What is the best rewards credit card when shopping for groceries, gas, clothes? Now that the banks are lurching towards charging fees on debit cards there really is no reason not to pay for groceries or gas with a cash-back rewards credit card. But, with the opportunity to earn up to 5% cash off of your everyday purchases, you really didn’t need another reason, did you?
For most people, groceries and gas represent their largest budget item. The average family spends about $10,000 on both. So, if you could earn 5% back on those purchases, you would pocket around $500, good for a month’s worth of groceries or a couple of months’ worth of gas. Seems silly not to do it, But, before you run to your computer to apply for a card, you should know a few things about cash back rewards:
Different rewards plans:
There are pure cash back cards – meaning you earn $1 of cash for a certain amount spent. Some plans award points, and others award food and gas discounts. The pure cash back plans are the most straightforward and offer the best values.
Rewards flexibility: Look for restriction on rewards usage. Some cards limit rewards usage to certain merchants.
Spending caps: Many cards cap how much of your spending can earn rewards. Look for no or high caps.
Earning expirations: With some cards your can earn the highest cash back, up to 5%, but there may be a time limit, or they only be available within certain time frames. Armed with these key elements, you can begin shopping and comparing the best cash back rewards cards. Here are our picks for the top cards. All cards come with no annual fees and most are offering a 0% intro balance transfer.
American Express Blue Cash Everyday
- 3% cash back at supermarket and 2% cash back at gas stations AND department stores. 1% cash back on everything else.
- No spending minimum, no rotating categories.
- If you don’t mind paying the $75 annual fee (waived the first year), the Blue Preferred card pays a whopping 6% on groceries and 3% on gas.
Chase Freedom
- 5% cash back on purchases made in specific categories that rotate every three months. The categories include groceries, gas, home improvement. You need to activate your cash back bonus for each category each quarter. Also pays 1% cash back on all other purchases made at anytime.
- From now until December 31, 2011 you can also earn 5% cash back, up to $1,500, on restaurants, department stores, entertainment and charitable contributions.
- Currently, you can get a $200 bonus after your first $500 spent in the first three months.
Bank of America Cash Rewards
- You earn 2% cash back on groceries and 3% cash back on gas, but there is a spending cap applied each quarter. A 1% bonus is earned on all other purchases.
- Also pays a 10% bonus when you redeem rewards into your checking or savings account.
Capital One No Hassle Rewards
- A straightforward plan that pays 2% cash back on gas and groceries and 1% on all other purchases.
- You can earn up to 15% on purchases made from its own retail network.
Chase BP Gas
(This is gas only at one company, but worth mentioning)
- 5% cash back on gas purchases at BP stations. Currently, BP is offering double rewards during the first two billing cycles. Go fill up for that long distance road trip.
The American Express Blue Cash card is the straight across top pick among these, but if you want to really maximize your rewards, you can obtain one that offers 5% to use during the quarters in which groceries and gas are featured. And, to avoid the spending caps on those cards, get one for each spouse.
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