If you are looking to maximize your rewards, a 5% cash-back card can be a smart addition to your wallet. Oftentimes, they have standard interest rates and no annual fee.
Discover offers four different credit cards that provide 5% cash back on the first $1,500 in purchases made each quarter in select categories (then 1%). Consumers can choose from the following cards: Discover it® Cash Back, NHL® Discover it®, Discover it® Balance Transfer and Discover it® Student Cash Back (CNBC Select's pick for best college student cash-back credit card).
Discover's 5% cash-back calendar for 2020 includes grocery stores, gas stations, select ride-shares, restaurants, PayPal and online shopping sites like Amazon.com and Target.com. These eligible merchants rotate quarterly, and cardholders must enroll each quarter to receive the benefit at select merchants.
5% cash back at different places each quarter after you activate bonus categories (on up to $1,500 in purchases, then 1%). Plus, unlimited 1% cash back on all other purchases.
At the end of your first year, Discover automatically matches all the cash back you earned
0% for the first 14 months on purchases and balance transfers
13.49% to 24.49% variable on purchases and balance transfers
3% intro balance transfer fee, up to 5% fee on future balance transfers (see terms)*
Rewards totals incorporate the cash back earned from the welcome bonus
Like the Chase Freedom®, the Discover it® Cash Back offers 5% cash back in rotating categories on up to $1,500 in combined purchases after you activate the bonus every quarter. After you reach the limit, it's 1% on all purchases. If you maximize your spending in these categories, you could earn $75 cash back each quarter on top of the 1% cash back you earn in all the other categories.
Now until March, you can earn 5% cash back at grocery stores (excluding Target and Walmart), Walgreens and CVS. Activation for the next quarter's bonus categories starts Feb. 1, 2020.
This card has a unique welcome bonus where Discover automatically matches all the cash back you earned at the end of your first year. There is no limit to how much Discover will match.
CNBC Select calculated how many rewards the average American can earn if they optimize the way they use their Citi® Double Cash Card. We worked with the location intelligence firm Esri, who provided us with a sample annual spending budget of $22,126.
The budget includes six main categories: groceries ($5,174), gas ($2,218), dining out ($3,675), travel ($2,244), utilities ($4,862) and general purchases ($3,953).
Here's a breakdown of how much cash back you can roughly earn in each category, annually:
Cardholders can earn an estimated $707 in cash back the first year (including the cash back from the welcome bonus) and a total of $2,120 over five years.
The cash back doesn't expire and you can redeem your rewards at any time for statement credits, gift cards, merchandise and more.
The Discover it® Cash Back offers a competitive 0% APR for the first 14 months on purchases and balance transfers (then 13.49% to 24.49% variable APR). Its contactless tap-to-pay technology makes it fast and easy to pay at millions of places.
This card also automatically waives your first late payment fee but don't make missing payments a habit. Beyond the additional fees, you risk damaging your credit score and potentially paying a higher penalty interest rate. (Check out CNBC Select's steps you can take to prevent late payments.)
Trying to optimize your quarterly credit card usage can be a lot of work, so it is worth it to do the research to make sure a 5% cash-back credit card is right for you.
For other options, CNBC Select's top pick for cash-back card, the Alliant Cashback Visa® Signature Credit Card, offers 2.5% cash back on all purchases (up to $250 in cash back rewards per billing cycle). It does have a $99 annual fee, which is waived the first year.
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To determine which credit cards offer the best value, CNBC Select analyzed 234 of the most popular credit cards available in the U.S. We compared each card on a range of features, including rewards, welcome bonus, introductory and standard APR, balance transfer fee and foreign transaction fees, as well as factors such as required credit and customer reviews when available. We also considered additional perks, the application process and how easy it is for the consumer to redeem points.
CNBC Select teamed up with location intelligence firm Esri. The company's data development team provided the most up-to-date and comprehensive consumer spending data based on the 2019 Consumer Expenditure Surveys from the Bureau of Labor Statistics. You can read more about their methodology here.
Esri's data team created a sample annual budget of approximately $22,126 in retail spending. The budget includes six main categories: groceries ($5,174), gas ($2,218), dining out ($3,675), travel ($2,244), utilities ($4,862) and general purchases ($3,953). General purchases include items such as housekeeping supplies, clothing, personal care products, prescription drugs and vitamins, and other vehicle expenses.
CNBC Select used this budget to estimate how much the average consumer would save over the course of a year, two years and five years, assuming they would attempt to maximize their rewards potential by earning all welcome bonuses offered and using the card for all applicable purchases. All rewards total estimations are net the annual fee.
While the five-year estimates we've included are derived from a budget similar to the average American's spending, you may earn a higher or lower return depending on your shopping habits.
Information about the Chase Freedom® and Alliant Cashback Visa® Signature Credit Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the cards prior to publication.