decide to spend it on yourself.

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Financial Literacy

Course: financial literacy   >   unit 3.

• Payment methods intro

Using cash vs. credit card, and other payment methods

• Scenario: comparing payment methods
• Comparing payment methods
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• Annotated Bibliography
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Credit Card vs. Paying Cash

Introduction.

That money remains one of the most important things in life is an obvious fact. It helps to survive buying things that are needed to meet the basic human needs: food, clothes, etc. Sometimes, people earn a lot of money and need to save them; sometimes, people need to make a purchase but cannot afford it. What is the best way out? The best way out is having a credit card. Credit cards have a lot of advantages over cash and vice versa, but which alternative is better? This essay is about the advantages and disadvantages of cash and credit cards.

Cash or Credit Cards?

Cash and credit cards have lots in common. They are both used to make payments for goods and services. They are money but used in different forms. Cash is limited to the amount of money currently at hand, whereas credit cards offer vast borrowing opportunities.

Let’s find out together!

The main differences between cash and credit card are also related to their advantages and disadvantages. One of the advantages of using cash is that one always knows how much he or she spends. For instance, if a person has $50 in cash, which means that he/she simply cannot spend $51. With a credit card, a person can pay for goods or services and later forget where the money has gone. Credit cards allow spending more money than a person has. Everyone loves “free money”, but each credit must to be paid off. The longer a person waits the bigger the amount of money he/she has to pay to the bank. Therefore, credit cards result in debts, which not everyone can handle (Evans & Schmalensce, 1999).

If a person purchases something and then wants to return it to the store, credit cards will not allow for a full refund. The bank will charge something for its services. However, if something is paid with cash, a full refund is more likely. With credit cards, people do not need to carry a huge amount of cash or use checks. Thus, a credit card reduces the risks of losing money or being robbed. Also, sometimes, a person may not know when exactly he or she will want to make a purchase. As a result, with a credit card, the buyer does not have to run back home or go to the bank to take the needed sum of money to make a purchase.

On the one hand, a credit card can be easily stolen, like cash. However, unlike cash, credit cards are susceptible to Internet frauds. As a result, a person ought to be really careful not to be cheated. If a credit card is stolen, its owner may not understand it at once. Meanwhile, the thieves will have enough time to take all money from the card or personal information about the owner, if they need it. On the other hand, credit card owners have a special type of insurance, so they should not be afraid if their cards are stolen. Some companies offer social reward programs to those, who have credit cards, so a person can get a 1-5% cash return from the money spent on certain product and service categories or pay with a credit card in certain stores (Ausubel, 1991).

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Credit cards allow customers to borrow a certain sum of money to pay for things, but there are limits on the amount of money that can be borrowed. At the end of each month, a customer will have to pay back all or part of the sum that has been borrowed. Today, credit card owners use the Internet more often than ever before. Credit cards enable their owners to make purchases by Internet, when needed. However, here is one problem: a person who makes purchases from an Internet store cannot always be sure that the product he/she has ordered will be delivered in a good condition. In most cases, when cash is used, buyers see the goods they buy, they can touch them, smell them, etc. With cash, individuals see exactly what they want to buy (Panurach, 1996).

If a person has problems, for example, faces a life-versus-death situation, credit cards can become a saving ticket. If a person has cancer, treating it may appear to be too expensive. Insurance companies do not give money to spend it on a bone narrow transplant, as it is still believed to be experimental. However, the situation cannot wait until the dispute is resolved. If a person has a credit card, which allows borrowing money, there is a good chance for this person to stay alive. Even if, after this operation, a person goes bankrupt, he/she can take part in a different program providing assistance to individuals facing similar situations.

Additionally, if a person travels and wants to make payments quickly and conveniently, he or she will have to exchange the currency. With a credit card, this problem disappears. A person does not have to search for a currency exchange and can pay with a credit card, no matter its basic currency. Finally, it should be noted, that using credit cards can help individuals to build a positive credit history. It is very important when applying for a job or in matters involving loans and rentals. With a good or excellent credit history, a person can ask for a loan to buy a car or a house, if he/she cannot afford buying it at once (Chakravorti, 2003).

Obviously, all forms of money have their advantages and disadvantages. To make a good choice, one should first understand his/her basic life needs. For example, those who travel a lot will find it easier to save and spend money using a credit card. If a person decides to use a credit card, it is better to look for the best offer, which includes insurance or other benefits. It is wise to remember that credit card companies use different types of tricks, and that is why everyone is to be careful while using a credit card. Each credit card owner should save all checks and documents to monitor their credit card balance. As a result, it is possible to say that the decision to use cash or a credit card depends on person and his/her needs.

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The debate on cash versus credit card has been going on for some time with no clear winner: Which is a better payment method, cash or credit? Paper or plastic? A number of valid arguments exist for each side, and the answer depends on who you ask. Here’s a look at the two payment methods and why some people are all about credit cards and some  people prefer to stick with cash .

The Case for Cash

Credit is still a fairly new concept within the history of finance, so many people would rather stick with paper money than charge purchases to credit cards. Here are some of the best reasons to always pay with cash:

Widely Accepted

You won’t usually hear someone say, “Sorry, we don’t accept cash here.” Cash is universally accepted — except online, technically — so you’ll always be able to make purchases, which is convenient. Credit cards, on the other hand, aren’t always accepted at every merchant.

How to:  Deposit Cash to an Online Bank Account

Tangibility

Sometimes it’s easier to spend money when you don’t see it leave your bank account. When you have a wallet full of cash, on the other hand, you watch it disappear as you make purchases. Many people prefer to use cash only because it helps them keep mental tabs on how quickly their money is running out.

No Interest or Fees

The great thing about making purchases with cash is you pay the item’s cost — and that’s it. You don’t have to factor in interest payments. You also don’t have to worry about racking up late fees at the end of the month because there’s no bill — you’re always paid up. Paying cash makes things much simpler and less expensive, overall.

Freedom From Debt

With cash, it’s much harder to fall into debt. You can still overspend and end up totally broke, but if you never actually borrow any money, at least you don’t owe creditors — or more money in interest — at the end of the day.

See:  How Much Debt Americans Really Have

No one has ever had their identity stolen by leaving their cash behind. Credit cards can be the key to your personal financial information, but money is just money. You don’t have to be concerned about fraud when you spend cash.

The Drawbacks of Using Cash

Paying with cash comes with some disadvantages, too. Here’s what you should consider before using this traditional method of payment:

Cash Doesn’t Provide Theft Protection

If you carry cash and you misplace your wallet, your only hope of recovering the money is someone turning it in.

Check Out:  Types of Credit Card Fraud Protection

Cash Is Hard to Track

If you’re trying to track your expenses and don’t like hoarding receipts, you might find it challenging to keep track if you pay in cash. When you use credit cards, you get a statement each month that tracks what you’ve spent. Log into your credit account online and you can typically see charges almost immediately.

Some Purchases Require Credit Cards

When you’re shopping online, paying with cash isn’t an option. If you don’t want to use a credit card, you can use debit card instead.

When to Use Cash

Many times, it’s advantageous to use cash, and some purchases are just easier to make with cash. For example, if you buy some Girl Scout cookies, unless your neighbor’s daughter has a card reader with her, you’ll need cash or a check. Here are other examples of   when to use cash :

Use Cash to Reduce Overall Spending

If you know you’ll be tempted to overspend — or you just want to make absolutely sure you stick to your budget — pay with cash. Take only the amount you’ve budgeted when you shop so you won’t be tempted to add extra items to your cart.

Use Cash to Support Small Businesses

Each time you use your credit card to pay for a purchase, the business pays a fee to the card issuer for processing the transaction. If you’re making a small purchase from a local business, like a morning bagel on your way to work, the cost of a credit card transaction for such a small item can eat up the narrow profit margin, which might lead the merchant to raise prices. In addition, some businesses might offer a discount if you pay with cash.

Related:  9 Businesses That Are Still Cash-Only

Benefits of Credit Cards

The average indebted U.S. household holds $7,996 in credit card debt, according to WalletHub’s 2017 Credit Card Debt study. Aside from being able to buy things you can’t actually afford — which isn’t necessarily an advantage — here are some of the best benefits of paying with a credit card:

Large Purchases

Imagine if every time you needed to make a big purchase, you had to wait for weeks or months until you had saved up enough to buy it. This might be doable when you decide to upgrade your TV, but what if your car needs a new transmission or if there’s a hole in your roof at home? You can’t afford to wait.

Credit cards allow you to make purchases and then spread out the cost over a longer, more manageable period of time. Many credit cards also offer extended warranties and purchase protection on eligible purchases. So if you use your credit card to make a large purchase on something with a warranty, the credit card could extend that warranty for up to three years, for example.

If you’re prepared, you can always   lean on your emergency fund   instead of charging more to your credit card.

Expense Tracking

Another problem with cash is there is no record of where it went unless you hold onto every receipt. Credit cards, however, present you with a paper trail of transactions every month in your statement. This makes tracking and understanding your budget a whole lot simpler and also alerts you to any suspicious charges.

Credit Score

It’s hard to get by in today’s society without a credit score. The credit rules might not be fair or make sense, but whether you want to obtain a student loan or turn the utilities on in your new apartment, you’re going to need credit. Of course, the only way to build credit is to use credit.

Learn:  How It’s Possible to Have a Perfect Payment History and Bad Credit

Credit card rewards can make you spend more than you should, but, if used responsibly, a credit card that offers rewards could earn you some extra cash — or  even a free flight or trip . If you buy your gas with cash, you won’t get any money back; but if you use a gas rewards card, you could get 1 to 5 percent cash back, for example.

Yes, this was an argument for cash, but credit cards have their own benefits when it comes to protecting your money. The problem with physical money is that if you lose it, it’s gone. That’s it. Credit cards, on the other hand, are just pieces of plastic. If you lose yours, you can cancel it and not lose a dime. Plus, if it does fall into the wrong hands, you’ll be liable for very little of the fraudulent charges, if any. Your liability is capped at $50 if you lose your credit card or it’s stolen — and if you report the theft to your credit card company before any transactions occur, you won’t be liable for any fraudulent charges. In addition, many credit cards offer zero-liability policies.

The Drawbacks of Using Credit Cards

Before you commit to a completely cashless lifestyle, understand the cons of using credit cards. If you’re debating between using cash or credit card, remember that not every merchant accepts all credit cards, for example. Here are other drawbacks you should consider when it comes to using credit cards:

You Tend to Spend More With Credit

When you pay with cash, your wallet is literally lighter when you’ve finished your transaction, which should make you more conscious of how much you’re spending. When you pay with a credit card, you are more likely to overspend on purchases because you have time between making the purchase and paying your bill. You might not realize how much you’re spending when you use credit — until you get that bill.

You Must Apply for Credit

Before you can use a credit card, you have to apply for one. If you have bad credit, you might need to   get a secured credit card   to rebuild your credit.

A secured card requires you to make a refundable deposit that guarantees your debt. You might not want to get the credit card requiring a deposit of $500 or more if money is tight and you need the cash for your emergency fund.

Using Credit Comes With Credit Card Fees and High Interest Rates

Credit cards interest rates, along with fees, can offset any rewards you earn. If you always pay your balance on time and in full each month, you’ll have no issue with rates and fees.

But if you don’t pay your balance on time, be aware that the maximum first-time late payment fee is $27 — and if you pay late more than once in a six-month period, the penalty jumps to $38. At those prices, it’s easy to see how you can offset any rewards you’ve earned if you don’t pay on time. Plus, interest charges can pile up fast, too, if you don’t pay off your balance each month.

Check Out:  Things You Should Never Put on a Credit Card

When to Use Credit Cards

Despite its drawbacks, using credit cards can be beneficial in many cases. Here are some situations when it’s ideal to pay with a credit card:

Use Credit to Rack up Rewards

Many rewards credit cards offer a range of incentives, including cash back, airline miles and gift cards. When you use cash-back credit cards, you’re essentially getting a discount on every purchase you make. If you can control your spending — and you’re going to spend the money anyway — get rewarded for using a credit card.

Use Credit to Build Your Credit

If you pay for everything in cash you won’t be able to improve your credit score. Even paying for purchases with a debit card won’t help you build credit.

Each month that you pay your credit card bill on time, however, an on-time payment is added to your credit report, which boosts your credit score. Your credit score is based 35 percent on your payment history, so it’s crucial to pay on time.

Related:   10 Best Credit Cards for Building Credit

Use Credit for Insurance on Large Purchases

You already know that putting a large purchase on a credit card could be worth rewards or miles, but it can also give you some peace of mind. Some credit cards offer extended warranty protection on purchases at no additional charge. For example, Discover offers up to $500 in coverage if any of your purchases are damaged or stolen within 90 days.

Cash vs. Credit Cards: Both Are Here to Stay

Regardless of whether cash or credit is best, getting along in today’s world without using some type of credit is very difficult. Even if you prefer cash, you’re probably going to have to borrow money at some point — even if it’s not necessarily on a credit card. Things could change in the future, but for now, credit isn’t going anywhere. And neither is cash.

Casey Bond  and   Michael Keenan   contributed to the reporting of this article.

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Should You Pay in Cash?

With the proliferation of plastic and digital alternatives to hard currency, many people consider carrying cash a throwback to an earlier age. In the modern age, it's all about fast transactions provided by credit cards . Cash may be king, but "buy now, pay later" reigns supreme.

