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When you start browsing the Internet for the best cash back credit card, chances are you'll find a series of generic articles that conclude with, "it depends on the card user." While there is some merit to that statement, we wanted to find a way to firmly establish a winner. To do this, we looked at the hard numbers for five of the top rated cash back cards to decide which one, on average, would provide the most money back per year. The stats for 2013 are in …
Before we get into our results, you need to understand what we did in our review. To start, we only evaluated credit card offers from our partners. We used the 2012 Consumer Expenditures Report from the Bureau of Labor Statistics to establish a base level of spending for all cards. That report revealed the following spending habits:
Caption: The 2012 Consumer Expenditures Report reflects an average annual income of $65,596 in a 2-3 person household, with 2 vehicles and 1-2 income providers.
For the purpose of this study, we assumed that consumers would put the following costs on their credit cards: groceries, dining, clothing, gas, and entertainment (movies), totaling up to $13,489 per year. That leaves housing (rent or mortgage), insurance, health care, and transportation (car payments and bus fees) off the card.
Cash Back Cards Considered for this AnalysisWe analyzed six completely different cash back cards for this study, with one coming from each of the major credit card providers. Those cards included Blue Cash Everyday from AMEX, BankAmericard Cash Rewards Card, Capital One Quicksilver Cash Rewards, Chase Freedom, Citi Dividend Platinum Select, and Discover It Card. None of these cards has an annual fee, and we ignored the APR with the assumption that a consumer would pay his or her balance immediately. This made the results as clear-cut or as cash back as possible. We omitted the break down for the bottom two cards; the Discover It card, which saves just $230.56 per year, and the Capital One Quicksilver Cash Rewards, which saves just $234.90 per year.
The graphs below highlights the results of our analysis, describing how we found each amount of cash back and what our totals were.BankAmericard Cash Rewards Credit Card
This card by Bank of America is one of their best cash back credit cards. You get $100 cash back (online-exclusive) after you spend $500 in purchases in the first 90 days of account opening and 1% cash back is earned on all purchases, every day. Additionally, card holders earn 2% at grocery stores and 3% on gas for the first $1,500 in combined gas and grocery purchases each quarter. We also assumed the customer did redeem cash back directly into their checking account, earning an additional 10% customer bonus.
- Bonus: $100
- Gas: ($2,549-$235) x .03 = $69.42
- Groceries: ($3,921-$235) x .02 = $73.72
- Remaining Gas & Groceries: $470 x .01 = $4.70
- Everything else: ($13,489 - $3,921- $2,549) x .01 = $70.19
- Above total: $318.03 x .01 = $3.18
- Total: $321.21
This card was a little more complicated, considering that consumers are spending $6,470 combined per year on gas and grocery purchases, which brings the total to $1,617 per quarter. The 2% and 3% rewards rate is only up to $1,500 in combined purchases per quarter, so the remaining $470 in gas and grocery purchases will earn just 1%.2013 Cash Rewards Calendar, which may change in the upcoming years. The results were as follows:
- Bonus: $100
- Jan-Mar Gas: ($2,549 ÷ 4) x .05 = $31.86
- Apr-Jun Dining: ($2,678 ÷ 4) x .05 = $33.48
- Apr-Jun Entertainment: ($2,605 ÷ 4) x .05 = $32.56
- Jul-Sep Gas: ($2,549 ÷ 4) x .05 = $31.86
- Jul-Sep Entertainment(theme parks): ($2,605 ÷ 4) x .05 = $32.56
- Oct-Dec Clothing: ($1,736 ÷ 4) x .05 = $21.70
- Everything Else: ($13,489 - $637.25- $669.50- $651.25 - $637.25- $651.25 - $434) x .01 = $98.08
- Total: $382.10
For a limited time, new Chase Freedom card members will earn an additional $100 cash back, bringing your total intro rewards to $200 cash back after spending $500 in the first 3 months. That means your savings would actually be $482.10 for the year. The totals above may be slightly skewed due to rounding, but the official total considers the extra digits after the decimal points. There are other rewards available for online shopping, travel, and more. Those categories did not apply to this study though. Also, the value for movies in the second quarter represents the entire entertainment budget for those months, per the averages mentioned in the "assumptions" preface. Personal spending habits could potentially alter the total.Citi® Dividend Platinum Select® Visa® Card-$100 Cash Back
The Citi® Dividend Platinum Select® Visa® Card-$100 Cash Back offers a $100 bonus after the first $500 spent on the card, along with 5% cash back from Citi on varying categories throughout the year. For this study, we used the 2013 Cash Back Calendar. Most of the categories on the calendar did not reflect the spending outlined in our assumptions, resulting in these totals:
- Bonus: $100
- July-Sep Entertainment(Theme parks & movie theaters): ($2,605 ÷ 4) x .05 = $32.56
- Oct-Dec Clothing (Dept. stores): ($1,736 ÷ 4) x .05 = $21.70
- Everything else: ($13,489 - $651.25 - $434) x .01 = $124.04
- Total: $278.30
The rewards calendar for 2013 for this card was geared more towards home improvement and online shopping. Perhaps we will look at those rewards categories in the future. *NOTE -This card may have changed since publish date. Please see terms and conditions.
ConclusionIf we weigh out all the above figures, here’s how the offers came out:
- Chase Freedom
- The Blue Cash Everyday Card
- BankAmericard Cash Rewards Credit Card
- Citi® Dividend Platinum Select® Visa® Card-$100 Cash Back
- Capital One Quicksilver Cash Rewards Credit Card
- Discover It
Chase Freedom ends up being the best cash back credit card on the market for the second year in a row, by $43.28 more in cash back than the second place winner. The Blue Cash Everyday Card came in at a close second. If you want to know what the best cash back card is for you, assess your spending habits over the course of the year and find a rewards program that lines up with them. With a little work, you're sure to find the perfect card for you.
*Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.
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