We recommend getting at least one card that earns 2% cash back rewards. Why? By using a 2% card as your default choice, you’ll get better rewards than you’l l get with earning 1 airline mile or hotel point per dollar. Plus, considering the opportunity cost of giving up 2% rewards when you shift spending to another card can help you make better decisions about how you use your rewards cards.
Here are several cards that we like that can get you 2% rewards with no annual fee:
Annual Fee: $0
Citi Double Cash Card
2% rewards + Extended warranty benefit.
Earns 1% when you buy and 1% when you pay. While the Double Cash is marketed as a cash back card, it earns ThankYou Points, which can become more valuable if paired with a premium ThankYou Points card.
Annual Fee: $0
TD Double Up℠ Credit Card
Best benefits on a 2% card
The most robust set of benefits on a 2% cash back card, including cell phone protection, extended warranty, and purchase security. Unfortunately, the card is only available within TD Bank’s branch footprint, mostly on the East coast.
Annual Fee: $0
Bread Cashback™ American Express® Credit Card
Unlimited 2% cash back on an Amex card
Interestingly, Amex doesn’t offer its own no-annual-fee card with unlimited 2% cash back, but it does offer one through Bread financial.
Annual Fee: $0
Wells Fargo Active Cash® Card
Simple 2% cash back rewards
Offers simple-to-use unlimited 2% cash back rewards, with cellular telephone protection—a fairly unique benefit in this category.
Annual Fee: $0
Signify Business Cash® Card
Unlimited 2% cash back rewards on a small business card
Most 2% small business cards charge annual fees or cap rewards. The Signify Business card does neither.
Annual Fee: $0
Fidelity® Rewards Visa Signature® Credit Card
Unlimited 2% rewards for Fidelity investors.
A Visa signature card offering a relatively robust set of benefits. Require you to redeem rewards as a deposit into a Fidelity account.
Annual Fee: $0
U.S. Bank Smartly™ Visa Signature® Card
Unlimited 2% rewards for U.S. bank customers, and up to 4% with a banking relationship.
The Smartly Visa offers 2% rewards everywhere, plus up to an additional 2% bonus rewards based on the size of your qualifying balances with U.S. Bank. The only caveat is that, to get maximum cash back value, you must redeem your rewards into a U.S. Bank checking account.
Annual Fee: $0
American Express Blue Business Cash™ Card
2% cash back on up to $50k/year of purchases, then 1%.
Offers American Express’s purchase protection and extended warranty benefits for purchases.
Why get a 2% cash back card?
I think that almost everyone should get a 2% cash back card. If you’re a card minimalist, a 2% card ensures that you’re getting decent rewards everywhere. And if you’re a card maximizer, a 2% card can enable you to make more rational decisions about using your cards that will lead to earning greater rewards.
If you want to keep a single card in your wallet, a 2% cash back card (especially the TD Double Up card, if you can get it) is a great option because it gives you a strong baseline of rewards everywhere.
But I also think that having a 2% cash back card enables you to make more rational decisions about using your cards. If you have a 2% cash back card in your wallet, you can think of putting a $100 charge on another card as costing $2.00… because that’s what you’re giving up in terms of rewards if you’re not putting that charge on your 2% card.
As an example, if you’re getting just one airline mile per dollar you spend on an airline credit card, that’s probably a bad tradeoff. But if you value an incremental boost to your airline status, you can evaluate if putting spending on your airline credit card is worth it. Putting an extra $10,000 on the Delta SkyMiles Reserve-level credit card to get 10,000 SkyMiles and 1,000 MQDs has a real cost—$200 in rewards you could have gotten with a 2% card. But if that spending bumps you up to the next level of elite status, and that is worth $200 to you, it’s a good move.
When to use a 2% cash back card
Think of your 2% cash back card as a “default” option for your spending. If you don’t have a reason to use another card, use your 2% cash back card.
When to use another card
The easy answer to this is that you should generally use another card if you can get better than 2% rewards. But there are a few good reasons to use another card and accept less than 2% cash back rewards. Here are some that come to mind:
- Consumer insurance protections. For some purchases, having access to a robust return protection, purchase protection, or extended warranty benefit might be worth
- Travel protections. The various travel insurance protections on premium travel credit cards can pay off big time if you ever need to use them, Personally, I always put my travel on my premium credit cards offering better travel protections.
- Boosts to airline or hotel elite status. If you value airline or hotel elite status, it might be worth it to put some spending on an airline or hotel credit card and earn only 1 point per dollar (or points worth less than 2% cash back) if you value the boost to the next level you’re getting from your card.
- Welcome offers. Finally, if you’re working on earning a welcome bonus on a new card, putting your spending on that new card will generally offer you a much better return than 2%.
