Cash back credit cards offer an opportunity to get some money back every time you make a purchase, but how you earn that cash back can vary from card to card.
Credit cards with 2% cash back allow you to earn a great rewards rate, regardless of where you spend your money. However, they also limit your ability to maximize your rewards on certain categories where you can get a better return from a different card.
Here’s what you need to know about 2% cash back credit cards and whether they’re right for you.
[Read: Best Rewards Credit Cards.]
How Common Are 2% Cash Back Credit Cards?
There are three different ways you can earn rewards on a cash back credit card. Depending on your spending habits and how much balance you want between simplicity and maximizing rewards, one may be better than the others:
— Flat-rate cards. These cash back cards offer a flat rewards rate on every purchase you make. They typically offer 1%, 1.5% or 2% back, but there is a 2.5% cash back credit card out there, too, and others that can offer more if you jump through certain hurdles.
— Tiered rewards cards. These cards offer a tiered rewards system, giving you a higher rate on certain spending categories. However, the base rewards rate is typically low at 1% or 1.5%, which is what most of your purchases will net.
— Rotating rewards cards. There are a few cash back credit cards that offer bonus rewards on categories that rotate every few months. You’re typically limited on how much you can earn in bonus rewards every quarter, and the base rewards rate is typically 1%.
The good news is that there are several credit card issuers that offer 2% cash back cards, so you’ll have plenty of options to choose from. In some cases, you may also get a higher rewards rate on some purchases.
“Credit cards that offer tiered bonus categories or quarterly rotating categories can get extremely complicated,” says Maya Nijhawan, co-founder of Finch, a company that offers a rewards card that lets you build credit without debt. But if you exclusively use a flat-rate card, you could miss out on better rewards on a different card, she adds.
“The primary benefit of a flat-rate rewards card is simplicity,” says John Cabell, director of banking and payments intelligence at J.D. Power. “Flat reward programs have more consistent earning power over time, often regardless of the types of purchases made. These products are also typically very easy to use for those who don’t want to monitor and manage their rewards earnings.”
Where to Find 2% Cash Back Cards
If you’re looking for a credit card with 2% cash back or more, there are many excellent options to consider. Keep in mind, though, that some require you to jump through hoops to maximize your rewards:
— Wells Fargo Active Cash Card. The card offers a flat 2% cash back on every purchase you make, plus a $200 cash rewards bonus when you spend $1,000 in the first three months. It also offers an introductory 0% annual percentage rate promotion for the first 15 months on both purchases and balance transfers. It doesn’t charge an annual fee.
— Citi Double Cash Card. You’ll earn 2% cash back on every purchase, with a catch — you’ll get 1% back when you make a purchase and 1% back as you pay it off. The card also offers an introductory 0% APR promotion for 18 months on balance transfers. It doesn’t charge an annual fee.
— Alliant Cashback Visa Signature Credit Card. The card offers 2.5% cash back on up to $10,000 in monthly purchases (1.5% thereafter), but you need to meet the requirements for a High-Rate Checking account with the credit union and maintain an average daily balance of $1,000 in the account each quarter. It doesn’t charge an annual fee.
— Capital One Spark Cash Plus. The charge card is designed for business owners and offers unlimited 2% cash back on every purchase and also a cash bonus of up to $1,000 — that’s $500 when you spend $5,000 in the first three months and another $500 when you spend $50,000 in total over the first six months. The card also offers a $200 cash bonus when you spend $200,000 annually, but it has a $150 annual fee.
— Apple Card. The card offers 2% cash back on all purchases you make using Apple Pay. Additionally, you’ll get 3% cash back on purchases made at Apple and other select retailers and 1% back on everything else. It doesn’t charge an annual fee.
— SoFi Credit Card. The card offers unlimited 2% cash back on every purchase, but only if you redeem your rewards to save or invest with SoFi or pay down an eligible SoFi loan. All other redemptions net just 1%. The card doesn’t charge an annual fee.
