best 2 percent cash back credit cards
September 01, 2020

Best 2% Cash Back Credit Cards September 2020

Credit Cards

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Plain vanilla as they sound, credit cards that offer 2% cash back on all purchases are the backbone of any sound, long-term credit card rewards strategy.

But which should you choose?  The Citi Double Cash?  The PayPal Cashback Mastercard?  The Fidelity VISA Signature?  In this article I’ll help you figure out which is the best 2% cash back credit card for you.

To begin, though, let’s first answer the question of whether you should, in fact, even apply for one of these cards.

Should I Get a 2% Cash Back Card?

It’s my firm belief that everyone’s first cash back card should be one that gives 2% cash back with no annual fee.

Do the Math

Yes, there are other cash back cards that can yield a higher cash back rate on certain “bonus” categories such as dining and entertainment.

But the vast majority of your spending is probably not in these bonus categories.

Think about it.  Let’s say you spend $5,000 a year on dining and put it all on a card that gives a whopping 4% cash back at restaurants.  This amounts to $200 cash back during the year.

Now let’s say you spend $15,000 during the year on other stuff during the year such as clothing, healthcare, insurance, and everything else you need to live your life.  If you put all that spending on a 2% cash back card, your annual cash back would come out to $300 on these purchases.

Do You Like Money or More Money?

Which is more of a priority to you?  Getting $200 cash back or $300 cash back?

Obviously the latter.

Of course, you have to do the math for your own particular spending habits.  That said, for most people, the question should not be should, but which, when it comes to 2% cash back cards.

Best 2% Cash Back Cards

This analysis will only look at true 2% cash back cards with no annual fee.  I exclude cards with an annual fee because all else being equal, a 2% cash back card with no annual fee is superior to a 2% cash back card with an annual fee.

Which 2% cash back cards don’t impose an annual fee?  You have three options: the Citi Double Cash, the PayPal Cashback Mastercard, and the Fidelity Visa Signature.

So if all of these cards have the same 2% cash back rate and $0 annual fee, which criteria did I look at to compare these cards?  I took into account the factors below:

  • Minimum redemption amount
  • Ease of redemption
  • Foreign transaction fees

APR is not taken into account because I assume that if you’re concerned about getting 2% cash back then you pay off your balance every month to avoid high interest rates.

Citi Double Cash

  • Citi Double Cash
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    Citi Double Cash: Best for Simplicity
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    • The Basics: The Citi Double Cash gives you 1% cash back when you swipe and an additional 1% when you make a payment, redeemable either as a statement credit or as a deposit to your bank account. There is no annual fee, and there is currently an 18-month introductory 0% APR period on balance transfers.
    • What I Like: You can redeem your cash back either as a statement credit or as a direct deposit to your bank account. This is important to me; I want to be able to put my cash to work as quickly as possible.
    • What I Don't Like: The card has a 3% foreign transaction fee. That said, if you travel internationally, you should generally have a top travel card with no foreign transaction fee to use abroad.
    • Foreign Transaction Fee

      3%

    • How to Redeem

      Statement credit or direct deposit to bank account

    • Minimum Redemption

      $25. This doesn't bother me very much because you only have to spend (and make a payment on) $1,250 worth of spend to reach this threshold.

PayPal Cashback Mastercard

  • PayPal Cash Back Mastercard
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    PayPal Cashback Mastercard: Best for Small Spenders
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    • The Basics: You earn 2% cash back on all spend on the card, redeemable to your PayPal account. You can then leave the cash in your PayPal account or redeem it to a linked bank account. There is no annual fee.
    • What I Like: There is no minimum cash back redemption amount. This isn't a huge factor for me since I easily hit the minimum redemption spend on my Citi Double Cash every month, but if you are on a budget and don't spend a lot, this could be a meaningful consideration for you. Also, there's no foreign transaction fee on this card.
    • What I Don't Like: The redemption process is multi-step if you want your cash back to make it to your bank account. First, you have to redeem your cash back to your PayPal account, and then from there transfer it to your bank account that is linked to your PayPal account. This makes the redemption process a bit more cumbersome than I would like.
    • Foreign Transaction Fee

      None

    • How to Redeem

      To PayPal account or bank account linked to your PayPal account

    • Minimum Redemption

      $0

Fidelity Visa Signature

  • Fidelity Rewards Visa Signature Card
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    Fidelity Rewards Visa Signature: Best for Investors
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      • Basics: This card essentially gives you 2% cash back on all purchases, but only if you redeem your cash back to a Fidelity account. If you redeem it to a non-Fidelity account or as a statement credit, the cash back rate is only 1%. There is no annual fee.
      • What I Like: This card makes it very easy for you to invest your cash back if you currently have or are willing to set up a Fidelity account.
      • What I Don't Like: Your redemption options are limited to Fidelity accounts if you want to earn the 2% rate. Also, the $50 minimum payout is a bit steep; you'd have to spend $2,500 a month to be able to redeem your cash back on a monthly basis.
      • Foreign Transaction Fee

        3%

      • How to Redeem

        To a Fidelity investment account

      • Minimum Redemption

        $50

    Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

    Logan Allec, CPA

    Logan is a practicing CPA, Certified Student Loan Professional, and founder of Money Done Right, which he launched in July 2017. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.

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