While there are many benefits to purchasing with a debit or credit card, sticking to cold hard cash for your routine daily transactions may ultimately help your wallet. Let's take a close look at how using cash instead of plastic can contribute to your ability to budget your money better, save more, and invest more.

Key Takeaways

• While there are many benefits to purchasing with a debit or credit card, sticking to cold hard cash for your routine daily transactions may ultimately help your wallet.
• Using a credit card encourages people to buy more and spend more. Multiple studies have found that people will spend more when they use a credit card compared to cash.
• Paying in credit cards does offer an enviable convenience to "buy now and pay later," but individuals must be careful to monitor their spending carefully at risk of carrying heavy debts.

The Benefits of Cash

Diminishing the chance to overpay.

One drawback of credit and debit cards is that they encourage you to spend more than you should do, and more than you intend to, by giving you easy access to capital. It simply doesn't feel like you're spending more money when you're using credit cards since you can't feel the money leaving your wallet.

Just as cards encourage overpaying for one item, they allow you to buy more things than you mean to. Stores are designed to display products appealingly and encourage impulse buying. Multiple studies have found that people will spend more when they use a credit card compared to cash. For example, an MIT study from its Sloan School of Management found that individuals may spend up to 100% more when shopping with a credit card, as opposed to cash.   Another study published in the Journal of Applied Psychology found that diners tipped an average of 4.29% more when using a credit card.  

What can you do to avoid this? Generally speaking, only carrying the cash you are prepared to pay for a given product will prevent you from buying the next level up and paying for features you don't need. That's the best way to keep shopping within your budget. If you are motivated, you will find discounts or cheaper alternatives to your regular brands to make that cash go further and maybe earn yourself a luxury item with the cash leftover.

Fewer Security Risks

There is also a practical security advantage with cash. Although debit and credit cards often have personal identification numbers (PIN) and chips for extra security, there is less risk of identity theft or your information getting stolen online when using cash. Cash is only protected by your ability to defend it should someone try to take it from you.

Cash vs. Credit Cards

Cash has one very clear advantage over using a credit card: if you use credit and end up carrying a balance, you will incur interest on your purchase. According to the Federal Reserve , the overall credit card interest rate in Q1 of 2021 was 14.75%.

If you save up enough cash for the same purchase, you are giving yourself the equivalent of a huge discount by not using your card. Before you sign up for a card, make sure you know what you're getting into by carefully examining the credit card agreement.

A credit card is only a good alternative to cash if you promise yourself you'll pay it off in full every month, and you do. If managed well, credit cards (even secured credit cards ) help you build credit to buy a home or another large purchase in the future.

Cash vs. Debit Cards

A debit card used responsibly can be the best substitute for cash, as long as you know there's money in the bank. By using a debit card, you're not incurring any new high-interest debt. As long as you are not incurring any overdraft fees , or withdrawing money impulsively from ATMs that charge high fees, debit cards can be a straightforward way to make purchases.

That being said, the biggest drawback of a debit card is that spenders don't get to build their credit. But like a credit card, a debit card trivializes purchases since they're harder to keep track of than counting the cash in your wallet. If you carry cash, you'll know how much you're spending from day to day. You might even put the brakes on if you're spending too much.

With a debit card, many who don't check their account balances until the end of the month, when the bill arrives, will be surprised to find they incurred so many charges that they completely forgot about.

The Bottom Line

Ultimately, individuals use a mix of both cash and credit cards for different kinds of purchases. While paying in cash will most likely help you save money and make fewer impulse purchases, paying in credit cards does offer an enviable convenience and allow you to afford larger items—given you monitor your spending carefully and make sure to pay off your balance each month.

With cash, your spending is straightforward and there is less risk of identity theft. Ultimately, it's up to each individual to make the best decisions based on their financial health, what they are purchasing, and the risks they are willing to incur.

Springer Link. " Always Leave Home Without It: A Further Investigation of the Credit-Card Effect on Willingness to Pay ."

APA PsychNet. " Credit card insignia and restaurant tipping: Evidence for an associative link. "

Federal Reserve. " Consumer Credit - G.19 ."

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Cash vs. Credit Card: Which Should I Use?

12 Min Read | Mar 16, 2023

Tap. Beep. Approved. Another $5 coffee charged to your credit card. That’s the third charge this week, but you figure pulling out your card is way easier than digging in your wallet for cash.

Sure, credit cards may seem more convenient. But what you probably don’t realize is how quickly those $5 swipes add up . . . and just how much your preferred payment method is actually costing you.

Which should you use? Cash or credit? It’s time to settle this debate so you can make sure you’re in control of your spending—and not the other way around.

Cash vs. Credit Cards: Which Should You Use?

If cash and credit cards went head-to-head in a boxing match, cash would definitely come out on top. Cash is king—even if it seems like we’re heading for a cashless society .

Now, when we say “pay in cash,” what we want you to hear is “pay in full”—which is the opposite of borrowing money. Paying in cash is more about the way you manage your money than it is about what you actually hand the cashier at the register. But there are definitely times when using physical cash (you know, those pieces of paper with presidents’ faces on them) works in your favor.

But before we get into all the reasons why cash reigns supreme, let’s take a look at why people tend to rely on credit cards more than cash.

Reasons People Use Credit Cards

Eight in 10 adults (84%) have at least one credit card. 1 But like your mom said: Just because everyone’s doing it, doesn’t mean you should too.

Here are some of the most common objections we hear for why people don’t want to part with their credit cards.

Despite the promise of fancy rewards , credit cards end up costing you more in the long run. How? Well, you’re tempted to spend more to earn more points, which increases your balance. The higher your balance, the less likely you are to pay it all off each month.

And between all the fees and insane interest rates , any money you would’ve “earned” in points is basically canceled out. Plus, it’s easier than you think to get caught up in a cycle of credit card debt all to chase air miles you’ll probably never use.

Also, you usually have to spend  thousands  on a credit card to get $100 cash back. And you don’t actually get to put a fresh bill in your wallet—it’s just more credit added to your account to keep you spending. See how sneaky this whole process is? The idea of cash back and credit card points may sound great, but it’s just a tricky way of getting you to spend more than you would have otherwise.

We hear it all the time: “I can’t travel without a credit card.” Uh, yeah you can ! Your debit card will do just fine on your beach vacation or your business trip to Dayton. In fact, a debit card can do everything your credit card can do —except put you in debt.

Now, some hotels or rental car companies may put a temporary hold on your card in case of damages. (Don’t worry—you can still use your card. You’ll just see a pending charge on your account until you check out or return the car.) And as long as you’ve budgeted enough for your trip and have some extra cushion in your bank account, it shouldn’t be a problem. Just call ahead and ask how much the hold will be so you can plan for it.

3. Building Credit

One of the top reasons people open a credit card account is to build up their credit score . But have you ever stopped to think why you need to build your credit in the first place?

Don’t let credit control your life! Learn the proven plan to win with money.

Here’s how it goes: You borrow money to build up your credit score . . . to be able to borrow more money . . . to build up your credit score . . . to be able to borrow more money. It’s a never-ending cycle that gets you absolutely nowhere (kind of like that last season of Lost ).

A FICO score is only useful if you play one game: the credit game. But guess what? If you never borrow money, you don’t need to worry about having the perfect credit score. In fact, you can live—and thrive —without credit . Yeah, we know that goes against everything your high school economics teacher said. But the truth is, you don’t need a credit card (or any form of credit) to survive.

4. Emergencies

But what if an emergency happens and I need to use my credit card? We get it. The AC breaks on the hottest day of the summer. The transmit-fuel-carburetor-thingy (you know the one) goes out on your car. And it always seems to happen when you’ve got zilch in the bank.

So, what do you do? You reach for the credit card—which only turns your emergency into a payment-induced nightmare. But if you had an emergency fund , you could just pay for the problem right then and there and not have to worry about paying it off later.

And it’s not scientifically proven, but we’ve found Mr. Mayhem tends to stay away when he knows you’ve got an emergency fund in place. Plus, it does wonders for your peace of mind.

It’s never fun when someone swipes your card number and goes on a shopping spree with your money (uh, rude!). And many people think using a credit card gives them more protection from these modern-day pickpockets. But that’s not necessarily true.

While you might be able to cancel fraudulent charges and get a new card, there’s a whole other threat you have to worry about— identity theft . And Dwight Schrute was right when he said identity theft is not a joke.

If someone manages to get your credit card account info (usually from online purchases), they can open up new credit accounts in your name, take out loans, and steal other personal data. And by the time you get your credit card statement the next month and notice all the fraudulent charges, the damage is already done.

Each time you swipe your credit card or type your card numbers in online, you increase the chance of having your personal info compromised. Raise your hand if you want to have your identity stolen . No one? That’s what we thought. Using cash can help you keep your personal information . . . well, personal .

The Benefits of Using Cash

So, now that we’ve gone over the pros and cons of credit cards (which are really just cons), let’s talk about cash. You know—Moola. Dinero. Bucks. Stacks. The green stuff. Dolla’ dolla’ bills, y’all!

Here are the reasons why it’s better to pay with cash.

1. You don’t have to worry about fees.

Think of those times you run into the dollar store to buy a few items . . . only to find out there’s a minimum charge to use a credit card. So, what do you do? You add a few packets of gum or a candy bar and end up spending more than you planned.

Or picture this: You spot the perfect tomato at your local farmers’ market. Farmer Joe takes credit cards, but because he’s a small business, he gets charged for each swipe. That means he’ll probably tack on a couple dollars to help cover the convenience fee (which isn’t very convenient for you, is it?).

Oh, and there are plenty more ridiculous credit card fees where that came from. But you can avoid all of them simply by using cash instead.

2. You avoid paying interest.

Spoiler alert: When you use a credit card, you’re not actually using your own money. You’re just racking up a tab you’ll have to pay back later. If you don’t pay it back in full and on time , you get charged interest (plus late fees). And in case you haven’t heard, the average credit card interest rate has reached an all-time high—20.4%! 2

You know a great way to avoid paying interest? Paying with cash! You can buy what you need, without worrying about making payments for months to come and forking over the interest toll. It’s a win-win!

3. You spend less.

When you use a credit card, you have no real idea of how much you’re spending in the moment—because you get the bill later. But there’s something about physically handing over your hard-earned cash that makes you think twice before you spend it.

In fact, people tend to spend more when using credit cards than cash. 3 And a study by MIT found credit cards “motivate spending by exploiting reward networks in the brain.” 4 In other words, credit card companies know how you think better than you do—and they use this knowledge to control your spending habits and get you to make more impulse purchases .

Paying with cash means you’re more likely to not buy something and stick to your budget, as well as find ways to stretch your dollar , like shopping around and looking for sales. Watching those $20 bills leave your wallet or envelope system makes you actually think about what you’re spending—instead of just mindlessly swiping your credit card.

Another study found that those who pay with cash actually have a more positive relationship with the items they purchase. 5   You’ll appreciate your brand-new transmission, reupholstered reading chair and even your kids’ Cap’n Crunch more if you pay with cash instead of putting it on a card.

4. You own, not owe.

Paying with cash keeps you from spending money you don’t have —which means you don’t owe anyone. And unlike credit, when you buy those new shoes with cash, you don’t have to worry about making payments on them or the interest coming back to bite you. You own those shoes. End of story.

With cash, if you can’t afford it, you can’t buy it. So, if you blow your grocery budget at the beginning of the month, you’re going to  feel  it at the end of the month. And when you realize you don’t have an endless supply of money at your fingertips, you’re more likely to change your spending habits . Trust us, seven days of tuna fish sandwiches may be the best overdraft protection there is.

5. You always have cash on hand.

Besides all the reasons we just mentioned, having cash on hand is always a good idea.

Think about all those times you wish you had some bills in your wallet: The parking attendant at the county fair only takes cash. Your favorite food truck doesn’t accept credit cards. You wait in line for that limited-edition concert poster, only to realize it’s “cash only.” You just found the cutest dress at a local boutique, but their card machine is down. You want to keep a gift secret from your spouse. You feel like you should give some money to the man on the street corner.

Or what if you’re in a real pinch? Like if you break down in the middle of nowhere and Bubba’s Tow Service only takes cash. You’ll really wish you had cash on hand then.

Look, it may not happen all the time, but do you really want to take that risk? Cash is still useful, and it can really come in handy—especially in an emergency.

What About Online Purchases?

We get it—many of us do most of our shopping online nowadays. In that case, a debit card will do the trick! It’s the only same-as-cash payment we approve of, and it’s just as secure as a credit card. Actually, debit cards are safer than credit cards because they won’t put you in debt.

But even if you use a debit card, don’t be fooled by those buy now, pay later scams when you’re scrolling through online stores. Installments may not be credit cards, but they can put you in debt just as fast—maybe even faster.

You  Can Live Without a Credit Card

So, which should you use: Cash or credit cards? The winner is . . . cash! Ding ding ding!

Go ahead and say goodbye to those credit cards . Because the truth is, you don’t need them. In fact, you’ll find that life is a whole lot better without credit cards .

Look, we know you can’t pay for  everything  with actual cash. But using cash when you can—and more importantly, not borrowing money—makes all the difference in helping you spend less, stay out of debt, and stick to your money goals.

And if you really want to keep more cash in your pocket each month, you need a way to stay on top of your spending—and the best way to do that is with a budget . Yep, no matter your preferred payment method, budgeting is the best thing you can do for your finances.

