5 best cash back cards with no annual fee

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5 best cash back cards with no annual fee


Cash back credit cards have a simple and attractive offering to consumers. Use the card to make purchases and get a percentage of the amount spent back. You don't need to worry about having to use your rewards to pay for travel expenses, or be stuck earning and redeeming miles or points in an airline or hotel program.

Perhaps best of all, you don't need to pay an annual fee to score a great cash back card. Below are five of the best cash back cards available with no annual fee.

Pros and cons

It's hard to point to a single best cash back card because your spending preferences and financial habits often dictate the rewards you'll earn. However, here are some of the pros and cons that distinguish one card from another. The cards are not preferentially ordered.

Discover it®

  • Pros - You can earn 1 percent back on all purchases made with the Discover it® card and 5 percent back on up to $1,500 in purchases at select retailers that change each quarter. Previous bonus categories have included gas stations, restaurants and Amazon.com. Discover will also match the cash back new card members earn at the end of their first year.

  • The Discover it® card doesn't have a penalty APR, the first late-payment fee is waived and there's no foreign-transaction fee. In addition, there's a promotional 0 percent annual percentage rate (APR) for 12 months on new purchases, and on balance transfers made before August 10, 2016.

  • Cons - The Discover it® cash back offering stands out because of the 5 percent categories, but if your purchases don't fall into the current categories or you forget to activate the bonus categories, you'll only earn 1 percent back. The card also doesn't offer new cardholders a bonus when they sign up.

Chase Freedom®

  • Pros - The Chase Freedom® card gives cardholders 5 percent cash back on up to $1,500 spent at different retailers that you activate each quarter. Some of this year's categories include grocery stores, restaurants and wholesale clubs. You get 1 percent back elsewhere.

  • The points can be redeemed for cash back at a rate of 100 points per dollar, or used to buy gift cards, make purchases on Amazon.com or book travel through Chase Ultimate Rewards®. New cardholders can earn a bonus $150 (15,000 Ultimate Rewards® points) after spending $500 within the first three months.

    You'll get a 0 percent APR promotional rate for 15 months on new purchases and balance transfers. The card also does not have a penalty APR.

  • Cons - Previous sign-up bonuses for the card offered up to $300 after spending $500 during the first three months. In addition, if your spending doesn't align with the bonus categories, you'll only earn the equivalent of 1 percent cash back on every purchase.

Citi® Double Cash

  • Pros - You can earn 1 percent cash back on purchases and 1 percent back when you pay for those purchases. You don't need to keep track of different categories.
  • You'll also get a 0 percent introductory APR for 18 months on balance transfers made within four months of opening an account. Additionally, there's no late-payment fee for the first late payment.

  • Cons - The Citi® Double Cash card doesn't offer a sign-up bonus or special cash back offering for new cardholders.

BankAmericard Cash Rewards™

  • Pros - Each quarter, you can earn 3 percent cash back at gas stations and 2 percent at grocery stores and wholesale clubs until you've spent $2,500 in combined grocery/wholesale club/gas purchases each quarter. You'll earn 1 percent cash back on all other purchases. If you redeem the points for cash back into a Bank of America checking or savings account, you'll get a 10 percent bonus on the cash back. Bank of America Preferred Rewards clients could get up to a 75 percent bonus on the cash back.

  • New cardholders receive a $100 bonus after spending $500 in 90 days. There's also a 0 percent APR promotional rate on new purchases for your first 12 billing cycles, and on balance transfers made within 60 days of opening an account.

  • Cons - Depending on how you spend, the basic cash back rate could be lower than that available on other no-fee cash back cards. To achieve the highest Preferred Rewards tier, you must collectively have an average combined balance of $100,000 or more in Bank of America and Merrill Edge/Merrill Lynch investment accounts.

Blue Cash Everyday® Card from American Express

  • Pros - Year-round 3 percent cash back at supermarkets on the first $6,000 in purchases (then 1 percent), and 2 percent at gas stations. You get 1 percent cash back on all other purchases. New cardholders can get a 0 percent APR promotional rate for 12 months on new purchases, and on balance transfers made within 30 days of opening the account.

  • You can get a $100 sign-up bonus after spending $1,000 in the first three months.

  • Cons - American Express may not be as widely accepted as cards from other issuers. In addition, while the 2.7 percent foreign exchange fee is slightly lower than the other cards listed here, there are cards without any foreign exchange fee.

Some people would rather not have to bother with the categories. Cristina Guglielmetti, a Certified Financial Planner™ in New York City says, "I prefer ones without a lot of categories to remember, and having the ability to take the reward however you like. The key is to pay it off every month." She uses the Citi® Double Cash card for this reason.

Other cardholders look for ways to use the bonus categories to increase their overall cash back. For example, you may be able to buy gas station gift cards at grocery stores with the American Express Blue Cash Everyday® card and earn 3 percent back instead of the 2 percent you'd get paying directly at a gas station. You can use a similar tactic with the cards that have rotating 5 percent-back categories.

Bottom line

Cash back credit cards make it easy to earn and redeem rewards. You may be able to earn 5 percent cash back or more on select purchases, and at least 1 percent on every other purchase. However, cash back cards may have higher interest rates than cards without rewards, and some may require that you have a good to excellent credit rating.

About the author: Louis DeNicola is a personal finance writer and educator. In addition to being a contributing writer at Credit Karma, you can find his work on MSN Money, Cheapism, Business Insider and Daily Finance. When he's not revising his budget spreadsheet or looking for the latest and greatest rewards credit card, you might spot Louis at the rock climbing gym in Oakland, California.

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