When it comes to cash-back cards, not all of them offer the same rewards. Some cards have a 5% reward category, while others don’t. However, despite the attractive 5% reward, these cards also come with certain limitations. For example, they may have rotating quarterly categories eligible for the 5% reward, and there could be caps on the amount you can earn back at that rate. Before deciding on a 5% cash-back card, it’s essential to understand the available options and any associated limitations.
To help you find the best 5% cash-back card, we conducted an analysis of various cards offered by different issuers. Our goal was to curate a list of the top-performing cards in this category. However, it’s essential to remember that these cards should be compared to other highly-rated options as well. Each individual’s unique needs and spending habits may lead to a different ideal choice. Here are the cards we’ve selected as the best in terms of 5% cash-back rewards:
Choosing a cash-back card can be challenging, as not all cards are equal. The allure of a 5% reward category may sound fantastic, but it comes with its fair share of restrictions. These limitations often include rotating quarterly categories eligible for the 5% reward and maximum earning caps. Understanding the available options and their constraints is crucial before committing to a 5% cash-back card.
Chase Freedom Flex℠
The Chase Freedom Flex℠ stands out among 5% cash-back cards due to its focus on travel benefits and high-yield rewards rate, making it attractive for savvy travelers. However, even if you don’t travel internationally frequently, you can still enjoy benefits like DashPass and Lyft, which are available for use anywhere.
One of the most appealing features of the Chase Freedom Flex is its $0 annual fee. Moreover, the rewards structure is quite enticing, with 5% cash back on up to $1,500 in rotating quarterly categories (requires activation), 5% cash back on travel booked through Chase Ultimate Rewards®, 3% cash back on dining and drugstore purchases, and 1% cash back on all other transactions.
As a welcome bonus, new cardholders can earn a $200 bonus after spending $500 on purchases within the first three months of opening an account. However, it’s worth noting that a 3% foreign transaction fee applies to each transaction made in U.S. dollars outside the country.
In addition to the rewards program, the Chase Freedom Flex offers valuable benefits like no expiration date on cash-back rewards and no minimum redemption amount. Cardholders can also take advantage of purchase protection and extended warranty coverage on qualifying purchases. The card further provides trip cancellation/interruption insurance, auto rental collision damage waiver, and cell phone protection in case of damage or theft. These features make it a well-rounded option for both frequent and occasional travelers alike.
U.S. Bank Shopper Cash Rewards™ Visa Signature® Card
The U.S. Bank Shopper Cash Rewards™ Visa Signature® Card is designed to help you maximize your cash back-rewards specifically at select retailers. While it offers higher cash back rates, this benefit is limited to a predetermined list of retailers. However, you do get the freedom to choose two retailers from the list, and the cash back cap is relatively high.
In addition to the cash back rewards, the card comes with some travel benefits, which can be appealing to frequent travelers. Moreover, the welcome bonus is a great incentive, offering a $250 bonus after spending $2,000 in eligible purchases within the first 120 days of account opening.
On the downside, the card does come with an annual fee of $95 after the introductory period. Also, there is a foreign transaction fee of 3% for each transaction made outside of the United States, so it may not be the best option for international travelers.
It’s worth noting that the rewards earned with the U.S. Bank Shopper Cash Rewards card do not expire, providing cardholders with peace of mind. However, there is a minimum redemption requirement of $25, which can be a consideration for those who prefer to redeem their rewards more frequently.
Capital One Walmart Rewards® Card
The Capital One Walmart Rewards® Card is an appealing option for frequent Walmart.com shoppers, as it offers an excellent 5% cash back on purchases made on Walmart.com and in the Walmart app. However, the rewards rate for in-store purchases drops to a so-so level after the first year.
One of the main advantages of the Capital One Walmart Rewards® Card is its $0 annual fee, making it a cost-effective option for those who want to maximize their rewards without paying extra. Additionally, the card provides 2% cash back on restaurants and travel, as well as at Walmart Stores, Walmart & Murphy USA fuel stations, with 1% cash back available on all other purchases.
For new cardholders, there is a welcome bonus that allows them to earn 5% cash back at Walmart stores for the first 12 months when using the card with Walmart Pay. This introductory offer can be enticing for those who plan to shop at Walmart frequently during that period.
U.S. Bank Cash+® Visa Signature® Card
The U.S. Bank Cash+® Visa Signature® Card allows users to select their bonus reward categories, and it offers higher reward caps, making it an appealing choice. One of its main advantages is the generous welcome bonus, along with a medium-length introductory APR. However, it lacks some additional major perks that other cards may have. On the positive side, it stands out by offering extra travel categories, giving users more options for earning rewards.
Regarding fees, the card has an annual fee of $0, making it cost-effective for users. The rewards program is quite comprehensive, offering 5% cash back on prepaid air, hotel, and car reservations made directly in the Rewards Center. Additionally, users can earn 5% cash back on the first $2,000 in combined eligible purchases each quarter in two categories of their choice. Moreover, there’s a 2% cash back on one everyday category, which can include gas stations, grocery stores, and restaurants, and 1% cash back on all other eligible purchases.