A monthly budget shows you exactly where your money is going in real time and keeps you from breaking the bank (unlike when you use credit cards). And the EveryDollar budgeting app makes tracking your transactions (even the cash ones) super easy! 

Finances Feeling Out of Control?

EveryDollar gives you a plan for your money—so you can spend with confidence and make progress toward your goals.

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About the author

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

The Truth About Credit Card Rewards

Credit card rewards may seem like a no-brainer, but we’ve got three big questions: How do they stack up next to interest payments? Is there a better way to manage your money—cash back or not? And who’s really paying for those perks?

How Does Credit Card Interest Work?

Credit card interest rates are at an all-time high! Find out where those numbers come from and how to avoid paying the toll.

Cash and Credit Cards: Comparative Analysis

Introduction, cash and card payments, works cited.

The modern world allows people to use more than one type of money to participate in trade. Currently, cash and card payments coexist, although there is a significant trend in favor of greater use of bank cards (Boden et al.). In addition, other payment methods are developing, allowing people to link a bank card to a program on their phone or watch. All this facilitates the payment process and the obstacles associated with using cash. These changes affect people’s preferences in payment methods and shift them to more choices of the most convenient way.

The choice of payment method is influenced by its convenience and availability. According to Shift Processing, credit cards are the preferred method of an exchange over cash, as they require minimal human effort. Statistics confirm that a typical cash transaction is $22, while a typical credit card transaction is $112 (Shift Processing). People who pay with a bank card experience significantly less stress when making a purchase and emphasize “the lower pain of paying” (Boden et al.). They are more likely to spend more money using a credit card because it is psychologically easier.

The usage method and spending limit fundamentally differ between cash and credit cards. Cash is a type of money that contains both paper and coins, so when people pay in cash, a percentage of their money is immediately deducted. Since a person immediately gives away his money, he approaches the purchase with great deliberation. In contrast, a credit card can be used to borrow from a bank, and the lender finances the seller on their behalf to complete the purchase. Thus, a person gets the opportunity to use money under the agreed-upon limit.

Both cash and credit cards have certain advantages when using them. Cash is easily converted into commodities as it is widely known, fast, and does not pose a significant risk of data leakage. Bank cards provide mobility of transactions but require special equipment or software. Therefore, a certain amount of cash is a safety net in a situation when it is impossible to make a transaction by card. Otherwise, a bank card is similar to paper money, allows you to purchase products and services, and ensures the security of recovery in case of theft.

In conclusion, cash and credit cards are interchangeable payment methods with advantages and disadvantages. Cash is a traditional way to pay for goods and services and is still handy for smaller purchases. Moreover, cash is more secure as it does not require special terminals or software to complete a transaction. However, in today’s world, a credit card is a reasonable and desirable substitute for cash for personal expenses. In addition, it is a necessary tool for e-purchases, provided that you can fully pay off your debts.

Shift Processing. “Cash Vs Credit Card Spending Statistics.” Shift Processing , Web.

Boden, Joe, Erik Maier, and Robert Wilken. “The effect of credit card versus mobile payment on convenience and consumers’ willingness to pay.” Journal of Retailing and Consumer Services , vol. 52, 2020, p.101910.

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Cash vs. credit vs. debit — which should you use?

Spending money can be stressful—don’t you agree?

We need to watch how much we’re spending and what we’re spending our money on.

So we add the layer of money management that drives most people crazy—budgeting.

Once we’ve nailed that down, we have yet another thing to consider—how are we going to pay for our purchases?

Years ago, everyone used cash. Then came debit cards as a convenience. Then credit cards began to make a wave as a means for making everyday purchases. In this article I’ll bring some clarity around each payment method and help you decide when to use each, and which one is best for which situation. Let’s kick it off with cash.

When you should use credit

Credit cards have a lot of power when you use them responsibly, but remember that if you don’t pay your bill in full you’ll have to pay interest. Here are some of the best circumstances to use a credit card.

When you’re traveling

When you’re traveling, using a credit card is the ideal payment method. This goes for everything from booking the trip to paying for your hotel and car rental. The points below will support this, but when you travel, you’ll need extra security in case your card gets lost or stolen. With a credit card, you have no liability for fraudulent charges, and you can cancel or freeze your card immediately.

When you’re traveling out of the country, you’ll get better rates for foreign exchange fees than buying currency with American dollars and using it in the country you’re in. In fact, we’ve reviewed the best credit cards that have NO foreign transaction fee at all. These cards also give you nice perks for making travel purchases.

Finally, most good travel rewards cards will also offer travel insurance. For example, the Chase Sapphire Preferred® Card , offers $100 a day of delayed baggage coverage for a maximum of five days.

When you want rewards

Most credit cards now will give you rewards for using them. Cash back credit cards are a fantastic asset since you’re getting money back for things you’re going to buy anyway.

When you’re making charges for work

Many of us need to use a credit card for work expenses—whether we own your own business or have to charge things for our job. Using a credit card is best for this because you don’t have to front the money.

For example, when you travel for work, you’ll need to pay for a hotel, car rental, food, and probably a few other expenses. If you use cash or a debit card, you’re out that money right away. With a credit card, you can charge it, submit your expense report, and get reimbursed—all in time for when the bill comes and is due. This way you’re not taking money out of your wallet to pay for expenses that will be reimbursed later.

When you should use cash

It’s funny. Most people I know never carry cash. If they do, they just stick a couple of 20s in their wallets to make sure they have it in case of an emergency.

But data tells us that cash isn’t being used only for emergencies. In fact, a study done by LendEDU showed that, out of 875 Americans polled, 32% of them preferred to use cash for everyday purchases. So this paper money still has its value. Here’s when to use it:

When you have an emergency

Cash is accepted everywhere, so having some on hand is nice in case of an emergency. I would always recommend keeping at least $40 in your wallet (more if you’re comfortable) for the times when you can’t use a credit card.

Another smart way to use cash is to keep up to $200 in an envelope stashed in your glove compartment. This way, if you ever forget your wallet and are in need of money, you’ll have it, and you’re only opening yourself up to a $200 risk if anyone were to ever get into your car.

For more significant emergency purchases, I’d recommend building up a safety net so you can rely on it if you have an unexpected considerable expense—such as an unplanned vet bill, car repairs, or broken appliance in the home. Shockingly, a study from Bankrate showed that only 37% of Americans have enough cash to cover even a $500 emergency expenditure.

Financial expert Dave Ramsey recommends having at least $1,000 in an emergency fund before doing anything else. I agree with this, and would suggest you come up with more than just $1,000 if you can to have as an emergency fund.

When you want to limit your spending

Cash is great for limiting your spending. First of all, it’s a physical piece of paper that you can see. I know that sounds funny, but psychologically we spend less money when we use cash .

This has a lot to do with the fact that you see the money leaving your hand and you can quickly connect that money to the thing you’re buying. With credit, we don’t make those associations as fast.

Try using envelopes with cash in them to budget your money instead of using a credit or debit card and trying to track your purchases. By physically seeing how much money you have left, you’ll be able to manage your spending better.

When you want to make healthier purchases

A study done by the Journal of Consumer Research showed that consumers who pay with cash are less likely to make impulsive purchases on items such as ice cream, chips, and cookies. According to the authors:

The pain of paying in cash can curb impulsive urges to purchase such unhealthy food products. Credit card payments, in contrast, are relatively painless and weaken impulse control. Consequently, consumers are more likely to buy unhealthy food products when they pay by credit card than when they pay in cash.

If you think about your last trip to the grocery store when you paid with cash, you were probably much more conscious of what you were buying, right?

When you want to have a better relationship with the things you buy

This one is fascinating. One study showed that people who use a “more painful” form of payment, such as cash, felt a stronger connection to not only the item they purchased but also the place they purchased it from.

One example might be buying a gift from a local antique store. This article argues that if you pay with cash, you might feel a deeper sense of connection and pride in the item you purchased as a gift, and also a connection with the store you bought it from – so you might go back. The authors say this:

…individuals who pay with more painful forms of payment increase their emotional attachment to a product, decrease their commitment to nonchosen alternatives, are more likely to publicly signal their commitment to an organization, and are more likely to make a repeat transaction.

You’re more in-tune with what you buy, and you become more loyal to a store. This, in turn, can help you become much more conscious about how much you’re spending, where you’re spending it, and what you’re spending it on.

When you want to make a small purchase at a small store

Have you ever gone to buy something at a small, independently owned store and you saw a sign that said something like “Credit card transactions require a $10 minimum” or something along those lines? That’s because businesses want to encourage you to use cash.

According to the National Retail Federation , credit cards charge, on average, 2% to process a transaction. So for every dollar you spend on something at a small store, they’re losing two cents off the top automatically. Most small businesses operate with such a small margin, to begin with, to avoid getting outshined by the “big guys” that two cents can end up making a big difference.

So stores will opt to require a minimum purchase for using a credit card or choose not to accept credit cards at all. That’s why if you’re going to a small store, you should always have cash on hand. Also, using cash may be one of the best things you can do to support a small business and its surrounding community.

When you should use debit

The study done by LendEDU (referenced above) found that debit cards were the preferred methods of payment by the people surveyed. In fact, nearly 44% of the people asked responded as debit being the best method of payment for them. Let’s explore some of the cases when using debit makes the most sense.

When you want to avoid getting into (more) debt

If you don’t have any debt, using a debit card is a great way to stay out of it. Since your debit card is connected to a checking account, you can theoretically only spend what is in the account (which may or may not be a lot).

ValuePenguin found that the average credit card debt in the United States was nearly $6,000. That number jumps to over $9,000 when you look at households who carry balances on their credit cards. With over 41% of households carrying some form of debt, it’s always smart to find ways to avoid it when you can. A debit card can provide the same convenience of a credit card without the worry of accumulating more debt.

You want to pay for everyday purchases conveniently

There’s something about a debit card that makes it convenient when you’re paying for everyday purchases. Things like gas, groceries, and coffee are relatively smaller purchases, and you don’t have to worry about them breaking the bank. In fact, ConsumerCredit.com did a study on this and found that every single respondent who was between 18 to 24 years old used a debit card for everyday purchases. 80% of their respondents overall used a debit card for everyday purchases, as well.

When you’re bad at paying bills

If you have enough self-awareness to know that you’re no good at paying bills, then you should use a debit card. Unlike a credit card, you won’t receive any bills for using it. Many banks now offer excellent online tools to budget and manage your money, so you can control where you spend your cash without having to worry about racking up a massive bill that you can’t afford at the end of the month.

When you want to limit your spending, but don’t want to carry cash

Building off the point above, if you’re going to manage your spending, I told you cash was a great option. But what if you don’t want to deal with all of the singles, fives, and loose change? It can get annoying quick.

A debit card provides an excellent solution for those who want to manage their spending. Those of you that have read my articles before know I’m a massive fan of YNAB. YNAB started with the assumption that you’d be using a debit card, so the software works the best when you do that. If you’re looking for an easy way to manage how much you spend, double down with both a debit card and a YNAB subscription.

» MORE: Read our YNAB review.

When you want the best of both worlds

I look at debit cards as the best of both worlds between cash and credit. You get the ease and spending limitations of using cash as well as the convenience and some of the protections (see more below) of using a credit card. It’s no wonder we see so many studies showing how frequently people use this type of payment method.

To determine which payment method is best, you have to consider many different factors. There are certain situations where it’s going to be best to use cash. Other cases may call for a debit card or even a credit card. My advice to you is first to identify what your financial goals are (i.e., are you trying to stay out of debt or curb your spending) then choose a default payment method that suits you best.

Another thing to consider is using all three methods. For example, you can keep cash in your wallet for unexpected expenses, use a debit card for all your everyday purchases, and then use your credit card for large purchases and travel.

