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The subject of inflation has been making headlines for months, and for good reason — according to a recent report by the U.S. Department of Labor's Bureau of Labor Statistics, the consumer price index has risen 8.6%, which measures the cost of everyday goods like rent, gasoline, food, medical care, energy and other essential items.
Discussions regarding inflation are often met with few solutions for consumers other than to simply cut back on spending. While it's recommended that you work with a budget and do your best to live below your means, there's only so much trimming back you can really do. Thankfully, there's an easy way to help your budget fight back against rising costs: earning a portion of your purchases back with a cash-back credit card.
Below, Select details how these types of credit cards can work against inflation, plus a few factors to consider when choosing one that best suits your financial needs.
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How cash-back credit cards fight against inflation
Cash-back credit cards operate with the simple premise of rewarding you with a certain amount of money returned to your pocket based on how much you spend on purchases. This happens in one of two ways, either via a flat-rate or through category-based spending.
If you were to choose a flat-rate cash-back credit card such as the Citi Double Cash® Card, you'd earn a specified flat-rate back on all your purchases. In this case, the card gives you 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. To earn cash back, pay at least the minimum due on time. Plus, earn 5% total cash back on hotel, car rentals and attractions booked with Citi Travel.
If you decide you want to maximize your spending across multiple categories, consider a cash-back card such as the Chase Freedom Unlimited® (see rates and fees), which earn 5% cash back on travel purchased through Chase Travel℠, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.
So, how much could you earn with each type of cash-back credit card? Select calculated the amount of cash the average American consumer could earn back in credit card rewards based on their annual spending. We worked with the location intelligence firm Esri, which provided us with a sample annual spending budget of $22,126. With a flat-rate 2% cash-back card, you could end up with about $444 in cash back in a year, while using a card that operates on category-based spending would make this figure vary based on how much you actually spent.
Whichever way you go, you can put your cash back to work in a myriad of ways. Whether you want to pay off some debt, invest in your retirement, save up for a new home or prefer to have a bit of a cushion in your monthly budget, every dollar helps during these inflationary times.
The Citi Double Cash® Card is one of the best no-annual-fee cash-back cards thanks to its straightforward rewards structure.
- Balance transfers get a long intro APR
- Generous flat-rate cash-back rewards structure
- No annual fee
- Travelers face a foreign transaction fee
- Intro APR only applies to balance tranfer
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back.
- Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. To earn cash back, pay at least the minimum due on time. Plus, earn 5% total cash back on hotel, car rentals and attractions booked with Citi Travel.
- Balance Transfer Only Offer: 0% intro APR on Balance Transfers for 18 months. After that, the variable APR will be 17.49% - 27.49%, based on your creditworthiness.
- Balance Transfers do not earn cash back. Intro APR does not apply to purchases.
- If you transfer a balance, interest will be charged on your purchases unless you pay your entire balance (including balance transfers) by the due date each month.
- There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).
Balance transfer fee
There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. A balance transfer fee of 5% of each transfer ($5 minimum) applies if completed after 4 months of account opening.
Foreign transaction fee
3%
The Chase Freedom Unlimited® is a no-annual-fee card that earns generous cash-back on everyday purchases and a lucrative welcome bonus.
- Users get a high rewards rate and strong welcome bonus
- Purchases and balance transfers get long intro APR
- No annual fee
- Travelers face a foreign transaction fee
- Few rewarding ongoing benefits
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening
- Enjoy 5% cash back on travel purchased through Chase TravelSM, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 1.5% on all other purchases.
- No minimum to redeem for cash back. You can use points to redeem for cash through an account statement credit or an electronic deposit into an eligible Chase account located in the United States!
- Enjoy 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 18.24% - 27.74%.
- No annual fee – You won't have to pay an annual fee for all the great features that come with your Freedom Unlimited® card
- Keep tabs on your credit health, Chase Credit Journey helps you monitor your credit with free access to your latest score, alerts, and more.
- Member FDIC
Balance transfer fee
Intro fee of either $5 or 3% of the amount of each transfer, whichever is greater, in the first 60 days. After that, either $5 or 5% of the amount of each transfer, whichever is greater.
Foreign transaction fee
3% of each transaction in U.S. dollars
What to consider when selecting a cash-back card
Cash-back credit cards can sometimes be overlooked, especially when travel rewards credit cards tend to garner most of the attention because of their flashy benefits. Cash-back cards, meanwhile, offer one nuclear perk that everyone can benefit from: saving money on your purchases.
Keep in mind, however, that not all cash-back credit cards are created equal. When choosing a new one, consider the following questions:
Are your purchases spread out across several categories?
If the answer is yes, it's up to you to decide if having multiple credit cards for each type of purchase is worth the headache. You can earn more cash back than a flat-rate card with this strategy. For example, if you're using the best credit card for dining on restaurant purchases, and the best credit card for groceries on grocery purchases, and the best credit card for gas at gas stations, then you'll be maximizing every spending category and earning a little more back on every transaction.
If you don't want the hassle, it may be best to go with a flat-rate cash-back card.
Can you earn the card's welcome bonus responsibly?
