Credit Cards With 3% Cash Back
Cash back credit cards give you money back for each card purchase, whether you charge a pizza or an Uber ride. But not all cash back cards are created equal.
Cards often earn between 1% to 2% cash back. That's not bad, but several credit cards give users 3% cash back or more.
Here's what you need to know about 3% cash back credit cards.
[Read: Best Cash Back Credit Cards.]
Can I Find a 3% Cash Back Card?
Sadly, no credit card earns 3% cash back on every purchase forever. Below are some cards that provide this rebate or better for a limited time or in certain spending categories:
-- Bank of America Cash Rewards credit card. Cardholders can earn 3% cash back in a monthly spending category of their choice, such as dining, gas, travel and online shopping. You can get 2% cash back on up to $2,500 in combined purchases each quarter at grocery stores and wholesale clubs and 1% cash back on everything else.
-- Capital One SavorOne Cash Rewards Credit Card. Card users receive 3% cash back on dining and entertainment, 2% on groceries, and 1% on all other purchases, with no limit on earnings.
-- Chase Freedom Unlimited. New cardholders earn 3% cash back on up to $20,000 in purchases the first year. Then the rewards rate becomes 1.5% back on everything.
-- Uber Visa Card. The Uber card pays 4% cash back on restaurants, 3% on hotels and vacation rentals, 2% on online purchases, and 1% on all other purchases. New card users receive a $100 bonus by spending $500 within 90 days of opening an account. Anyone can receive a $50 credit toward online subscription services charged to the Uber card by spending at least $5,000 per year on the card.
-- U.S. Bank Cash+ Visa Signature Card. This card touts a three-tiered cash back rewards program. Cardholders earn 5% cash back on the first $2,000 spent each quarter in two categories they choose. Purchases within one everyday category, such as gas stations or grocery stores, get 2% cash back, with no limit on earnings. All other purchases earn 1% cash back.
[Read: Best Rewards Credit Cards.]
What's the Typical Cash Back Rate for Rewards Credit Cards?
The reality is that 3% cash back is not necessarily out of reach for consumers but short-lived.
"Cards that pay 3% or higher only do so on certain spending categories and then typically only pay 1% on all other purchases," says Jim Miller, vice president of the banking and credit card practice at J.D. Power.
For most cash back credit cards, what rebate should you expect? The standard cash back rate is about 1%, according to Logan Allec, certified public accountant and founder of personal finance site Money Done Right.
That said, some cards earn a flat 2% rate on all purchases and charge no annual fee. But that usually means you won't have chances to earn a higher rate. You wouldn't be able to earn more than 2% cash back on bonus categories, for instance.
How Can I Make the Most of My 3% Cash Back Earnings?
One way to maximize your cash back rewards is to use several cash back credit cards, Allec says. You can choose the right card based on your spending habits and 3% cash back categories.
If you'd rather stick to using one cash back credit card, Allec offers more guidance. "This means you need to check your annual spending and make a list that separates purchases into different categories," he says. "Compare this list to different rewards cards that offer 3% cash back or higher in certain categories, and then select the one that you would earn the most cash back based on your spending history."
Miller suggests a two-pronged strategy: Use a flat-rate 2% cash back card for most purchases, and switch to a card that earns 3% back or better for purchases that qualify in bonus categories.
You might have bonus rates of 6% cash back on groceries, 4% back on dining, and 3% back on travel, entertainment and gas. You'll want to use that card for purchases in these categories but the 2% cash back card for everything else, Miller says.
[Read: Best Travel Rewards Credit Cards.]
But how do you keep track of which card to use and when? Note the cash back rate on each card with a permanent marker so you don't have to memorize all of them, Miller says. For cards with rotating bonus categories, a sticky note could help you remember the bonus categories for each quarter.
If you don't want to keep track of cash back rates and bonus categories, you could choose a card that earns at least 3% back in bonus categories where you spend the most and 1% on everything else. You'll probably earn less than you would juggling multiple credit cards, but this approach makes earning bonus rewards simple.
No matter your strategy, keep up with your payments on all of your cards, and pay the balance in full each month. "Even 5% cash back won't matter if you are paying 16% or more in interest," Miller says.
If you do have to carry a balance, make sure it's for the card with the lowest interest rate. And do your best to pay off your balance as soon as you can.
Finally, Allec cautions that annual fees might affect your overall earnings. You'll want to weigh the costs of your rewards credit card. "You should compare how much cash back you'll receive in a card's 3% cash back category, annual-fee 1% cash back card," he says.
Casey Bond is a seasoned personal finance writer and editor. Her work has appeared in a number of major national publications including U.S. News & World Report, Yahoo Finance, MSN, The Huffington Post, Business Insider, Forbes and others. Follow her on Twitter @CaseyLynnBond.