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Credit Cards Vs. Paying Cash Essay Sample

Type of paper: Essay

Topic: Investment , Credit Card , Credit , Debt , Time , Shopping , Banking , Money

Words: 1100

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It has become a very pertinent question whether to use credit card or pay by cash. On one side you have traditionalist who want to pay by cash. And on the other hand are people of new generation who prefer carrying credit. We will look at this issue objectively, and compare and contrast the pros and cons of both to reach a conclusion. The thought process will be to look at both of them from standpoint of convenience and long term financial situation of household. People are using credit card more often these days for purchasing everyday items like groceries and gas. It also offers them convenience of internet shopping, or promising to pay in later like in car rental. It also offers them a great convenience when making a large payment conveniently. Also, it brings in added security of not having to carry cash. Also, it is very risky to carry cash. Once stolen, it is near impossible to retrieve. Like cash, you credit card too can be stolen, but there ways in which you can circumvent this problem. You can ring up your credit card company in time before it is misused upon being lost. Also, credit card companies allow you to reclaim any fraudulent purchases. It is also a fast and convenient way for doing your shopping. Carrying cash can be cumbersome if the amount is high. It will take greater amount for transaction at the counter. Typically it takes less time in the queue if transaction is electronic. You can also keep track of your spending bills by accessing your monthly statement. And can receive the summary either electronically or in mail. You can also set up preauthorized statement to pay your bills. It gives great convenience as you do not have to worry about missing the due date. Further you can also set up your credit card payment such that your credit card monthly balance is automatically deducted from your bank account. Done this way, you can pay for things you really need to buy with the convenience of credit card, and without having to fall in debt like cash. Credit card by default, also offers something like 30 day interest loan. Whenever your credit card bill is generated, you are expected to pay that in about 3-4 weeks. If you pay your bills within the 30 days of generation on invoice, you are not charged interest. And if you exceed that time, the interest rate varies from 18-29% depending on the credit card. This also helps build your credit profile. A good credit profile shows how careful you are with regards to repaying your debt. It conveys to the financial institutions that you are a responsible citizen. If you built it carefully and consistently, it gets you loans for cars or house at a better rate. Credit cards have their negative sides as well. You are typically tempted to spend more if you in possession of a credit card. It is this very temptation that has led many to accumulate debt. Also, one has to accept that shopping in cash discourages you to spend. If you have a credit card, you are more likely to spend. The reason is that you are less likely to resist temptation if you have access to credit card. Also, you are more likely to weigh your priority while buying non-essential items, and help you stick to the budget. Unlike cash, when you are paying with credit card, you don’t feel you are parting with your money. The habit of using cash instead of credit has a profound impact on one’s debt. Unlike credit cards, there are no fees such as interest, late fees, etc with cash. Also, with case you are unlikely to be attracted towards special offers or rewards that prompt you to spend even more. These rewards may look attractive, but over time you realize that they are not worth paying interest on. If tracking your purchases is what you like about using credit card, then you might as well consider using debit card. Just like a credit card, you can access an itemized list of your spending in debit card. Also, data can be downloaded and tracked via Quicken or other online budget applications. So, in a way they have the convenience of credit card, while preventing you from falling into debt trap. If you were only comparing cash as a better option to credit cards, everybody will agree. Unlike cash, in case of debit card it is hard to tell how much of your money you are spending. Also, cash can come handy when you are making a purchase at places that don’t accept credit cards. These could be family owned businesses like corner stores, farmer’s market or even food trucks. Also, at places like flea market or craft show, it is much easier to bargain if you have cash in hand. There are times when it is beneficial to have cash for other person’s sake. One such common example would be giving tip at a restaurant. Although it is now possible to pay tip using credit card or debit card machine, it is much better for the waiter to get it in cash right away. Cash also comes in very convenient as emergency money, where one is in a situation where credit card and debit card are not accepted, and there is not ATM nearby. In conclusion, I would recommend a balanced approach. One should keep credit, debit and cash. Credit card should be used with discretion to pay utility bills or to purchase things online. Typically, use credit card to purchase things one “needs”. This will help build ones credit profile and also avoid unnecessary expenditure. I would recommend using debit card for most of the purchases. It has safety of credit card and as with cash; it does not amount to one’s debt. I would also recommend keeping some amount of cash handy for situations where credit and debit are accessible. The use of plastic, which is a credit or debit cards offers greater security as compared to cash. For large purchases, carrying cash is often not an option as it is too cumbersome and risky. The option of writing a check or getting a bank draft made may be so time consuming that it might deter spending. Debit card, if used responsibly, is an ideal replacement for cash. A credit card can also be a convenient way to pay only if you are in a position to pay the balance by the due date. If you have a problem of overspending, then shopping with cash or debit card is the way to go. As it helps limit your budget and impulsive spending.

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Band 4+: Cash vs. credit cards: pros, cons, and impact on our spending.

In today’s day and age, credit cards themselves alongside online payment methods play a major role in the daily lives of most people, but while online payment as a means of transaction has only recently originated, Credit Cards have existed since much much before. Here, I shall aim to try and compare them against cash and highlight the strengths and weaknesses of each payment methodTo begin with, both cash and credit cards get the job done, and pay the receiver, but what sets both apart is functionality, ease, comfort, and practicality, where the differences arise. In our daily lives, cash plays a fundamental role in most transactions and exchanges of goods and services. Cash is quite useful in most small daily exchanges, is not cumbersome to handle, and requires simple addition and subtraction to do business with it, being most convenient for the average user.But while that is true, to withdraw or get cash, most need to visit ATMs (not counting online payment), where credit cards come into play. Additionally, holding too much cash at any moment gets risky because of the risk of losing your wallet and displacing money. Also, most advocates of credit cards claim it to be just as easy to use as money, slide it in the card machine, enter your PIN, and voila! No need to worry about not having change or cash.After analyzing the pros and cons of both entities, it is clear to say that the debate of credit cards and cash is once again that of momentary convenience, and the needs and desires of an individual user keep changing from time to time. Safe to say, the best path forward is to use both judiciously in their own best way, and what would be even more important is to bring about some radical change, since online payment methods seem to be outdoing both and rising rapidly in most nations around the world, first world and third world.

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Many young people are now attracted to dangerous sports such as snowboarding or mountain biking. What makes these sports so attractive? What measures should be taken to minimize the risks? You should use your ideas, knowledge, and experience and support your arguments with examples and relevant evidence. You should write at least 250 words.

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Cash vs Credit Card (Compare&amp Essay Example

• Pages: 2 (369 words)
• Published: December 29, 2016
• Type: Essay

Comparison Between Credit Cards and Cash People may prefer to have cash in their pockets while others tend to put money in their bank accounts using credit cards. Paying cash is a direct way to purchase things between the costumer and the cashier. Credit card stores a big amount of money which makes things easier, for some people, than carrying a lot of cash. Even though both cash and credit cards have about the same role, there are notable differences and similarities.

Credit cards provide a convenient alternative to cash allowing the individual to carry an infinitive amount of money stored in only a card. For instance, when people travel by an air-plane, they will not be allowed to take more than 10,000 cash, for safety reasons. Credit cards will not be restricted even if there is a million doll

ars put in the card. On the other hand, having cash might not provide convenience for the individual when people desire to take a lot of money. That will make them have fear that they will probably get stolen.

In addition, when one decides to purchase something on the internet, credit cards will be mandatory. That is because the card contains numbers which are going to be typed. That will also prevent sending fake money to the organization which will receive the money. However, if cash can be accepted in online purchases, there will be a lot of manipulation because cash cannot contain any digit numbers compared to the credit cards that have many numbers, such as the card number and name of the holder. Those information are subjective to change in case there are illegal transictions.

life people tend to use credit cards more than putting cash in their wallets. Also, cash is still used but not taken in big amounts that might cause insecurity. Both credit and debit card payments have been proven that they are safer and more convenient than cash payments, especially when it comes to the online purchases. In addition to that, when people travel somewhere they have not been there before, they will be able to know whether or not it is going to be secure to have cash instead of credit cards.

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Cash Vs Credit Card advantages and disadvantages.discuss both view

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To summarize, a robotic teacher does not have the necessary disciple to properly give instructions to students and actually works to retard the ability of a student to comprehend new lessons. Therefore, it is clear that the idea of running a classroom completely by a machine cannot be supported. After thorough analysis on this subject, it is predicted that the adverse effects of the debate over technology-driven teaching will always be greater than the positive effects, and because of this, classroom teachers will never be substituted for technology.

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Debit vs. credit: What’s the best way to pay?

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When do you use a credit card, and when do you use a debit card? Many people don’t think very carefully about debit versus credit. They use whichever card is closest at hand.

Some people mistakenly assume debit is more secure than credit, even though it’s often the other way around. Other people don’t realize that making purchases on debit won’t help them build the kind of credit score needed to take out a car loan or apply for a mortgage.

Is credit always the better choice, or are there times when it’s better to use a debit card? Let’s check out the ins and out of this debate.

• 87% of Americans use a debit card. ( Statista )
• 83% of Americans have at least one credit card. ( The Federal Reserve )
• The average American has 3.84 credit cards. ( Experian )
• There were 376 million open credit card accounts in the U.S. as of Q2 2022. ( American Bankers Association )
• In 2018, Americans made more transactions with debit cards than with credit cards (86 billion vs. 45 billion), but the total dollar value of credit card transactions was higher ($3.98 billion in credit card transactions vs. $3.1 billion in debit card transactions). ( The Federal Reserve )

Debit card vs credit card: What’s the difference?

Debit cards allow you to spend directly from your checking account, while a credit card charges a credit line you’ll pay off later, potentially with interest. When you swipe or tap your card, you’ll enter a pin for your debit card while a credit card may require a signature.

Beyond the technical differences, debit cards and credit cards differ in one significant way: rewards. Credit cards come in many varieties, but many credit card holders use them because they offer cash back. In fact, Bankrate’s January 2022 survey found that cash back was Americans’ favorite credit card feature by far.

The Federal Reserve’s 2019 Payments Study found that debit cards were used almost twice as often as credit cards in 2018, but the value of credit card payments exceeded the value of debit card payments by nearly 30 percent.

How do credit cards work?

Credit cards allow you to make purchases now and pay them off later. Most credit cards offer revolving lines of credit , so you can either pay off your balance in full every month or carry a balance from month to month and pay it off over time. If you do not pay off your balance in full before your credit card grace period ends, your unpaid balance will accumulate interest.

Credit cards come with a unique 16-digit number that lets you quickly make purchases in person or online — as long as you haven’t exceeded your credit card limit .

Pros and cons of credit cards

When should i use a credit card.

Credit cards are flexible tools that allow you to borrow money, build credit, earn rewards and pay securely. But without the right habits and intentions, your credit score will take a hit.

Here are a few instances where it may make the most sense to use a credit card:

When you’re online shopping

Want to know how to shop online safely ? Start by choosing reputable retailers like Amazon, Walmart and Target. And when you shop small, be sure that the website is secure. Look for “HTTPS” at the beginning of the web address rather than “HTTP.”

Then, try to use credit cards for as many purchases as possible. Since credit cards offer fraud liability protections that debit cards do not, meaning online purchases with credit come with fewer risks. So if you’re debating debit or credit for online shopping, pick credit for a safer shopping experience.

Want to reduce your online shopping fraud risk even further? Add your credit cards to a virtual wallet . While storing your credit information on a digital wallet may sound like a fast track to getting hacked, virtual wallets actually make transactions safer. Today’s digital wallets use multiple forms of security to ensure that your credit card number remains hidden during every online shopping transaction. By creating a unique token every time you shop, for example, digital wallets make it very difficult for thieves to steal your credit card information.

When you’re at the gas pump

Gas station fuel pumps are among the riskiest places to pay since many gas stations haven’t yet implemented EMV chip readers , and credit card skimmers can quickly swipe your information when you pay at the pump. It can be dangerous to use your debit card, which is tied directly to your bank account, over a credit card, especially when the card reader at the pump prompts you to swipe your card instead of inserting the EMV chip.

If you want to work on your credit score

If you want to build your credit score , you’ll need to use credit cards over debit cards. While you might not be approved for the best cards right away, there are credit cards for people with no credit history . You’ll want to use those credit cards responsibly by making on-time payments and keeping your balances as low as possible . A 750 or 800 credit score doesn’t happen overnight, but practicing good habits and showing discipline to potential lenders can lead to success with loan qualification and lower interest rates down the road.

If you want to earn rewards

If you want to earn cash back, points or miles on everyday purchases — not to mention additional perks like complimentary airport lounge access — you’ll want a top rewards credit card . Although very few debit cards offer cash back on purchases, you aren’t going to get as many rewards with debit as you will with credit. While the cash back debit cards only offer 1 percent cash back, the best cash back credit cards offer at least 1.5 percent on general purchases and as much as 6 percent cash back on popular spending categories.

How do debit cards work?

Debit cards, like credit cards, come with a unique number that allows you to make purchases in person or online, quickly. The big difference between debit and credit is that debit cards withdraw money from a linked checking account. Instead of making a purchase now and paying it off later, a debit card immediately draws from your account to pay for the entire amount. As long as there’s enough money in your checking account, your debit card purchase should be approved. And since you’re using the money you already have, you don’t have to worry about going into debt from the purchase.

Pros and cons of debit cards

When should i use a debit card.

Sometimes people hear “cash versus credit” and assume it means “credit cards versus paper money.” The truth is that debit cards are largely the same as cash. These days, “cash” refers to any money already in your possession, such as the money in a checking or savings account.

When you’re comparing credit cards and debit cards, here’s where debit could come out ahead:

When you’re trying to stay out of debt

If you want to avoid credit card debt altogether, you have two options: either pay off your credit card bill in full every month or make every payment in cash.

Making every payment with a debit card to avoid credit card debt can be a smart financial move. If you are trying to stick to a budget , for example, a debit card can keep you from spending more than you can afford. Likewise, many people working to pay off old credit card debt decide to only use debit cards until they’ve paid their debt in full.

When you need to take out cash

If you need to withdraw money at an ATM, debit cards are by far the most viable option. When you take out cash against your credit card’s limit, you must pay back the money borrowed. But the catch is this: The interest rate for a cash advance is much higher than the interest rate on credit card purchases, and there’s no grace period. Meaning, that cash advance will start accruing interest immediately.

If you can pull out cash from your debit card, do so. You can avoid unnecessary fees and interest charges by going this route. If you can visit an ATM that is associated with your bank, you most likely won’t pay any fees at all.

When you want to save money on interest

The average credit card interest rate is currently hovering around 19.5 percent, making it quite costly to carry a balance on a credit card. If you’re currently working on paying off your high-interest credit card debt, put your card aside and use your debit card for the time being. But continue to pay down your balance or else your credit score will take a hit.

Debit or credit: Which is safer?

Both debit cards and credit cards come with safeguards to prevent fraud. When you use a debit card at a grocery store or gas station, for example, you are often required to provide a unique PIN. When you shop with credit online, you’re often required to enter your credit card’s three-digit security code. Banks and credit card companies are also constantly on the lookout for any transactions that could be potentially fraudulent. In most cases, they will send mobile alerts as soon as they notice suspicious charges or unusual activity on your account.

