Christmas and the gift-giving season is usually here faster than we expect. As you begin shopping for yourself and others, we want you equipped with the best credit card on the market. There are many choices for each financial lifestyle stage (borrower, spender, saver) and reward goal (cash savings, college savings, travel, debt transfers) but at HIT our focus is on savers and cash back.
There is plenty of competition in the credit card market, which is a benefit to the cardholder who can seek out the best deal (or finish reading this blog post, hehe). The competition has led to credit cards with no annual fees, and a slew of perks like airline miles, reward points, cash back, and sign on bonuses.
Credit card companies offer these incentives because they earn 2-3% each time the cardholder makes a purchase. This 2-3% is called an interchange fee and is charged to the merchant making the sale by the credit card company. There are other profit centers that credit card companies have, such as interest on a debt, but as savers we do not succumb to these. Therefore, we have gone out and searched high and low for the credit card that returns most of the interchange fee back to us, the cardholder.
After researching 100’s of cards we had a tie for the top 2020 cash back credit card. The winners are the Citi Double Cash Card and the Fidelity Rewards Visa Card. These two cards give back most, if not all their interchange fee revenue, the incentives are straightforward, they have no annual fees, no spending limits, and the cashback is a full 2%.
Before you go out and apply, these cards are for savers who always pay off their monthly bill on time and never carry a balance. Second, these cards are simply for those of you who want to put more cash back in your pocket. For example, if you are like me and spend $5000 month over an entire year, you’ll earn an additional $1200 from the 2% cash back!
Is 2% enough incentive for you to apply for one of these cards? The link to each card and the highlights and drawbacks are below.
The Citi Double Cash and Fidelity Rewards Credit Card Highlights
- 2% cash back on everything
- No cash back spending limits
- No annual fees
- No rotating categories
- Drawback – 3% Foreign Transaction Fee
- Bonus – You may be able to catch Fidelity’s sign up special that gives you $50 if you spend $500 within the first 60 days
- Drawback – Required to have a fidelity account to receive cash back (direct deposit)
Important Reminders:
These cards are recommended only if you are a saver and always:
- Pay on time
- Pay off the full balance
- Do not use for balance transfers
- Do not use for cash advances
Cashback isn’t always king with cards! Don’t forget that you should always apply for a card with the end in mind. In my experience, and depending on your home base airport, miles cards and perks cards can really add up. My wife and I each hold a more expensive annual fee card that grants us access to many airport lounges (free food, drinks and low stress), provides credit on airplanes for more food and drinks, provides credits for global entry/TSA pre-check and Uber. The fee is large up front but for the amount we travel this is a net positive. Additionally, the miles add up and if you wiggle it enough can be 6x more than the 1% cash back cards (or 3x more in the Citi/Fidelity cards).
Nice, how much better are they if you pass up the nice to haves or the things you wouldn’t ordinarily pay for? Also are you taking into account the savings of shopping around for flights with cash rather than miles? Are u in the world of having a travel specific card plus cash back or just travel?
This cash back card is meant to be a card that you aren’t likely to have to churn.
Nice points (no pun intended), 3x better than 2% sounds too good to be true, from the standpoint of income earned from the card companies. I’d need to dig in further and see how they supplement it to see if it’s sustainable, or is this one of the sweet specials you found that you’ll have to adjust later.
I think the 2% cash back is the best, simple and straightforward card to have. Almost like a Dave Ramsey card for savers that doesn’t take into account people’s individual situations.
Most of the other cards you have to take time to understand the rules and only use them for a specific amount or purchase.
The credit card churning game has gotten much more difficult with Chase and American Express cracking down on their rules. I just carry cards that have great perks (like the Alaska airlines companion fare) or the chase and Amex cards with big perks that add up.
You’re right on the everyday rewards. I used my capitalone quicksilver 1.5% back a lot before I traveled as much as I do now. Those cashback rewards add up.
I like that we ended up coming to the same conclusion with the double cash card. Hard to beat. I too had an airline card, and when flying frequently the benefits lined up, and the annual fee was worth it. The free 2 checked bags, the initial free miles that basically bought you 2 round trip tickets, and the priority boarding was nice, but as I started flying less and less the annual fee didnt make sense. Especially since with the double cash card you can rack up enough cash to pay for a flight in about as much time as miles.
West, it sounds like the airline card worked well for Ethan and yourself and one point in life. But if you don’t have that special circumstance or don’t want to adjust cards when travel stops it’s hard to beat 2% and the flexibility of cash.
Good picks. Fidelity guy myself as well. Would add honorable mentions to AMEX Gold, Chase Freedom Unlimited, Chase Preferred, Costco Citi, Amazon VISA, Capital One Quiksilver.
Will definetely be telling my friends about this! Thanks for the tips
Thanks for the information. I appreciate you taking the time and sharing this content.