The Best Cash Back Credit Cards – 2012

Looking to find the best cash back credit cards on the market today? You’ve come to the right place.

This is the most complete, unbiased review of cards that you’ll find anywhere. While the list remains largely similar to last year’s, there are some changes. A few cards have changed their terms, resulting in their being cut from the list, while a few new offers have popped onto the scene. One thing you’ll find in common for all of the cards that made the list–none of them have an annual fee. Read on to get all the details.

Note: This list only includes personal cash back credit cards. As I mention in this post, small businesses should strongly favor a rewards credit card over a cash back card.

Fidelity Investment Rewards American Express Card

Pros: Untiered, uncapped 2% rebate on all purchases, low 1% forex fee Cons: Requires Fidelity brokerage account, Amex not universally accepted

The Fidelity Amex continues to deliver among the best untiered, uncapped rate of cash back on purchases available on the market today. The card earns a 2% rebate on all purchases deposited into a Fidelity account of your choice. The Fidelity account may be a non-retirement account, an IRA or 529 college savings plan.

Cardholders earn 2 points for each dollar in net retail purchases. Points can be redeemed in 5,000 point increments into your eligible Fidelity account, at a rate of 1 cent per point. You may also choose to automatically have your points swept as a cash deposit into your Fidelity account.

One often-overlooked benefit of the Fidelity Amex is that it only carries a 1% fee for purchases made in foreign currencies, compared to the 2-3% fee that most other credit cards usually assess.

One of the drawbacks of the card is that it is an Amex, meaning that you’ll need to still carry a Visa and/or MasterCard in your wallet for those places that don’t accept American Express.

If you already have an existing relationship with Fidelity or are strongly considering one, then this is a great card to consider.

Fidelity Investment Rewards Visa Signature Card

Pros: Up to 2% rebate on all purchases Cons: Requires Fidelity brokerage account

The Fidelity Visa is very similar to the Fidelity Amex, though it offers a slightly lower rebate than its sibling. While the Amex offers a flat 2% cash back, the Visa card has a tiered rebate structure. For the first $15,000 in purchases of the year, you’ll earn 1.5 points for each $1. After you’ve reached $15,000 in spending, you’ll receive 2 points per $1 in purchases. As with the Amex, your points can be automatically converted into a deposit into your eligible Fidelity account in $50 increments.

Unfortunately, the Fidelity Visa also charges a 3% forex fee, compared to the 1% charged by its Amex sibling.

The upside to the Visa is that it does have more universal acceptance, so if you’re looking to have just a single credit card in your wallet, it may be the card you’re looking for.

Capital One Cash Rewards card

Pros: Effectively a 1.5% rebate on all purchases, doesn’t require having a relationship with a specific financial institution Cons: Entire rebate is not received immediately

One of the new card offers to appear in the past year was the Capital One Cash credit card. It offers an essentially flat 1.5% cash back on all purchases. Customers receive their rebate in two steps: 1) 1% cash back on all purchases is earned immediately. 2) On their anniversary, customers receive an additional 50% bonus on the rebates that they earned in the previous year. Rewards can be redeemed at any time with no minimum and can come in the form of a check, statement credit or gift cards.

Like all Capital One cards, it does not charge foreign transaction fees, making it an excellent choice for travelers.

Overall, the Capital One Cash card offers a relatively straightforward 1.5% rebate that doesn’t require a relationship with any specific financial institution.

Priceline Rewards Visa

Pros: Effectively at least a 2% rebate on all purchases Cons: Rewards system can be confusing to understand

The Priceline Rewards Visa is a points-based credit card that offers 5 points per dollar spent on “Name Your Own Price” Priceline purchases and 2 points per dollar on all other purchases. The card’s rewards system can be confusing at first, but the bottom line is that points can be redeemed for at least 1 cent per point, making this card earn at least a 2% rebate on all purchases.

In addition, the card is a Visa, meaning you’ll enjoy near universal acceptance. On the downside, there is a 3% foreign currency transaction fee. You also stand to have your account closed and/or points forfeited due to inactivity if you don’t use the card at least once every 6 months or keep a balance.