That said, credit cards offer a few fraud protection benefits that debit cards don’t. Nearly all of today’s top credit cards offer zero fraud liability on unauthorized charges, which means you won’t owe a penny on any charge determined to be fraudulent.

Debit cards also limit your fraud liability but require you to report your lost or stolen card within two business days to limit your liability to $50. If you report after two business days but before 60, your liability goes up to $500. If just your debit card number is stolen and not the card itself, you are not liable for unauthorized charges, as long as you report them within 60 days of receiving your statement.

In general, credit cards offer better fraud protection. If someone skims your credit card information , for example, you have time to dispute the charge before you’re liable for the payment and the pending charge may never even post to your account. If you use a debit card, though, the funds can be removed from your bank account directly and quickly, making the process of disputing and getting your money back much more time-consuming.

The bottom line

If you use your credit card responsibly and avoid making purchases you can’t pay off over time, the benefits of using credit cards — from increased rewards to enhanced fraud protection — often outweigh the potential costs. On the other hand, there are circumstances in which paying with a debit card can help you save money, whether you’re trying to stick to a budget or avoid credit card debt and interest charges.

If you want the best of both worlds — the security of credit and the cost-effectiveness of debit — you might want to consider using your credit card like a debit card. If you’re going to charge a purchase to your credit card, make sure you can pay it off with the money that’s already in your checking account.

As long as you pay your credit card bill in full every month, you’ll be using your credit card like cash, avoiding interest charges and staying out of debt — while building credit and earning rewards.

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• Credit Cards
• Best Cash-Back Credit Cards

Best Cash-Back Credit Cards Of June 2024

Expert Reviewed

Updated: Jun 5, 2024, 2:25pm

Multiple options for earning and redeeming credit card rewards can be helpful to some while overwhelming to others. Sometimes you want to earn rewards in a way you can easily understand—dollars and cents. These cash-back cards keep it simple while providing something extra: You’ll find options with low introductory APRs, no annual fee and other perks and benefits for added value.

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Our editors are committed to bringing you unbiased ratings and information. Our editorial content is not influenced by advertisers. We use data-driven methodologies to evaluate financial products and companies, so all are measured equally. You can read more about our editorial guidelines and the credit card methodology for the ratings below.

• 31 types of cash-back categories evaluated
• 210 credit cards rated
• 53 years of industry experience
• 130 credit cards owned

Best Cash-Back Credit Cards for Everyday Spending

• Chase Freedom Flex℠ : Best Rotating Category Cash-Back Card
• Citi Custom Cash® Card : Best Cash-Back Card With Changeable Bonus Categories
• Prime Visa : Best Cash-Back Card for Amazon Shoppers
• Discover it® Cash Back : Best for Large Welcome Bonus Potential
• Credit One Bank Wander® Card : Best Travel Cash-Back Card For Fair Credit
• Discover it® Student Cash Back : Best Cash-Back Card for Students
• Bank of America® Customized Cash Rewards credit card : Best for Preferred Rewards Members
• Blue Cash Preferred® Card from American Express : Best Cash-Back Card for Gas and Groceries
• Bank of America® Premium Rewards® credit card : Best Cash-Back Card for Travel
• Chase Freedom Unlimited® : Best Cash-Back Card for Tiered Rewards Categories
• Best Credit Cards Of 2024
• Best Cash Back Business Cards
• Best 2% Cash Back Cards
• Best 5% Cash Back Cards
• Best 3% Cash Back Cards

Citi Double Cash® Card

Up to 2% Reward Rate

First, you earn 1% unlimited cash back on every purchase you make. Then, as you pay for those purchases, you Read More

Welcome Bonus

Earn $200 cash back

Regular APR

19.24% - 29.24% (Variable)

Credit Score

Excellent, Good, Fair

The Citi Double Cash card’s simple cash back structure and long-lasting balance transfer APR offer make the Citi Double Cash a favorite among those who want to set it and forget it. It offers a solid cashback rate on all purchases and 0% intro APR on balance transfers, all without an annual fee.

• Earn up to 2% cash back—1% when the purchase is made and 1% when payment is made on the account
• No cash-back cap—no limit on the amount of cash back that can be earned
• No annual fee
• Introductory APR period for balance transfers
• Foreign transaction fee
• Balance transfer fee
• Lack of benefits seen in other no annual fee cards
• No introductory 0% APR on purchases
• Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back.
• Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. To earn cash back, pay at least the minimum due on time. Plus, for a limited time, earn 5% total cash back on hotel, car rentals and attractions booked on the Citi Travel℠ portal through 12/31/24.
• Balance Transfer Only Offer: 0% intro APR on Balance Transfers for 18 months. After that, the variable APR will be 19.24% – 29.24%, based on your creditworthiness.
• Balance Transfers do not earn cash back. Intro APR does not apply to purchases.
• If you transfer a balance, interest will be charged on your purchases unless you pay your entire balance (including balance transfers) by the due date each month.
• There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).

Best Rotating Category Cash-Back Card

Chase freedom flex℠.

Up to 5% Reward Rate

Earn 5% cash back in categories that rotate quarterly on up to $1,500 when enrolled, 5% on travel purchased through Read More

20.49%-29.24% Variable

Excellent, Good (700 - 749)

I’m delighted by the Chase Freedom Flex℠ for a few quarters throughout the year when its rotating 5% bonus categories line up with my top spending habits, making it super valuable.

Why We Like It

On top of the rotating categories, earning 3% on restaurants all year long is a great return for a no annual fee card.

What We Don’t Like

Your earning potential is limited because there’s a cap on spending with the 5% categories—plus, you have to remember to activate the bonus.

Who It’s Best For

The Freedom Flex is fantastic for anyone who doesn’t mind staying on top of the details.

Kudos to Chase for always keeping the rotating categories relevant on the Freedom Flex. From Amazon to PayPal and Starbucks to Walmart, you’re almost guaranteed to find at least one quarter every year (or even several) where the 5 bonus points roll in with almost no effort. Just don’t forget to activate the categories every quarter.

• Rotating quarterly categories earn 5% rewards when activated, up to a combined quarterly $1,500 maximum
• Travel rewards rate rivals some of the best premium travel cards
• Generous rewards rate in several other categories
• Travel bookings must be made through Chase Travel℠ to earn 5% cash back
• Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening.
• 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories each quarter!
• 5% cash back on travel purchased through Chase Ultimate Rewards®, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more
• 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1% cash back on all other purchases.
• No minimum to redeem for cash back. You can choose to receive a statement credit or direct deposit into most U.S. checking and savings accounts. Cash Back rewards do not expire as long as your account is open!
• 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 20.49%-29.24%.
• No annual fee – You won’t have to pay an annual fee for all the great features that come with your Freedom Flex℠ card
• Keep tabs on your credit health – Chase Credit Journey helps you monitor your credit with free access to your latest score, real-time alerts, and more.
• Member FDIC

Best Cash-Back Card With Changeable Bonus Categories

Citi custom cash® card.

5% cash back on up to $500 in purchases in your top eligible spend category each billing cycle. 4% cash Read More

Set it and forget it with the Citi Custom Cash® Card . I appreciate that higher cash-back rates are automatically applied to your top eligible spending category, even if that changes from one month to the next.

You can get a low introductory APR on new purchases and balance transfers, which can be helpful to new cardholders.

The cash back on most spending categories is a meager 1%.

Since this card is hot and cold on earning rates, it makes more sense for someone with at least one other credit card to pair with it.

If you’ve always wanted a credit card that adapts to your lifestyle instead of you having to adapt to it, you’ve found what you’re looking for with the Citi Custom Cash. You’ll never have to worry again about making sure you’re earning bonus points at the places you shop the most, because this card will automatically do it for you — even if those places change every month.

• No registration required to earn bonus rewards
• Cash-back categories are unique categories that other cards may not offer bonus rewards for
• Introductory APR on purchases and balance transfers
• High balance transfer fee
• High foreign transaction fee
• Some everyday rewards categories are neglected
• 0% Intro APR on balance transfers and purchases for 15 months. After that, the variable APR will be 19.24% – 29.24%, based on your creditworthiness.
• Earn 5% cash back on purchases in your top eligible spend category each billing cycle, up to the first $500 spent, 1% cash back thereafter. Also, earn unlimited 1% cash back on all other purchases. Special Travel Offer: Earn an additional 4% cash back on hotels, car rentals, and attractions booked on Citi Travel℠ portal through 6/30/2025.
• No rotating bonus categories to sign up for – as your spending changes each billing cycle, your earn adjusts automatically when you spend in any of the eligible categories.
• No Annual Fee
• Citi will only issue one Citi Custom Cash® Card account per person.

Best Cash-Back Card for Amazon Shoppers

Up to 5% back

Earn 5% back on purchases at Amazon.com, Amazon Fresh, Whole Foods Market, and on Chase Travel purchases with an eligible Read More

Get a $100 Amazon Gift Card

19.49% - 27.49% Variable

Good, Excellent (700 - 749)

I shop with Amazon more than I should admit, which makes it tough to beat the cash-back rewards rate offered by the Prime Visa .

Amazon sells nearly everything, making this a great catch-all card.

You’ll need to maintain your Prime membership to keep earning at the maximum rates.

This card is best for people who frequently shop with Amazon, Whole Foods or both.

The card is a no-brainer for Amazon Prime members. You’ll be hard-pressed to find another card that offers such a great rewards rate on so many different types of purchases.

• 5% cash back on Amazon and Whole Foods purchases
• No spending required for the welcome bonus
• No foreign transaction fees
• Travel and shopping protections
• Requires an Amazon Prime membership
• No 0% introductory APR
• Low cash back for purchases outside of bonus categories
• Get a $100 Amazon Gift Card instantly upon approval exclusively for Prime members
• Earn unlimited 5% back at Amazon.com, Amazon Fresh, and Whole Foods Market with an eligible Prime membership
• Earn unlimited 5% back on Chase Travel purchases with an eligible Prime membership
• Earn unlimited 2% back at gas stations, restaurants, and on local transit and commuting (including rideshare)
• Earn unlimited 1% back on all other purchases
• No annual credit card fee
• No more waiting. Redeem daily rewards at Amazon.com as soon as the next day

Best for Large Welcome Bonus Potential

Discover it® cash back.

Earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, Read More

Cashback Match™

18.24% - 28.24% Variable APR

Excellent/Good

I’ve never had a Discover card, but the Discover it® Cash Back will match exactly what you earn in the first year. Time it with an expensive year, and that could lead to a large bonus.

This card features rotating bonus categories every quarter, which is a good way to earn even more on select purchases.

For everyday spending after the first year, you’ll be better off with a 2% cash-back card.

The Discover it® Cash Back is perfect for someone using it on rotating categories.

The quarterly categories are the highlight of the Discover it® Cash Back. You’ll often find broad options on its rotating list of categories, such as restaurants, drug stores, gas stations and groceries, which makes it easy for almost any household to take advantage of them. Just don’t get tripped up by forgetting to activate the categories at the start of each quarter, because you can’t do it retroactively to earn bonus cash back on your past purchases.

• 5% cash back on quarterly rotating spending categories throughout the year (activation required)
• Discover will automatically match all the cash back you’ve earned at the end of your first year
• No minimum cash-back redemption
• 5% bonus cash-back rate is limited to $1,500 per quarter in spending
• Bonus categories must be activated quarterly
• Low 1% base reward rate on everything else
• INTRO OFFER: Unlimited Cashback Match for all new cardmembers–only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. You could turn $150 cash back into $300.
• Earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases—automatically.
• Redeem your rewards for cash at any time.
• Discover could help you reduce exposure of your personal information online by helping you remove it from select people-search sites that could sell your data. It’s free, activate with the mobile app.
• Get a 0% intro APR for 15 months on purchases. Then 18.24% to 28.24% Standard Variable Purchase APR applies, based on credit worthiness.
• No annual fee.
• Terms and conditions apply.

Best Travel Cash-Back Card For Fair Credit

Credit one bank wander® card.

Up to 10X Reward Rate

Earn 10X points on eligible hotels and car rentals booked through the Credit One Bank travel site; earn 5X points Read More

29.74% Variable

Fair/Good (650 - 699)

I’d be heartbroken if I couldn’t earn cash back on travel spending. Now, even those with fair credit have a superb option. The Credit One Bank Wander® Card earns bonus points offered in many travel-focused categories.

Even though the card is marketed as a travel rewards card, your points are redeemable as cash for extra flexibility.

There’s an annual fee on this card without a whole lot of extra benefits to justify it.

The Wander card is perfect for travelers who have fair credit. Someone with a higher credit score may prefer a different travel rewards card.

The Credit One Bank Wander Card offers lucrative points-earning opportunities within key travel categories, however, its extra perks and benefits fall short when compared to other premium credit cards.

• High reward potential
• Issuer advertises requiring an average minimum credit rating
• $95 annual fee
• No low introductory APR period
• High 29.74% Variable APR
• Earn 10x points on eligible hotels and car rentals booked through the Credit One Bank travel partner site
• Earn 5x points on eligible travel, dining, and gas
• Earn 1x points on all other purchases
• Redeem your reward points for statement credits, gift cards, merchandise, flights, hotels, and more
• With $0 Fraud Liability, you won’t be responsible for unauthorized charges
• Free Online Credit Score and Credit Report summary, terms apply
• If you are a Covered Borrower under the Military Lending Act, you may get a different offer
• See Rates & Fees

Best Cash-Back Card for Students

Discover it® student cash back.

