The Best Cashback Credit Cards of 2022

Welcome to Saving Money with Andrew!

Credit card rewards are important. Really important. The average American household spends about $60,000 per year. 1% of that is $600 per year. 2% of that is $1200. A small percentage of a lot of money can be a lot of money.

And yet, whenever I talk to a friend or family member about their credit card, they commonly show me a card that earns subpar rewards, often worth less than a cent per dollar spent. When faced with this fact, they will often reply by citing a recent reward they purchased with the card (a plane ticket, a hotel stay, etc), ignoring that this reward typically reflects an effective reward rate of far less than 2% of their purchases, and not acknowledging what they are sacrificing by using a credit card that earns those lower-value rewards.

What’s the best way to maximize your credit card rewards? The answer is simple, and hasn’t changed much since I first wrote about this in 2019.

For 98% of readers, you will do best with two credit cards:

1. The Citi Double Cash card for 2% cash back on all purchases.[1] It’s notable that Citi does not prominently feature the Double Cash card on their front page. That’s for a reason.

   

2. If you are a frequent Amazon shopper, the Amazon Prime Rewards Visa card (Amazon Prime members only) for 5% cash back on all Amazon and Whole Foods purchases. Use this for Amazon and Whole Foods, and nothing else.

That’s it. This combination of cards will earn you a blended rewards rate above 2%, far higher than almost any other card out there. And neither have an annual fee.

If you are a very, very frequent traveler and use a single airline or hotel chain, it’s possible, but highly unlikely, that a travel card could earn you a higher effective rate (if used optimally), taking into account the value of status and other rewards. And there are certain higher-end cards with annual fees that may be worth it if you are a very high spender. But probably not.

Most issuers offering affinity cards (e.g., an airline, hotel, or store-issued card) rely on holders using their cards for general purchases, earning sub-2% rewards, often significantly less, and making lots of $ for the issuer. And cards offering higher rewards for certain categories are counting on you using them for other categories, again earning suboptimal rewards.

I welcome your comments and would love to hear useful counterexamples, but I have found that after running the numbers on effective reward point values (Investopedia has a decent set here) almost no other card will yield an average reward rate in excess of a combination of these two cards. If you can do meaningfully better than 2% across all your spending, tell me in the comments!

Traditional disclaimers apply—these tips only apply if you do not carry a balance, ever (and make sure to set your card to autopay). And also, this post is not an advertisement! I don’t make money from this newsletter via ads, affiliate links, or anything else, and I am not paid by anyone featured in the newsletter. I also promise never to charge for this newsletter.

And now…Andrew’s pick(s) of the week:

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I hope this has been helpful. If you liked it, please share it on social media! Also, please send me your feedback, requests, and success stories.

[1] There have been a few major changes since 2019. The most notable is that cash back is now rewarded as “ThankYou Points”, which Citi does to try to trick you into redeeming it for gift cards and other rewards at a suboptimal reward rate. Skip those and request a direct deposit to your bank account.