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Best Cash Back Credit Cards (2016 Update)

November 6, 2015

Best Cash Back Credit Cards for 2011

If you have good credit, the opportunities this year are as good as they’re going to get for the foreseeable future!  Here are the two best cash back credit cards I’ve seen, ever.

 

(Drum roll) The best cash back credit cards for 2016

 

CitiBank DoubleCash Master Card:  Earn 1% immediately and 1% when you pay off your card (2% total).  Since Mastercard/Visa are accepted in many more locations than AmEx, this is my go-to card, except for purchases where I need the warranty or other benefits that an AmEx card provides.  App

American Express Fidelity Rewards: Earn 2% cash on everything.  Requires opening a Fidelity account online here (<3 minutes, no deposit required). Cash back rewards are transferred to the Fidelity account (can be transferred to your checking or automatically invested in an IRA or college savings account).  You can setup the cards to auto-sweep to your account monthly assuming you have at least $50 (instead of yearly like Costco or until you have some minimum number of points).  App.

These two cards represent where 95% of my charges go.

Before continuing to other cards, I want to briefly discuss American Express benefits:

  • American Express Additional Benefits:
    Extended Warranty: Extends the term of the original manufacturer’s warranty up to one additional year.  This actually can save a lot of money (TVs, phones, stereos, etc)
    Damage/Theft Protection: Protects purchases against accidental damage and theft for up to 90 days from purchase.
    Other Benefits here half way at bottom.

American Express is the best card to use for all high value new purchases, particularly flat screen TV/computer/smartphone/tech purchases, because it extends the warranty for free for a year, which has a lot of value.  For example, extending the iPhone warranty 1 year costs an additional $70; an extended warranty on a new TV or other high end purchase is worth even more money.  A friend recently had the water pump on his hot tub go out;  it was outside the manufacturer’s warranty by 1 month.  But it was covered by American Express, who cut him a check for $700.

On mileage cards:

Q: “Do any of the air mile cards make sense to keep long term and pay the fee vs the 2% cash back? I’ve always had trouble with paying a credit card a yearly fee so I haven’t paid attention to it. But I do travel a lot. ”

The only way a $95/annual fee makes sense in my opinion is if you travel a lot and get free baggage with it.  That can save $35-50 each direction.  Do a couple trips a year and that adds up.  Otherwise, $95 chews up $9500 ($95/.01) worth of expenses you charged that would have earned you $190 ($9500*.02) on a 2% card.

High reward / High annual fee cards:

American Express Platinum:  I just got it this year and will review it after I’ve had it a year.  This card has a very hefty annual fee ($450) but comes with a lot of perks.

Chase Saphire Reserve:  Also with a $450 fee, depending on how you travel this could be a better card than the AmEx Platinum.  It’s under consideration for next year.  App.

High sign-up bonuses:

Is it worth it?  Absolutely.  Some cards will pay $400-600, even $1,000 for signing up for their card.  Some will waive the annual fee the first year.  Just make sure you cash the bonus out and cancel it in time.  I often make an extra $500-600 a year just signing up for an extra credit card.  I consider it the perk of good credit.

Continuing onto other top cards:

VISA Capital One Rewards:  Earn 1.5% cash back on everything.  This is better than the Fidelity VISA card in two important ways:  it doesn’t require a Fidelity account and instead of sweeping the money into an account, you can set it to auto credit against your future bill so you get immediate benefit instead of the bank holding your money. App.

VISA Fidelity Cash Rewards: Earn 1.5% cash on everything.  Requires first opening a Fidelity Cash & Brokerage account online here (<3 minutes, no deposit required)). Cash back rewards are transferred to the Fidelity account which can be transferred to your checking or automatically invested in an IRA or college savings account.  Be sure to give Fidelity account # to representative if applying by phone.  App.

Amex SimplyCash Business: Earn 5% cash back on wireless service and office supplies , 3% on gasoline up $12,000 per year, and 1% on every other purchase.  $100 annual fee (which eliminates a lot of its value for me).  Plus, it is automatically credited to your statement each month. App.

VISA Bank of America Rewards: 3% gas, 2% restaurants, 1% everything else plus $50 cash bonus.  App.

Summary:  The difference between 1% and 1.5%-2% is  is 50%-100% more cash back.  It’s the difference between a $500 (at 1%) and a $750 (at 1.5%) or $1,000 (at 2%) for simply using a better card.

Avoid.  Credit cards with “up to” language or that have rotating categories or other strings attached generally are games that lower total cash back at the end of a year.

Debit Cards.

While I strongly dislike debit cards because they are more difficult to deal with in terms of fraud protection and offer less fringe benefits, below is the best cash back debit card available:

Mastercard PerkStreet Debit Card:  2% cash back on everything provided you maintain a $5,000+ balance. Less than $5,000, the reward drops to 1%.  Why you would have this card is beyond me… but it’s a top debit card. App.

These are the best deals I believe are available.  If you’re aware of something better, please let me know.

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