18.24% - 27.24% Variable APR

Fair/New to Credit

Learning how to use credit responsibly in college was one of the smartest moves I made. The Discover it® Student Cash Back offers easier approval requirements, cash-back and a path to build credit.

Unlike other student cards, this one doesn’t treat you like a second-class citizen. You’ll earn cash back at the same rates as the non-student version.

There’s a short runway on the intro APR offer for new card members, which could get you into trouble if you’re not paying attention.

Unsurprisingly, this card is best for students looking for a card that earns cash back with no annual fee.

An engaging and fun student credit card, the Discover it® Student Cash Back combines useful benefits for cardholders to learn about building credit history while earning extra cash back each quarter on select categories.

• 5% cashback on rotating bonus categories after enrollment
• First-year cash-back match
• 5% bonus cashback rate is limited to $1,500 per quarter in spending
• Low 1% base reward rate
• INTRO OFFER: Unlimited Cashback Match for all new cardmembers – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! So you could turn $50 cash back into $100. Or turn $100 cash back into $200. There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.
• No credit score required to apply.
• No annual fee and build your credit with responsible use.
• 0% intro APR on purchases for 6 months, then the standard variable purchase APR of 18.24% – 27.24% applies.

Best for Preferred Rewards Members

Bank of america® customized cash rewards credit card.

Choose your 3% category

Earn 3% cash back in the category of your choice, automatic 2% at grocery stores and wholesale clubs (up to Read More

19.24% - 29.24% Variable APR on purchases and balance transfers

I’m jealous of Bank of America Preferred Rewards members who get a cash-back boost on all charges on the Bank of America® Customized Cash Rewards credit card .

It’s awesome to find a card that offers 3% back—or more—on such a wide variety of potential categories.

Unfortunately, both the 2% and 3% earning rates are capped at only $2,500 in combined spending per quarter.

The real winners here will be someone who’s already enrolled in (or is willing to join) the Preferred Rewards program.

It’s all about choice with the Bank of America® Customized Cash Rewards credit card. Not only do you get to choose your top bonus category, but you can change it every month if you want. You’ll find the most value in this card if you’re also a member of Bank of America’s Preferred Rewards program by receiving a 25%-75% earning bonus on everything you buy.

• Bank of America Preferred Rewards clients earn 25% to 75% more cash back
• Decent rewards earning potential
• Option to change 3% bonus category monthly
• Bonus rewards have quarterly caps
• $200 online cash rewards bonus after you make at least $1,000 in purchases in the first 90 days of account opening.
• Earn 3% cash back in the category of your choice, automatic 2% at grocery stores and wholesale clubs (up to $2,500 in combined choice category/grocery store/wholesale club quarterly purchases) and unlimited 1% on all other purchases.
• Choose 3% cash back on gas and EV charging station, online shopping/cable/internet/phone plan/streaming, dining, travel, drug store/pharmacy or home improvement/furnishings purchases.
• If you’re a Bank of America Preferred Rewards® member, you can earn 25%-75% more cash back on every purchase. That means you could earn 3.75%-5.25% cash back on purchases in your choice category.
• No annual fee and cash rewards don’t expire as long as your account remains open.
• 0% Intro APR for 15 billing cycles for purchases, and for any balance transfers made in the first 60 days. After the Intro APR offer ends, a Variable APR that’s currently 19.24% – 29.24% will apply. A 3% Intro balance transfer fee will apply for the first 60 days your account is open. After the Intro balance transfer fee offer ends, the fee for future balance transfers is 4%.
• Contactless Cards – The security of a chip card, with the convenience of a tap.
• This online only offer may not be available if you leave this page or if you visit a Bank of America financial center. You can take advantage of this offer when you apply now.

Best Cash-Back Card for Gas and Groceries

Blue cash preferred® card from american express.

Up to 6% Reward Rate

Earn 6% cash back at U.S. supermarkets, on up to $6,000 per year in purchases (then 1%); Earn 6% cash Read More

$0 intro annual fee for the first year, then $95

19.24%-29.99% Variable

Excellent/Good (700 - 749)

I cook a lot, which means I get extra excited about the industry-leading 6% cash back on your first $6,000 in U.S. grocery store purchases per year available on the Blue Cash Preferred® Card from American Express .

The excellent cash returns also extend to gas and transit, making it a relevant option for the average household.

I feel like it’s far too easy to hit the $6,000 grocery spending cap each year and American Express hasn’t raised the limit to account for inflation.

Who It’s best for

Customers who fill their carts at the grocery store will be thankful for this card.

You’ll have a hard time finding a better cash-back rate on groceries and streaming, and the Disney Bundle credit nearly neutralizes the cost of the annual fee.

• High cash-back rewards in several categories of spending
• No enrollment is required, cash back is automatic
• Comes with several travel benefits and protections
• Charges an annual fee
• 6% cash back at U.S. supermarkets is capped at $6,000 in annual spending (then 1%)
• Earn a $250 statement credit after you spend $3,000 in purchases on your new Card within the first 6 months.
• $0 intro annual fee for the first year, then $95.
• Buy Now, Pay Later: Enjoy $0 intro plan fees when you use Plan It® to split up large purchases into monthly installments. Pay $0 intro plan fees on plans created during the first 12 months from the date of account opening. Plans created after that will have a monthly plan fee up to 1.33% of each eligible purchase amount moved into a plan based on the plan duration, the APR that would otherwise apply to the purchase, and other factors.
• Low Intro APR: 0% on purchases and balance transfers for 12 months from the date of account opening. After that, your APR will be a variable APR of 19.24% – 29.99%. Variable APRs will not exceed 29.99%.
• 6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%).
• 6% Cash Back on select U.S. streaming subscriptions.
• 3% Cash Back at U.S. gas stations.
• 3% Cash Back on transit (including taxis/rideshare, parking, tolls, trains, buses and more).
• 1% Cash Back on other purchases.
• Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit or at Amazon.com checkout.
• Get up to $120 in statement credits annually when you pay for an auto-renewing subscription to Equinox+ at equinoxplus.com with your Blue Cash Preferred® Card. That’s $10 in statement credits each month. Enrollment required.
• Thinking about getting the Disney Bundle which can include Disney+, Hulu, and ESPN+? Your decision made easy with $7/month back in the form of a statement credit after you spend $9.99 or more each month on an eligible subscription (subject to auto renewal) with your Blue Cash Preferred® Card. Enrollment required.
• Terms Apply.

Best Cash-Back Card for Travel

Bank of america® premium rewards® credit card.

Up to 2X Reward Rate

Earn unlimited 2 points for every $1 you spend on travel and dining purchases. Earn 1.5 points for every $1 Read More

60,000 points

21.24% - 29.24% Variable APR on purchases and balance transfers

The welcome bonus on the Bank of America® Premium Rewards® credit card is extremely high for a cash-back card, and Preferred Rewards members could earn above-average returns on travel spending.

Every year, cardholders can earn up to $100 in statement credits toward airline incidental fees (think checked bag expenses, seat assignments and more), plus another $100 to cover TSA PreCheck® or Global Entry.

If you’re not a Preferred Rewards member, there are several travel rewards cards that could match or beat the earning rates on this card.

This card is best for someone who already banks with Bank of America and has high travel spending.

The best travel credit cards make it easy to earn back the annual fee every year, and the Premium Rewards credit card is one of those. It’s also a rewards powerhouse for Bank of America Preferred Rewards customers.

• No foreign transaction fee
• TSA PreCheck® or Global Entry fee credit
• Visa Signature concierge benefit
• Flexible reward redemption options
• High penalty APR
• High standard APR and cash advance APR
• No airport lounge perks
• Low $95 annual fee.
• Receive 60,000 online bonus points – a $600 value – after you make at least $4,000 in purchases in the first 90 days of account opening.
• Earn unlimited 2 points for every $1 spent on travel and dining purchases and unlimited 1.5 points for every $1 spent on all other purchases. No limit to the points you can earn and your points don’t expire as long as your account remains open.
• If you’re a Bank of America Preferred Rewards® member, you can earn 25%-75% more points on every purchase. That means you could earn 2.5-3.5 points on travel and dining purchases and 1.87 – 2.62 points on all other purchases, for every $1 you spend.
• Redeem for cash back as a statement credit, deposit into eligible Bank of America® accounts, credit to eligible Merrill® accounts, or gift cards or purchases at the Bank of America Travel Center.
• Get up to $100 in Airline Incidental Statement Credits annually and TSA PreCheck®/Global Entry Statement Credits of up to $100, every four years.
• Travel Insurance protections to assist with trip delays, cancellations and interruptions, baggage delays and lost luggage.
• No foreign transaction fees.

Best Cash-Back Card for Tiered Rewards Categories

Chase freedom unlimited®.

Up to 6.5X Reward Rate

Earn an additional 1.5% cash back on up to $20,000 spent in the first year, after that 5% cash back Read More

Up to $300 cash back

20.49% - 29.24% Variable

New cardholders can make out like a bandit with the Chase Freedom Unlimited® , thanks to a welcome offer, intro APR on both new purchases and balance transfers and noteworthy cash-back.

Every purchase earns a minimum of 1.5% cash back, which is above average for a card that also includes a few bonus categories.

To earn the most cash back on travel, you’re forced to book your trips through the Chase Travel℠ portal.

Those who would appreciate the combination of receiving both an elevated base earnings rate and valuable fixed bonus categories.

The secret advantage of the Chase Freedom Unlimited is that it earns rewards that can be moved to other Chase credit cards instead of being redeemed for cash back. That means when you pair it with one of Chase’s cards that can transfer points to the bank’s airline and hotel partners, you’re effectively earning rewards that are even more valuable than advertised.

• Generous welcome offer for a no annual fee card
• Unlimited 1.5% minimum earn rate for cash-back rewards
• No minimum redemption amount
• Ongoing balance transfer fee is high
• Requires a companion card to transfer points to travel partners
• INTRO OFFER: Earn an additional 1.5% cash back on everything you buy (on up to $20,000 spent in the first year) – worth up to $300 cash back!
• Enjoy 6.5% cash back on travel purchased through Chase Travel, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 4.5% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 3% on all other purchases (on up to $20,000 spent in the first year).
• After your first year or $20,000 spent, enjoy 5% cash back on travel purchased through Chase Travel, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.
• No minimum to redeem for cash back. You can choose to receive a statement credit or direct deposit into most U.S. checking and savings accounts. Cash Back rewards do not expire as long as your account is open!
• Enjoy 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 20.49% – 29.24%.
• No annual fee – You won’t have to pay an annual fee for all the great features that come with your Freedom Unlimited® card
• Keep tabs on your credit health, Chase Credit Journey helps you monitor your credit with free access to your latest score, alerts, and more.

Here's a Summary of the Best Cash-Back Credit Cards

Overview of the best credit cards for cash back of 2024.

The Chase Freedom Flex℠ charges no annual fee and features valuable bonus categories, making it a good choice for almost anyone looking to earn cash back.

Rewards: Earn 5% cash back on up to $1,500 in combined purchases in categories that rotate quarterly (requires activation), 5% cash back on travel purchased through Chase Travel℠, 3% cash back on dining and drugstores and 1% cash back on all other purchases.

Welcome offer: Earn a $200 bonus after spending $500 on purchases in the first 3 months from account opening.

Annual fee: $0

Other benefits and drawbacks: In addition to the useful bonus categories, the Chase Freedom Flex℠ offers purchase protection, extended warranty protection, select travel protections and cellphone protection when making eligible charges.

This card is a winner already, but it can be even better when paired with a Chase Sapphire Preferred® Card , Chase Sapphire Reserve® or Ink Business Preferred® Credit Card . That’s because you can transfer the points earned on your Freedom Flex to one of these premium cards where they can be redeemed for 25% to 50% more value through Chase Travel℠ or Pay Yourself Back . Points can also be transferred at a 1:1 ratio to Chase’s airline and hotel partners, including United MileagePlus and World of Hyatt .

The Citi Custom Cash® Card makes earning at elevated rates easy with its changeable bonus categories. Plus, those with fair credit may apply.

Rewards: Earn 5% cash back on purchases in a top eligible spend category up to the first $500 spent each billing cycle, 4% cash back on hotels, car rentals, and attractions booked on Citi Travel℠ portal through 6/30/2025 and 1% cash back on all other purchases.

Welcome offer: Earn $200 in cash back after spending $1,500 on purchases in the first 6 months of account opening. The bonus points come in the form of 20,000 ThankYou® Points that can be redeemed for $200 cash back.

Other benefits and drawbacks: Cardholders will automatically earn at the 5% rate on their top spending category from 10 potential categories that cover everything from restaurants to groceries to home improvement. Just watch out for the $500 cap each billing cycle; After that, earnings drop to 1%. The Citi Custom Cash® Card also offers free access to your FICO Score and comes with an introductory APR offer: 0% introductory APR for 15 months from date of account opening on purchases and from date of first transfer for balance transfers completed within 4 months of account opening. After that, the variable APR will be 19.24% - 29.24%, based on creditworthiness. There is also a balance transfer fee of 5% of each balance transfer; $5 minimum.