For a more complete explanation of the rewards system and a full review of the Priceline Visa, see this review.

Honorable Mention

Blue Cash Everyday® Card from American Express

Amex revamped its Blue Cash card, making its reward structure more straight-forward and attractive to lower and moderate spenders. It did come at a cost, however, as bigger spenders will not find the new versions of the card as attractive.

Gone is the tiered reward structure. From the first dollar you spend, you’ll earn 3% cash back at stand-alone supermarkets, 2% at stand-alone gas stations and select major department stores and 1% on all other purchases.

Rebates are earned in the form of Reward Dollars, which may be redeemed for statement credits, or additional items like merchandise and gift cards, whenever your available Reward Dollar balance is 25 or more.

The Blue Cash Everyday card also has a sibling dubbed the Blue Cash Preferred card. The Blue Cash Preferred card carries a $75 annual fee and earns a 6% rebate at stand-alone supermarkets, 3% at stand-alone gas stations and select major department stores and 1% everywhere else.

For those who make a lot of purchases at the grocery store (or those who are more creative and buy store gift cards there), the Blue Cash Preferred card can be an attractive option. If you’re trying to decide between the Blue Cash Everyday card and the Blue Cash Preferred, you can use this handy calculator which examines your spending habits to determine the better card for you.

Penfed Visa Platinum Cashback Rewards Card

• 5% rebate on gas paid at the pump
• 1% rebate on all other purchases (soon to be 0.25%)
• Rebate applied automatically every month as a statement credit
• Must be a PenFed Credit Union member

Penfed’s cash back credit card has seen a number of changes over the past year. It still, however, arguably remains the best credit card for gas purchases. It earns an excellent 5% rebate on gas paid at the pump, but a pedestrian 1% rebate on all other purchases. Your cash back is automatically applied monthly as a statement credit.

The rebate on non-gas purchases is expected to dive to an unacceptably low 0.25% very soon, however, as PenFed begins promoting a new points-based card. Existing cardholders are currently in a transitional period, where they either keep the downgraded version of the old cash back card or switch to the new points-based rewards card.

The new points-based Penfed Platinum Rewards card appears to be a worthy successor to the cash back card, earning 5 points per dollar spent on gas, 3 points per dollar spent at supermarkets and 1 point per dollar on everything else. Points can be redeemed for rewards such as Visa prepaid cards at a value of 1 cent per point. Unlike the existing PenFed cash back card, however, redemption is not automatic every month.

In order to get a card, you must be a member of the credit union. You’re automatically eligible if you’re a member of the military or related to someone who is, work at a qualified business or at the Red Cross. Otherwise, you can become eligible by joining the Voices for America’s Troops for a one-time $15 fee.

Fort Knox Visa Platinum Card

• 5% rebate on gas paid at the pump
• 1.25% rebate on all other purchases
• Rebate applied automatically every month as a statement credit
• Must be a Fort Knox Credit Union member

A lesser known but richer cousin of the PenFed Visa is the Fort Knox Visa. It pays 5% cash back on gas and 1.25% on all other purchases. Its membership requirement is also easy to satisfy, as there is a consumer’s organization, the American Consumer Council, that you can join for free as part of your application process. Membership to the credit union does require a payment of $15 upfront, $5 of which represents a share in the credit union and $10 of which covers the one-time membership fee.

Be careful that you continue to use the card if you get it, as there is a $26 inactivity fee if you leave it dormant for a year.

PNC CashBuilder Visa Credit Card

• Flat 1.75% rebate possible
• Requires extensive banking relationship with PNC Bank
• Cash back rewards credited to checking, savings or CashBuilder account

By default, the PNC CashBuilder Visa Credit Card earns a flat 1.25% cash back rebate. However, your rebate can be boosted depending upon either your level of spending or the extent of your relationship with PNC, up to a possible flat 1.75% cash back.