— Synchrony Premier World Mastercard. This card offers unlimited 2% cash back on every purchase, with no strings attached. However, there aren’t any other relevant benefits or features. It doesn’t charge an annual fee.
— PayPal Cashback Mastercard. You can earn unlimited 2% cash back with this card, but you’ll need a free PayPal account to be able to apply. It doesn’t charge an annual fee.
— Fidelity Rewards Visa Signature Card. The card offers 2% cash back on every purchase, but you’ll need to deposit your rewards in an eligible Fidelity account to get that rate. It doesn’t charge an annual fee.
— Evergreen by FNBO Rewards Visa Card. The card offers unlimited 2% cash back on every purchase plus a $200 cash bonus when you spend $1,000 within the first three billing cycles. The card also offers an introductory 0% APR for 12 months on purchases and balance transfers. It doesn’t charge an annual fee.
— TD Double Up Credit Card. You can earn 2% cash back on everything with this card if you redeem your rewards into an eligible TD Bank account. Otherwise, you’ll earn just 1% back. It also offers $100 in bonus cash when you spend $1,000 in the first 90 days and an introductory 0% APR on balance transfers for 15 months. It doesn’t charge an annual fee.
— Key Cashback Credit Card. The card’s default rewards rate is 1.5%, but you can get unlimited 2% cash back if you have a KeyBank checking account with at least $1,000 in monthly deposits and a savings or investment account with a $1,000 minimum daily balance. The card also offers an introductory 0% APR on balance transfers for 12 months. It doesn’t charge an annual fee.
— PenFed Power Cash Rewards Visa Signature Card. Like the Key Cashback Credit Card, this one offers 1.5% cash back as a default rate. But if you’re an eligible PenFed Honors Advantage member, you can get 2% back on everything. The card also offers a $100 statement credit when you spend $1,500 in the first 90 days, as well as an introductory 0% APR on balance transfers for 12 months. It doesn’t charge an annual fee.
Also, note that you can get up to 2.62% cash back on everyday purchases with the Bank of America Premium Rewards credit card and the Bank of America Premium Rewards Elite credit card. However, you need to have at least $50,000 in assets in eligible accounts with Merrill Lynch or Bank of America to earn a rate above 2%.
Which 2% Cash Back Credit Card Is Right For You?
There’s no single credit card out there that’s best for everyone, so it’s important to compare all of your options to determine the right fit for you.
As you can see, even something as simple as a flat 2% cash back card can get complicated when the card issuer adds hurdles to earn that rewards rate. Additionally, some 2% cash back cards also offer other benefits, such as a sign-up bonus, an introductory 0% APR promotion and more.
“Determine which type of credit card you actually need and shop around for the card that matches your spending behavior and lifestyle,” says Nijhawan.
If you’re considering a 2% cash back card, take your time to shop around. Think about what it takes to earn the rewards rate, if applicable, and what other card benefits are important to you. If you believe you might miss the rewards rate because of the requirements, consider a different card.
Keep in mind, too, that all of these cards typically require that you have good credit, which starts at a FICO score of 670. If your score is below that threshold or just above it, you may want to work on building your credit before you apply.
How to Maximize Your Cash Back Rewards
If you’re considering a 2% cash back credit card, you’re going to get a great rewards rate on every purchase. However, if you want to make the most of your everyday spending, it may make sense to add one or more other rewards credit cards into the mix.
For example, some cards offer up to 6% cash back on supermarket purchases, and others offer up to 5% back at gas stations. “Align your spending with the rewards program to get the most earning power,” says Cabell.
And for all of your spending that doesn’t earn those bonus rates, you can use your 2% cash back card. This approach does make things more complicated, and it requires more organization, especially to make sure you pay your bills on time every month. But the strategy can pay off big time in the long run in the form of more cash rewards.
If you want to keep things simple, Cabell recommends that you plan to use your 2% cash back card on everything and pay your monthly bill on time and in full to avoid hefty interest charges.
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