The Amazon Prime Visa offers a tough-to-beat cash-back rate for purchases at Amazon and Whole Foods. Since purchases with these merchants can cover a lot of categories, this card is almost a sure bet for anyone who shops at Amazon and already has an Amazon Prime membership.

Rewards: Earn 5% back on purchases at Amazon.com, Amazon Fresh, Whole Foods Market and on Chase Travel purchases with an eligible Prime membership, 2% back at gas stations, restaurants and on local transit and commuting (including rideshare), and 1% back on other purchases.

Welcome offer: Earn a $100 Amazon gift card upon approval with an eligible Prime membership.

Other benefits and drawbacks: Eligible Prime Members can earn 10% back or more on select products with Prime Card Bonus. This card also offers various travel and purchase coverages, including an auto rental collision damage waiver, baggage delay insurance, extended warranty protection, purchase protection and more. Cardholders can also take advantage of the ability to pay over time on purchases of $50 or more.

The Discover it® Cash Back card will automatically match all of the cash back you’ve earned at the end of your first year, with no limits. Depending on your spending, this match can easily exceed the bonuses you can earn from other cards. Even after the first year, it offers solid rewards.

Rewards: Earn 5% cash back on everyday purchases at different places each quarter up to a quarterly maximum of $1,500 in spending when activated. Plus, earn unlimited 1% cash back on all other purchases – automatically.

Welcome offer: Discover will automatically match all the cash back earned at the end of the first year as a cardmember. There's no minimum spending or maximum rewards.

Other benefits and drawbacks: Discover’s bonus categories have typically been high-value spending areas such as groceries, gas stations and restaurants. The biggest downside to the Discover it® Cash Back is that you must remember to activate the bonus category each quarter, or you won’t earn the higher cash-back rate. You can opt-in for Discover to remind you when the bonus category changes.

This card also comes with an introductory APR offer, making it a cost-saving option if you have a big purchase coming up or want to consolidate high-interest debt: 0% introductory APR for 15 months on purchases and eligible balance transfers. Then, a standard rate of 18.24% - 28.24% variable applies. A balance transfer fee of up to 5% of the amount transferred applies. Keep in mind Discover is not as widely accepted outside of the U.S. compared to other card networks.

The Credit One Bank Wander® Card offers strong rewards that can be redeemed for cash back in various travel-related categories and statement credits, even for those who have only fair credit .

Rewards: Earn 10 points per dollar on eligible hotels and car rentals booked through the Credit One Bank travel partner, 5 points per dollar on eligible travel, dining and gas and 1 point per dollar on all other purchases.

Welcome offer: This card does not offer a welcome bonus.

Annual fee: $95

Other benefits and drawbacks: Cardholders also get free online access to their credit score, the ability to choose their payment date and zero fraud liability protection.

The Discover it® Student Cash Back has been one of the top student cards for a long time. Students should consider getting a credit card to start building their credit history early and this card allows students to earn cash back at the same time.

Rewards: Earn 5% cash back on everyday purchases at different places each quarter like grocery stores, restaurants, gas stations and more, up to the quarterly maximum once activated. Plus, automatically earn unlimited 1% cash back on all other purchases.

Welcome offer: Unlimited Cashback Match™ - Discover will match all the cash back you’ve earned at the end of your first year. There's no minimum spending or maximum rewards.

Other benefits and drawbacks: The Discover it® Student Cash Back card also offers a 0% intro APR on purchases for 6 months, then the standard variable purchase APR of 18.24% - 27.24% applies.

The Bank of America® Customized Cash Rewards credit card fits nicely in the wallet of Bank of America or Merrill customers. With Bank of America’s Preferred Rewards program, the card’s earning rates can increase by as much as 75%. Without Preferred Rewards, other cards may offer a better return for your spending.

Rewards: Earn 3% cash back in the eligible category of your choice, 2% at grocery stores and wholesale clubs (up to $2,500 in combined choice category/grocery store/wholesale club quarterly purchases) and unlimited 1% on all other purchases.

Welcome offer: Earn a $200 online cash rewards bonus after spending $1,000 in purchases in the first 90 days of account opening.

Other benefits and drawbacks: The Bank of America® Customized Cash Rewards credit card offers an introductory APR: 0% introductory APR for 15 billing cycles for purchases and balance transfers, 19.24% - 29.24% variable APR applies thereafter. Intro rate applies for any balance transfers made in the first 60 days; balance transfer fee of 3% applies to each transfer during this period, then 4%. Cardholders also receive free online access to their FICO Scores .

If you prefer to buy your groceries at the store rather than dine out, the Blue Cash Preferred® Card from American Express (terms apply, see rates & fees ) is one you may want to consider. Even with a $0 intro annual fee for the first year, then $95, the high rewards at U.S. supermarkets and U.S. gas stations can help offset the expense for many families.

Rewards: Earn 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%), 6% cash back on select U.S. streaming subscriptions, 3% cash back at U.S. gas stations and on transit (including taxis/rideshare, parking, tolls, trains, buses and more) and 1% cash back on other eligible purchases. Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit or at Amazon.com checkout.

Welcome offer: Earn a $250 statement credit after spending $3,000 in purchases within the first 6 months.

Annual fee: $0 intro annual fee for the first year, then $95

Other benefits and drawbacks: The Blue Cash Preferred® Card from American Express also offers return protection ¹ , secondary car rental loss and damage coverage ² and an up to $120 annual statement credit for Equinox+ membership when you pay for an auto-renewing subscription at equinoxplus.com with your card ($10 in statement credits each month). You won’t receive this benefit if membership is purchased via the Equinox+ app or through a third party. To receive this benefit, cardholders must enroll in their Amex card account.

If you would rather avoid an annual fee, the Blue Cash Everyday® Card from American Express (terms apply, see rates & fees ) offers 3% cash back at U.S. supermarkets, U.S. gas stations, and online retail purchases in the U.S. (on up to $6,000 in each category per year in purchases, then 1%), and 1% cash back on other purchases. Cash back is received in the form of Reward Dollars that can be easily redeemed for statement credits or at Amazon.com checkout with no annual fee.

The Bank of America® Premium Rewards® credit card earns points that can be redeemed for cash back. This card has more focus on travel-related purchases but still offers a high cash-back rate for non-bonused categories. Those who invest with Bank of America will be able to get even more out of this card through Bank of America’s Preferred Rewards program, which offers up to a 75% bonus on points earned.

Rewards: Earn 2 points per dollar on travel and dining purchases and 1.5 points per dollar on all other purchases.

Welcome offer: Earn 60,000 online bonus points after spending $4,000 in purchases in the first 90 days of account opening.

Other benefits and drawbacks: This card doesn’t charge foreign transaction fees and offers up to $200 in annual travel statement credits—a $100 airline incidental statement credit and a $100 credit to cover a TSA PreCheck® or Global Entry application fee.

The Chase Freedom Unlimited® is another excellent no annual fee cash-back option. It offers simple rewards categories, and depending on spending patterns, the Freedom Flex could compete with this card’s earnings.

Rewards: Earn 5% cash back on travel purchased through Chase Travel℠, 3% cash back on eligible dining and drugstores and 1.5% on all other purchases, plus an additional 1.5% cash back on the first $20,000 in purchases the first year.

Welcome offer: Earn an additional 1.5% cash back on up to $20,000 spent in the first year, worth up to $300 cash back.

Other benefits and drawbacks: Like the Freedom Flex, the Freedom Unlimited offers purchase protection and extended warranty protection. It also offers some travel benefits, including trip cancellation and interruption insurance, travel and emergency assistance services and secondary auto rental collision damage coverage .

It too, can be paired with a premium Chase Ultimate Rewards card to amp up the value of eligible redemptions.

Methodology

Forbes Advisor combed through the profiles of dozens of cash-back credit cards. We focused on major banks and standout credit cards at lesser-known banks with online accessibility. We looked for credit cards outperforming other cards in terms of cash-back rates and categories, fees, welcome bonuses and other rewards and features.

Our data scoring system accounts for many factors, including a comprehensive weighting of card information relevant to our readers including:

• Estimated annual earnings – 70%
• Welcome bonus – 10%
• Introductory APR offers on purchases – 10%
• Ongoing APR – 5%
• Consumer benefits – 5%

Cards are then compared against other similar cards, in this case, cards offering cash-back rewards.

To learn more about our rating and review methodology and editorial process, check out our guide on how Forbes Advisor rates credit cards .

Please note: Cards on this list may not be shown in order of their star rating. The star rating is determined solely by the editorial team.

What Is Cash Back on a Credit Card?

A cash-back credit card allows cardholders to earn a percentage back on eligible credit card spending. Typically, a cardholder can redeem any money earned from cash back as a statement credit, a check sent via mail or deposited directly into a qualifying bank account.

Many types of cards offer cash back, including those earning the same flat rate on everything you buy, those offering tiered cash back where certain areas of spending earn at a higher rate than other categories and cards offering elevated cash back in specific categories that change quarterly.

Due to the wide array of options, it’s imperative to consider what categories you spend the most in month-to-month so you can choose the best cash-back credit card for your spending habits.

How Do Cash-Back Credit Cards Work?

The process for earning and redeeming cash back works similarly across credit card issuers.

• Make an eligible purchase with your cash-back card. Certain credit card transactions, such as balance transfers , cash advances and annual fees, do not earn cash back. Make sure to consult your card’s terms and conditions to see what eligible purchases earn cash back.
• Earn a percentage of cash back on your spending. The exact amount depends on your card’s terms, and your earnings typically accumulate in your card’s rewards account.
• Redeem your cash back according to your issuer’s requirements. Depending on your card, you may have different options for redeeming your cash back, including but not limited to a statement credit against your balance, a direct deposit or a check. Some cards allow you to redeem your cash earnings in any amount at any time, while others require a minimum balance to cash out.

Why Do Credit Cards Give Cash Back?

Card issuers offer cash back to incentivize card usage, allowing consumers to take a cut of the transaction fees charged to vendors.

Transactions fees, which are typically 2% to 4% of a transaction amount, generate upward of $160 billion in revenue. These earnings are split among the banks, card issuers, card networks and fintech companies involved in facilitating the purchase. If a transaction fee is 3% for example, issuers may provide 1.5% cash back to a consumer as an incentive to apply for and use the card.

How To Get Cash Back From a Credit Card

Redeeming your cash back is a painless process that can be easily done through your credit card account.

• Request to redeem your cash back within your credit card account. You’ll have to log in to your account via your issuer’s website or mobile app.
• Select the amount of cash back you’d like to redeem. This is also the time to select how you want to get your cash back . Typical options include a statement credit, online deposit to a linked bank account or a check mailed to your address. Some cards may redeem cash back automatically by applying it as a statement credit on your account.
• Wait for your cash back to arrive. If you redeemed your cash back as a statement credit, you may see it immediately applied on your credit card account. If you are expecting a check or a deposit, keep an eye on your account and mailbox untilt the payment arrives.

Types of Cash-Back Credit Cards

Generally, three kinds of cash-back credit cards rule the market: flat-rate, tiered-rate and rotating category credit cards.

Ask an expert

What type of cash-back card is best?

Yanely Espinal

Credit Cards Expert

Toni Perkins-Southam

Credit Cards Lead Editor

Becky Pokora

Credit Cards Writer

The best type of cash-back card for many people is a simple, flat-rate cash-back card because you can get a consistent 2% back on all purchases, regardless of your spending categories. This means you don’t have to worry about keeping track of which cards you use and when.

The best credit card for cash back ultimately depends on individual spending habits and preferences. But for those wanting simplicity, a flat-rate cash-back card may be optimal, while others who spend more in specific categories will benefit from cards offering bonus rewards in those areas.

My personal preference is to find cash-back cards specifically geared toward your spending habits. For me, it’s all about travel and restaurants. I can earn twice as much by using targeted cards, which makes it worth the extra mental organization.

How Much Cash Back Can You Get?

For the most part, the amount of cash back you can earn depends on how much you spend on your card and the rewards rate offered by the card. If you spend $5,000 per year on a card that earns 2% cash back on every purchase, you’ll earn $100 in cash back. Someone spending $25,000 on the same card would earn $500.

You can earn more cash back by using credit cards that offer higher earning rates on select categories. For example, if you spend $5,000 on groceries on a card that offers 6% on that category, you’ll earn $300 in cash back—a much larger reward for the same spending.

Keep an eye on the terms of your card to help determine how much cash back you can earn. Many credit cards offer unlimited cash back. Others may cap the amount you can earn in certain categories and lower the return rate once you max out that type of purchase.

Common Cash-Back Bonus Categories

Many cash-back bonus categories focus on rewarding everyday spending in areas such as dining, groceries and gas. Some cards allow you to choose your own category or reward the category in which you spend the most. Others focus on more obscure categories. Common categories include:

• Travel (including flights, hotels and car rentals)
• Home improvement or home furnishings

Factors To Consider When Choosing a Cash-Back Credit Card

The best credit card for cash back is the one that best fits your lifestyle and spending habits. The right cash-back credit card for someone else may not be the right cash-back card for you.

Forbes Advisor aims to help you by identifying what each cash-back card is best for, but you should always do the math yourself and consider not only how much cash back you could earn but also how you might use the other card benefits.

After you’ve identified how much you spend in different areas and what other card features could benefit you, you’re ready to compare credit cards and shop for the best one for you. As you compare cards and credit card issuers, there are some things that you should incorporate into your evaluations.

Is there an annual fee? How much would you have to spend on the card to earn enough cash back to at least cover the annual fee? How does that compare to a similar card that doesn’t charge an annual fee? What other fees might you have to worry about?