As for the welcome bonus, users can earn a $200 rewards bonus after spending $1,000 on purchases within the first 120 days of account opening, which is a great incentive to start using the card.
Target RedCard™ Mastercard:
The Target RedCard™ Mastercard caters to frequent Target shoppers, providing exclusive benefits usable only at Target and Target.com. It comes with a $0 annual fee and offers rewards like 5% off qualifying purchases at Target stores and Target.com, 2% rewards on dining and gas purchases, and 1% rewards on all other purchases. The rewards can be redeemed as Target GiftCards. While there is no welcome bonus, cardholders enjoy perks such as free 2-day shipping on eligible items, extended return periods, and access to exclusive offers for RedCard holders.
Prime Visa:
For Amazon enthusiasts, the Prime Visa offers attractive cash-back rewards on Amazon.com, Amazon Fresh, and Whole Foods Market purchases. To take advantage of this card, a Prime Membership is required. The card comes with no annual fee for Prime members and offers 5% back on Amazon purchases, 5% back on travel booked through Chase, 2% back on gas stations, restaurants, and local transit, and 1% back on all other purchases. The welcome bonus is a $100 Amazon gift card for Prime members upon approval. Additional benefits include travel and emergency assistance, purchase protection, and extended warranty protection.
Blue Cash Preferred® Card from American Express:
The Blue Cash Preferred® Card from American Express targets home-theater enthusiasts and home cooks. It features outstanding rewards with 6% cash back at U.S. supermarkets (up to $6,000 per year), 6% cash back on select U.S. streaming services, 3% cash back at U.S. gas stations and transit, and 1% cash back on other purchases. The card has a $0 intro annual fee for the first year, then $95. The welcome bonus offers a $250 statement credit after spending $3,000 in purchases during the first six months. Cardholders also enjoy streaming statement credits and other additional features.
Discover it® Cash Back:
The Discover it® Cash Back provides rotating quarterly category bonus rewards with caps and an appealing welcome bonus: Discover automatically matches all the cash back earned in the first year. This card has no annual fee and offers 5% cash back on purchases at different places each quarter (up to $1,500 spent) and 1% cash back on all other purchases. The card stands out for its security and convenience benefits, including free Social Security number (SSN) monitoring and the Freeze it® feature to prevent fraud. However, it lacks travel benefits and has limited acceptance internationally.
Discover it® Student Cash Back:
Designed for students, the Discover it® Student Cash Back card offers great rewards and an introductory APR on purchases. The welcome bonus features Discover’s Cashback Match, where all cash back earned during the first cardmember year is matched. With no annual fee, students can enjoy 5% cash back on rotating categories (up to the quarterly maximum) and 1% cash back on other purchases. The card also provides useful benefits for students, including fraud alerts and $0 fraud liability, making it an excellent tool for building credit responsibly.
What does 5% cash back mean?
Cash-back credit cards are a popular type of rewards card, providing users with a percentage of cash back on their purchases made with the card. Among various rewards cards, the 5% cash-back card stands out as one of the most attractive options, offering a generous 5% cash back on specific purchases.
What sets the 5% cash-back card apart from flat-rate cash back options is its ability to earn elevated rewards in a particular category. This means that users can benefit greatly when making purchases within this specific category, making it highly appealing for those who frequently spend in that area.
How to choose the best 5% cash-back credit card
When selecting a 5% cash-back credit card, one should start by examining how the card handles the 5% cash-back feature. Certain cards offer this benefit only in specific spending categories and may have an annual limit on these higher rewards. However, if your expenses don’t align with the 5% category, the card’s overall value might diminish since other rewards are usually earned at below-average rates.
In addition to the cash-back feature, some cards come with supplementary perks like travel or purchase protections, entertainment access benefits, and other enticing incentives. Nevertheless, it’s equally crucial to take into account the card’s annual fee, interest rate, and any other applicable fees. Thoroughly reading the fine print is essential to grasp the full scope of limitations and restrictions before deciding to apply for the card.
How to maximize your cash back
To maximize your cash-back rewards, it’s essential to select a credit card that suits your financial situation. Look for cards that offer rewards on the types of purchases you make regularly. By aligning the card’s reward structure with your spending habits, you can optimize your reward earnings effectively.
For those who find the specific guidelines for earning 5% cash back too restrictive, 2% cash-back cards are a viable alternative. These cards often provide the best flat-rate rewards, making it easier to earn rewards on various purchases. Another approach is to combine both types of cards, ensuring a minimum of 2% cash back on all purchases and a maximum of 5% cash back on eligible items.
A key factor that can diminish the value of your reward earnings is carrying a balance on your credit card. The interest charges on the outstanding balance can quickly outweigh the benefits of the rewards you’ve earned. To avoid this, make it a priority to pay your credit card bill on time and in full every billing cycle. By doing so, you’ll retain the full value of your cash-back rewards.
