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I am very fortunate to have been traveling with my family from a very young age, and my love of flying and travel comes from those early transatlantic trips with my parents. We often have different priorities when it comes to travel (if my mother had her choice she would still be booking the first row of the smoking section on Condor), and like many of you probably do for your family, I do my best to help them leverage their spending in a way that makes sense for the way they want to travel. My parents tend to favor a very simple strategy, while my brother has typically been interested in earning points quickly, which has allowed us to take some pretty fun trips together.
He and his wife recently welcomed their first child, and even prior to that his work situation had been severely limiting the amount of time and flexibility he has for travel. It’s a bit inhumane to only have a handful of long weekends off a year, in my opinion, but he thinks it’s ridiculous that I blog from the bathtub, so who am I to judge?
At any rate, he has decided that the best and only option for him is a cash back card. And he won’t shut up about it (this is roughly one of 47 texts I received on the topic):
For the record, I am not at all opposed to cash back cards in general. I think that they’re a valuable part of a card portfolio, and are a great way to offset some of the expenses of award travel, if nothing else. I prefer to focus the bulk of my energy on earning points in programs that offer more aspirational opportunities, but for some situations (like my brother’s), a cash back card might make the most sense.
So, for those people with new babies who don’t necessarily want to travel internationally in premium cabins in the near future, which are the best cash back cards?
What’s actually in my wallet #highroller #happyroomattendantshappylife
This is one of the most lucrative cash back cards out there. It offers a flat 2% cash back on purchases without an annual fee. That’s a pretty darn good return for a no annual fee card, and makes it a “keeper.”
The card does have foreign transaction fees, but they’re “only” 1%, should you want to use it internationally (that being said, hopefully you have a better credit card for international travel which waives foreign transaction fees altogether). The signup bonus isn’t especially lucrative, but you can earn 5,000 bonus points after you make at least $500 in purchases within the first 60 days (that’s enough for $50 in an eligible Fidelity account). I’m not a huge fan of the fact that the money goes into a Fidelity account, since that’s not who I bank with.
This is a no annual fee credit card that offers 1% cash back on every purchase, and then an additional 1% cash back when you pay for those purchases. There are no limits to the amount of cash back you can earn. That makes it as lucrative as the Fidelity Card, with the added bonus of being accepted in more places, given that it’s a Mastercard.
The downsides of the card are that there’s no sign-up bonus, and it does have 3% foreign transaction fees.
This card offers 6% cash back at U.S. stand-alone supermarkets (on first $6,000 of spend per calendar year, and 1% thereafter); 3% cash back on gasoline at U.S. stand-alone gas stations and at select major department stores; 1% cash back on other purchases.
For a no annual fee card, the Blue Cash Everyday® is a good option. The card offers 3% cash back at U.S. stand-alone supermarkets (on first $6,000 of spend per calendar year, and 1% thereafter); 2% cash back on gasoline at U.S. stand-alone gas stations and at select major department stores; and 1% cash back on other purchases.
You still pay 2.7% in foreign transaction fees, but if you’re looking for a cash back card without an annual fee this could be a good choice.
If you plan on traveling anywhere at all, ever, then this is the best option, in my opinion.
A lot of people would say actual cash back is more valuable than cash back towards travel. For me that’s not the case, and I am guessing for most people reading this blog, that’s not the case either. Unless you spend less on travel than you’d earn in rewards, it’s the same thing. And that’s simply to say that the same amount of cash back would be equally valuable to me regardless of which form it came in.
With the Barclaycard Arrival Plus™ you’re essentially earning ~2.22% cash back towards travel, while with the Fidelity Investment Rewards American Express Card you’d be earning 2% cash back.
The Barclaycard Arrival Plus Card doesn’t have an annual fee the first year either, so you do come out ahead with it, by ~0.22% per dollar spent. After that, the $89 annual fee makes the math more complicated, but I still give the edge to the Barclaycard over the Fidelity card, at least for me personally.
If you’re looking at international travel, there’s additional value in having the Barclaycard Arrival Plus Card, given the waived foreign transaction fees and Chip + PIN technology.
So what’s the difference?
There are pros and cons to each of the above cards. I find the Citi® Double Cash Card to be the most straightforward among these cards, given that it offers a high return on everyday spend and the cash back can be earned in the form of a statement credit (I find that easier than having to open a Fidelity account and depositing the money there). The Fidelity® Investment Rewards® American Express® Card does offer a $50 statement credit, though if you’re going exclusively for a cash back card I don’t think that offsets the two biggest benefits of the Citi Double Cash Card (the fact that it’s a Mastercard and that the cash back comes in the form of a statement credit).
The TrueEarnings® Card from Costco and American Express, TrueEarnings® Business Card from Costco and American Express, Blue Cash Preferred® Card from American Express, and Blue Cash Everyday® Card from American Express can all make sense depending on your specific spend patterns. They’re not as straightforward as the Citi or Fidelity Cards, but can also offer a much higher rate of return if your spend is focused in certain categories.
Even if you’re not big into aspirational international premium cabin travel at the moment, there’s a lot of value in the Barclaycard Arrival Plus™ World Elite Mastercard®. You essentially earn ~2.22% cash back with the card, which is a higher return on everyday spend than the other cards. On one hand it’s tough to justify the annual fee after the first year compared to a 2% cash back card, though on the other hand there’s a lot of value in having a card with no foreign transaction fees and Chip & PIN technology, so I think the value of that shouldn’t be underestimated.
Given my brother’s situation, I would probably go with the Citi® Double Cash Card, which is tough to beat in terms of simplicity and return on everyday spend.
What do you think? Is anyone else switching to primarily cash back products?