Annual Percentage Rate (APR)

Credit card interest rates are typically higher than other types of loans. If you don’t think you’ll be able to pay off your credit card in full each month, a credit card may not be the right fit for you. If you want a credit card but don’t think you’ll be able to pay it off, you should pay close attention to how much interest you might incur on purchases and balance transfers. If this sounds like you, you should consider a card with an introductory 0% APR offer or a card that’s good for balance transfers .

Cash-Back Rate

Cash-back rates vary from card to card. Consider the areas of your life that you spend the most money in, and choose a card that will reward you accordingly.

Bonus Categories

Will you be able to take advantage of the bonus categories? If the card offers 3% on gas and groceries, but you take the train and prefer to dine out, then that’s not the cash-back card for you.

Redemption and Rewards

Can you use the cash back the way you want to? Many cash-back credit cards offer various ways to redeem what you earn, such as statement credit, a check, a deposit into a savings or investment account, discounted travel packages and so on. Some cards are more restrictive than others. Make sure you know how you will be able to redeem your hard-earned rewards.

Pros and Cons of Cash Back Credit Cards

Cash-back credit cards are an excellent way to earn rewards with every qualifying purchase on your credit card. There’s generally no learning curve required, and you can claim your rewards with a few clicks in your online account—sometimes, they’re even provided as a statement credit automatically. You can also easily calculate your earnings so you know precisely what to expect. But compared to the alternatives, it’s easy to see why some opt for cards with complex points and miles systems.

Finding the Best Cash-Back Credit Card for You

There are many great cash-back cards on the market, but the card that will earn you the greatest rewards depends on your spending habits. Before committing to a card, take a look at your budget and see where you spend most frequently. Then, choose the card that best fits your lifestyle.

How To Make the Most of Your Cash-Back Credit Card

There are a few strategies to make the most of your cash-back credit cards and earn elevated rewards across multiple categories:

• Find a card that aligns with your spending. Before choosing a cash-back card, take a look at your expenses to see which categories you spend the most in. By selecting a card that provides the highest cash back on your common spending categories, you can maximize your daily earnings.
• Consider the annual fee. If you are considering a cash-back card that carries an annual fee, make sure to calculate if the cash back you anticipate earning will exceed the cost of holding the card. If the answer is no, you’d probably be better suited with a no annual fee card.
• Pay off your card in full every month. To be blunt, credit card rewards are not worth anything if you’re carrying a balance and paying interest on your credit cards. If you want to maximize the cash back you are earning, make sure to pay off your card in full to avoid pesky interest and fees.
• Pair multiple cards. For instance, you could use a card rewarding gas purchases at 3% cash back, another earning 4% cash back on groceries and yet another earning 2% cash back on all purchases. Where the first two cards likely only reward non-bonus category spending with 1% cash back, you can pair multiple cards to reward the major spending you do across all categories.

If you are considering opening a second cash-back credit card account, beware of the increased responsibility of managing multiple cards. More cards means more monthly statements, minimum payments, fees and risk of accrued interest.

Read more: How Many Credit Cards Should I Have?

Cash-Back Credit Card Benefits

We get it—earning a chunk of change back on your purchases can be pretty sweet. However, cash-back credit cards offer more benefits than meets the eye.

• Low annual fees. If you are just getting your feet wet in the world of credit cards, cash-back cards are a safe place to start. Many cash-back cards do not charge an annual fee, meaning it’s easy to get value out of them each year as long as you pay your balance in full each statement period.
• Welcome bonuses. Another perk of cash-back credit cards is the opportunity to earn a welcome bonus, which will reward you with a certain amount of cash back after hitting a spending threshold on your card within an allotted time period. By timing the opening of a cash-back card with a major purchase, you could use your welcome bonus to effectively save up to hundreds of dollars.
• Introductory APRs. A common benefit you’ll find on cash-back credit cards is a 0% introductory APR offer on purchases. Depending on how long this period is, it could help you pay down a larger purchase you plan to put on the card.
• Secure payments. Credit cards are a secure method of payment and typically offer zero fraud liability, meaning you are not responsible for unauthorized purchases made with your card.
• Purchase protection and extended warranty protection. Select cash-back credit cards may offer these benefits, which can reimburse you for purchases if an item is damaged or stolen or extend a product manufacturer’s warranty by an additional year. You’ll hopefully never have to use these perks, but they could save you serious money in a less-than-ideal situation.

Alternatives to Cash-Back Credit Cards

Depending on your preferred redemptions, comparing other types of credit card rewards alongside cash-back credit cards may be valuable in deciding on your next card.

Cash Back vs. Travel Rewards

Travel rewards, such as airline miles or hotel points, can be strategically redeemed to get outsized value. Every travel program has sweet spots where a single point or mile could be worth five or ten cents each when redeemed tactically. However, this assumes you’re well-versed in the program’s strengths—and have the flexibility to take advantage of them.

Compare this to cash-back credit cards, which offer stable value. You don’t have to hunt for the most valuable redemptions or worry about getting below-average value. It’s also much simpler and doesn’t require a time investment in order to redeem rewards.

Read more: Best Travel Credit Cards of 2024

Cash Back vs. Flexible Bank Points

Many card issuers offer proprietary points instead of traditional cash back. These programs, like Chase Ultimate Rewards or Citi ThankYou points, build in flexibility. When you earn credit card points, you can redeem them as cash back (often, but not always, equivalent to 1%) or for other rewards through the program. A common redemption option is to book travel through the points portal to get 25% more value with every point. You may also be able to transfer points to partnering travel loyalty programs, effectively earning travel rewards.

Once again, cash back is the easiest and most straightforward option. However, credit card points usually have one or more different redemption options that are still relatively simple yet provide a greater return. Compared to cash back’s fixed redemptions, the flexibility of these points is their greatest attribute.

Find the Best Credit Cards for 2024

No single credit card is the best option for every family, every purchase or every budget. We've picked the best credit cards in a way designed to be the most helpful to the widest variety of readers.

Study: Americans Regularly Carry a Balance, Despite the Cost

Over half of Americans carry a balance on their credit card at least a few times a year rather than paying their bill in full, according to a survey by Forbes Advisor in May 2024:

Anyone who is using a credit card with the mindset of paying over time should be focused on their card’s interest rate and other costs that might apply, such as missed payment fees or late charges. These costs will likely add up to a higher cost than what you’d spend on annual fees or earn through credit card rewards, making them an impactful part of your decision.

If you carry a balance, our credit card interest calculator can show you how much extra this could cost you in a month—or a year. If the number’s more than you’re comfortable with, it might be worth the extra effort to look into a 0% credit card so that you have a set number of months (and sometimes more than a year) to pay things down without accruing interest. can redeem them for other rewards through the program. A common redemption option is to book travel through the points portal to get 25% more value with every point. You may also be able to transfer points to partnering travel loyalty programs, effectively earning travel rewards.

Are Cash-Back Credit Cards Worth It?

Cash-back cards generally fall into one of three categories:

• Flat-rate rewards, such as 2% cash back on every purchase.
• Rotating-category rewards, such as 5% cash back on a selection of purchase categories that update every quarter, then 1% cash back on remaining purchases.
• Fixed-category rewards, such as 6% cash back on groceries, 3% cash back on gas or 2% cash back on restaurant purchases, then 1% cash back on remaining purchases.

The best type of cash-back card will vary depending on your purchase habits. If you have a large amount of purchases in a specific category, such as groceries or gas, it makes sense to find a card that offers bonus cash for your frequent purchases. But if you want a “set it and forget it” card, a flat-rate cash-back card will likely make more sense for you. If you want to maximize your cash-back earnings, consider pairing a flat-rate card with one that offers a rewards-earning bump for where you shop most often.

To view rates and fees for Blue Cash Preferred® Card from American Express please visit this page . To view rates and fees for Blue Cash Everyday® Card from American Express please visit this page . ¹Eligibility and Benefit level varies by Card. Terms, Conditions and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by AMEX Assurance Company. ²Eligibility and Benefit level varies by Card. Terms, Conditions and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by AMEX Assurance Company. Car Rental Loss or Damage Coverage is offered through American Express Travel Related Services Company, Inc.

Frequently Asked Questions (FAQs)

Where can i get cash back on my credit card.

Every card presents cash-back in different ways. Many of them allow you to take your earnings in the form of a statement credit, which reduces the monthly balance you need to pay on your bill. Other cards may instead offer cash back as an electronic deposit to your banking account or a check in the mail.

What’s the best cash-back credit card?

There’s no one best cash-back credit card for everyone. Your spending habits and preferences determine which card will hold the most reward potential for you. Though many cards may net you more value with bonus categories, welcome bonuses and other benefits, the highest flat-rate cash back can be achieved with the Alliant Cashback Visa® Signature Credit Card * , which earns up to 2.5% cash back with no categories to track on up to $10,000 in purchases each billing cycle with qualifying accounts. All other purchases earn 1.5%, charges no annual fee and requires cardholders meet certain requirements before earning cash back, including membership with the credit union. Because of these limitations, this card did not make it on this list. Other cards will likely net more value when evaluated holistically.

How can I maximize the cash back I earn from my credit cards?

Maximizing the cash back you’ll earn from a credit card typically involves ensuring you’re using the best card or cards for your spending. If you spend $500 on gas every month but put it on a card that only earns 1% on gas purchases, you might be missing out on extra rewards. Finding the right card for your spending is the first step to maximizing your reward potential.

Is cash back from a credit card taxable?

In general, the IRS treats cash-back rewards on a credit card as a discount and not earnings, especially if you take your cash-back rewards as a statement credit on your credit card. This means that your cash-back rewards are not taxable.

There is a caveat: If you use your cash-back rewards to pay for a business expense, you can’t deduct the cost of that purchase from your taxes since you used your rewards to purchase the item. In addition, some welcome bonuses are considered taxable income. Be sure to check with your bank or financial institution and a tax advisor to be certain.

Which credit card gives the most cash back?

There’s no top cash-back credit card that will earn the most rewards for everyone. The highest-paying cash-back card available today depends on how you spend money and how many cards you want to have.

For example, a card might earn 6% cash back up to the first $6,000 in spending at U.S. supermarkets and, after that, 1%. But if you rarely shop for groceries, you might get more utility out of a card that earns an unlimited 4% cash back on dining and entertainment, 2% on groceries and 1% on all other spending.

If you’re looking for the highest paying flat-rate cash-back credit card, the Alliant Cashback Visa® Signature Credit Card * is hard to top. It earns up to 2.5% cash back with no categories to track on up to $10,000 in purchases each billing cycle with qualifying accounts. All other purchases earn 1.5% and carries a $0 annual fee. You’re required to join Alliant’s credit union to apply for the card.

Does cash back expire?

The expiration date, if there is one, on any cash-back rewards you’ve earned from your card depends on your credit card’s policies. Some cash-back rewards never expire, and others may require card activity to keep your cash back from expiring. Check your card’s terms and conditions to make sure you don’t accidentally lose any earnings. In addition, be sure to cash out your rewards before you close a credit card account.

Do cash-back cards actually give you cash?

While many credit card cash-back reward programs redeem cash back as a statement credit to your account, some also allow you to redeem your cash back as a check or deposit to your bank account. If you’re looking for a program to literally mail you a stack of benjis, you’re probably out of luck.

Next Up In Credit Cards

• A Forbes Guide To Choosing A Cash Back Credit Card
• Best Rewards Credit Cards
• Citi Double Cash® Card Review
• Discover it® Cash Back Review
• Blue Cash Preferred® Card from American Express Review

*The information for the following card(s) has been collected independently by Forbes Advisor: Alliant Cashback Visa® Signature Credit Card . The card details on this page have not been reviewed or provided by the card issuer.

With more than 50 million redeemed miles under her belt, Becky Pokora is a rewards travel expert. She's been writing about credit cards and reward travel since 2011 with articles on Forbes Advisor, BoardingArea, The Points Guy and more. Her redemptions have helped her travel to more than 50 countries and all seven continents.

Jerod Morales is a deputy editor at Forbes Advisor and a travel rewards expert. He took a deep dive into points and miles in 2016, searching for a way to make travel both possible and affordable for his growing family. Now, as a dad to four sons, he and his wife enjoy introducing their kids to cultures and cities across the globe as often as they can.

Yanely Espinal is the director of educational outreach for Next Gen Personal Finance, a nonprofit working to ensure that every high school student gets a full semester of personal finance education—including lessons in proper credit card usage—before graduation. She is often described as a ball of energy, with a gift for storytelling, and a passion for explaining credit cards and other financial concepts in a straightforward way.   While working as an elementary school teacher, Yanely decided to change her financial life by paying off $20,000 of debt in just 18 months. In 2015 she created MissBeHelpful, a YouTube channel and social media platform that now has over 5 million views, to help others learn the money skills she never learned in school. Some of her most popular videos on the channel include “5 Things to Consider When Applying for a Credit Card” and “When To Pay Your Credit Card Bill and Increase Your Credit Score.”   Her book, “Mind Your Money,” is an Amazon bestseller and was a Plutus Award finalist for Best New Personal Finance Book of 2023. She hosts Financially Inclined from Marketplace, a video podcast for teens about money lessons for living life your own way. Yanely is also a member of CNBC's Financial Wellness Advisory Council and an Advocate at the NGPF Mission 2030 Fund.