All credit card cash reward programs are not the same. If you pay attention to the fine print in the credit card offers, you will get the information you need to pick the best one for you.
Flat percentage
Some cash reward programs give you the same percentage of cash back no matter how much you charge. For example, a card may give you $1 cash back for every $100 you charge in purchases. That’s a flat 1% cash back.
Tiered percentages
Some cards base their cash-back percentage on how much you charge in a single year. For example, a card may give you 1/4 of 1% cash-back on the first $1,000 of purchases you charge; then 1/2 of 1% on the second $1,000; 1% on the third $1,000; and then 2% after you have charged more than $4,000 for the year.
If you don’t expect to use the card much, then a flat rate card would be a better deal. For example, if you only plan to charge $1,000 worth of purchases per year, then with a flat rate card you would get 1% back, or $10, while with the tiered card described in the previous paragraph, you would only get 1/4 of 1% back, or $2.50.
On the other hand, if you are going to charge enough on that card so that most of your purchases will be at the highest tier, then you will generally be better off with the tiered percentage card.
Bonus rates for special categories of purchases
Some cards give you extra cash back for certain kinds of purchases. For example, some cards give you 5% cash back for groceries, drug store purchases, and gas, with 1% cash back for everything else.
Cards that give you bonus cash back are a very good choice. Look for cards that give you bonuses on the types of purchases that you spend the most money on. If you don’t mind owning and keeping track of more than one credit card, you can get even more cash back by using different cards for different purposes in order to take advantage of as many bonus cash back offers as possible.