Sallie Mae Visa Signature Card

• Up to 2% cash back on all purchases
• Spotty customer service

Sallie Mae is most well known as a student loan provider, but also has a couple of interesting credit card options that are open to anyone. The Sallie Mae Visa Signature card is a points-based credit card that offers 2 points for every dollar spent with no limit to the number of points you can earn. Points can be redeemed towards merchandise, travel, gift cards or cash back. You will earn a higher effective cash back percentage when you accumulate more points to redeem. For instance, while 2,500 points can be redeemed for a $16.25 rebate (effectively 1.3% cash back), if you save up 25,000 points, they can be redeemed for a $250 rebate (effectively earning you 2.0% cash back).

Alternatively, Sallie Mae offers another credit card which earns 5% on gas and groceries (on up to $500 in spending per month), 5% on books (on up to $1000 in spending per month) and 1% on everything else. Depending upon your spending habits, this could be an attractive option. It’s important to note, however, that these spending categories do overlap with other credit cards that don’t have any such spending caps. For instance, the PenFed card offers an unlimited 5% rebate on gas, the Citi Forward offers 5 points per dollar on books, movies and music with no cap and the Amex Blue Cash Preferred Card offers a 6% rebate at supermarkets (with $75 annual fee) and no cap.

When considering either Sallie Mae credit card, it’s also important to consider that Sallie Mae is not as experienced in dealing with their credit card business as the larger credit card issuers. There have been many issues reported with Sallie Mae’s program. Multiple people have reported having long delays with receiving their card, problems with the online application process and spotty customer service.

Discover More Card

• 5% cash back in quarterly rotating categories
• Up to 1% cash back on all other purchases
• Redeem in $20 increments

The Discover More card makes a very poor general use credit card because of its tiered cash back structure. Your first $3,000 in purchases earns only a 0.25% rebate. In addition, purchases made at warehouse clubs and discount stores also earn only 0.25%. Otherwise, you’ll earn 1% cash back on purchases after you’ve spent $3,000 in a year.

However, it often features promotions that can make it a worthwhile card to have. If you are a dedicated deal chaser, it often pays to have at least one credit card on each of the four major networks (Amex, Mastercard, Visa and Discover), as there will occasionally be excellent network-specific promotions.

Discover also pioneered the concept of rotating bonus spending categories that other issuers now copy. Currently, Discover is offering a 5% cashback bonus on up to $1,500 in purchases on airlines, car rentals, hotels, cruises and restaurants and 5% on up to $200 in purchases at gas stations, museums and movies. From April through June, the 5% bonus categories (on up to $1,500 in spending) will be restaurants and movies.

In addition, you can get bonus cash back at select merchants when you use ShopDiscover, often much higher than similar shopping portal sites. Discover also features redemption options that increase the value of your rewards when redeemed at select merchants for gift cards or instant eCertificates. For instance, you can turn $20 in rewards into a $25 gift card.

Chase Freedom Card

Citi Dividend Card

• 5% cash back in quarterly rotating categories
• 1% cash back on all other purchases

I’m grouping the Chase Freedom and the Citi Dividend card together because they are quite similar. They both earn a base 1% cash back with the opportunity to earn 5% in rotating categories that change every quarter, like the Discover card. While the Chase Freedom allows you to earn 5% on up to $1,500 in bonus category purchases each quarter, the Citi Dividend limits your total cash rebate to $300 per year, unless you received an offer stating otherwise.

If you can remember to sign up for the rotating bonuses every quarter and match your spending to the bonus categories, these cards can deliver a good rebate percentage. If you are looking for less hassle, however, you may want to look elsewhere. For the quarter of 10/1/12-12/31/12, the Chase Freedom card is offering a 5% rebate at at hotels(on hotel rooms purchased directly with the hotel), airlines(on tickets purchased directly with the airline), Best Buy® and Kohl’s. For 7/1/12-9/30/12, the Citi Dividend is offering a 5% rebate on airline and car rental purchases, and at Gap, Banana Republic, Old Navy, Gap Outlet and Banana Republic Factory Stores. See the cash back bonus calendar for more details.

A final word
It’s good to remember that cash back cards are only valuable for consumers who pay their balance in full every month. If you carry a balance, you are better off finding a low-interest rate card, since the interest you are paying will more than offset any cash back you might receive.

Editor’s note: For historical versions of this list, see:

• Best Cash Back Credit Cards – 2011
• Best Cash Back Credit Cards – 2010