A welcome bonus is a great way to kick off your cash-back earnings and is typically part of an offer where you'd need to spend a specified amount of money during the first few months of card membership. The Blue Cash Preferred® Card from American Express, for example, lets you earn as high as $300 cash back after spending $3,000 in purchases on your new Card in the first 6 months. Apply to find out your offer. If approved, you'll: 1. Find out your offer amount, 2. Accept the Card with your offer, 3. Spend $3,000 on purchases in your first 6 months 4. Receive the cash back. Cash back is received in the form of Reward Dollars that can be redeemed for a statement credit or at Amazon.com checkout. Welcome offers vary and you may not be eligible for an offer.
While it's traditionally known as a travel card, the Chase Sapphire Preferred® Card (see rates and fees) is currently offering 75,000 bonus points after you spend $5,000 on purchases in the first 3 months from account opening.
If you're looking to add a credit card because of its welcome bonus, plan ahead so you can meet the minimum-spending requirement responsibly.
The Chase Sapphire Preferred® Card packs a punch for a $95 annual fee card, offering annual travel credits, comprehensive travel protections and more.
- You can transfer rewards to all of Chase's travel partners including World of Hyatt, Southwest Rapid Rewards and many more
- Long list of travel and shopping protections
- $50 annual Chase Travel hotel credit
- Has an annual fee
- Requires a high credit score
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Earn 75,000 bonus points after you spend $5,000 on purchases in the first 3 months from account opening.
- Enjoy benefits such as 5x on travel purchased through Chase TravelSM, 3x on dining, select streaming services and online groceries, 2x on all other travel purchases, 1x on all other purchases
- Earn up to $50 in statement credits each account anniversary year for hotel stays through Chase TravelSM
- 10% anniversary points boost - each account anniversary you'll earn bonus points equal to 10% of your total purchases made the previous year.
- Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
- Complimentary DashPass which unlocks $0 delivery fees & lower service fees for a min. of one year when you activate by 12/31/27. Plus, a $10 promo each month on non-restaurant orders.
- Member FDIC
Balance transfer fee
Either $5 or 5% of the amount of each transfer, whichever is greater
Are you open to paying an annual fee?
Just because a cash-back card has an annual fee doesn't mean you should look away, although many of them don't. The Blue Cash Preferred® Card from American Express, for instance, carries a $0 intro annual fee for the first year, then $95 (see rates and fees), between its many perks, robust spending categories and You may be eligible for as high as $300 cash back after spending $3,000 in purchases on your new Card in the first 6 months. Welcome offers vary and you may not be eligible for an offer. Cash back is received as Reward Dollars, redeemable for statement credit or at Amazon.com checkout, the fee might be worth it depending on what you're looking for. Terms Apply.
Just make sure the features and benefits of the cash-back card you select outweigh the annual fee.
The Blue Cash Preferred® Card from American Express is a low-fee card with generous cash-back rewards and useful ongoing benefits, such as a monthly Disney Bundle credit. (Enrollment required for select benefits mentioned)
- High cash-back earnings for U.S. supermarkets and streaming services
- Intro-APR offer for purchases and balance transfers
- No annual fee for the first year
- It's less rewarding after the first year because of the annual fee
- Bonus rewards for U.S. supermarkets are capped
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Apply and find out your welcome offer. As High As $300 cash back* after you spend $3,000 in purchases on your new Card within the first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply, and if approved: 1. Find out your offer amount 2. Accept the Card with your offer 3. Spend $3,000 in 6 months 4. Receive the cash back. *Cash back is received in the form of Reward Dollars that can be redeemed for a statement credit or at Amazon.com checkout.
- $0 intro annual fee for the first year, then $95.
- Enjoy 0% intro APR on purchases and balance transfers for 12 months from the date of account opening. After that, your APR will be a variable APR of 19.49%-28.49%.
- Plan It®: Buy now, pay later with Plan It. Split purchases of $100 or more into equal monthly installments with a fixed fee so you don't have the pressure of paying all at once. Simply select the purchase in your online account or the American Express® App to see your plan options. Plus, you'll still earn rewards on purchases the way you usually do.
- Earn 6% cash back at U.S. supermarkets on up to $6,000 per year in eligible purchases (then 1%), 6% cash back on select U.S. streaming subscriptions, 3% cash back at eligible U.S. gas stations and on transit (including taxis/rideshare, parking, tolls, trains, buses and more) purchases and 1% cash back on other purchases. Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit and at Amazon.com checkout.
- Get up to a $10 monthly statement credit after using your enrolled Blue Cash Preferred® Card for a subscription purchase, including a bundle subscription purchase, at DisneyPlus.com, Hulu.com, or Stream.ESPN.com U.S. websites. Subject to auto-renewal.
- Terms Apply.
- See Rates & Fees
Balance transfer fee
Either $5 or 3% of the amount of each transfer, whichever is greater.
Foreign transaction fee
2.7% of each transaction after conversion to US dollars
Bottom line
Cash-back credit cards provide a great value to consumers, as long as they're used responsibly. And as Americans' wallets continue to get squeezed by the rising costs of inflation, saving a little on each of your purchases by using the right rewards credit card can make a big difference.
Before you start using a new cash-back credit card, also consider making larger moves like trimming your expenses, renegotiating your rent or asking for a raise to help fight the increased cost of living. By taking care of these types of financial wins, you'll be in a better position to maximize your savings on your everyday purchases.
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For rates and fees of the Blue Cash Preferred® Card, click here.
