This is part 5 of a multi-part series of “best credit card combos”. The goal is to find the combination of 2, 3, or maybe 4 credit cards that, together, offer the best rewards for day to day spend. The series, so far, is as follows:
- Best credit card combos: Ultimate Rewards (earn up to 2.16 points per dollar)
- Best credit card combos: Membership Rewards (earn up to 2.56 points per dollar)
- Best credit card combos: ThankYou Rewards (earn up to 2.23 points per dollar)
- Best credit card combos: Mixed rewards (earn up to 3.23 points per dollar)
- Best credit card combos: Cash Back (this post)
Previous posts have focused on the best ways to earn points in transferable points programs. These programs are particularly good for people who want to get outsized value from their points by using them opportunistically towards the best travel redemptions. For an overview of transferable points programs, please see:
- A quick guide to transferable points programs
- Membership Rewards vs. Ultimate Rewards vs. ThankYou Rewards. Which is best?
- SPG vs. Amex, Chase, and Citi transferable points programs. Which is best?
Unlike the previous posts in this series, today’s post focuses on cash back credit cards. I’ve written before about which one credit card is best for spend (found here). The options listed there are great for the person who wants to keep things simple. If you’re willing to juggle a few cards, though, you can do quite a bit better by using the right card for the right situation. Today we’ll look at which cards taken individually or together yield the best cash back returns.
Note that it is always possible to earn more points through credit card signup offers and/or short term promotions. This post is not about that. This post is for those who prefer to get a few cards and stick with them over time.
In evaluating various combinations of cards, I made the following assumptions about spend:
- Total annual spend: $30,000
- Spend would be divided into the following categories:
- Travel: 15%
- Dining: 20%
- Gas: 15%
- Grocery: 25%
- Other bonus categories: 5%
- All other: 20%
- The cardholder would always use the card that earns the most at any given location.
- Chase Freedom 5X bonus categories are based on the 2015 Freedom 5X calendar
- Discover It 5% bonus categories are based on the 2015 Discover It 5% calendar
- While it is often possible to increase rewards by buying gift cards at a store that offers a category bonus, this analysis does not take that into account.
- Some banks offer relationship bonuses that can significantly increase rewards. These relationship bonuses were not included in this analysis.
- Some banks offer limited time increased earning promotions. These are not included in this analysis.
- Some banks offer cards that are available in very limited regions (JCB’s Marukai card, for example). These are not included in this analysis.
For each of the analyses described below, I used my Credit Card Analysis Spreadsheet to estimate the amount of cash back, per dollar, one could earn with various combinations of cards. Keep in mind that the assumptions listed above are coded into that spreadsheet. So, any assumptions that do not apply to you will effect the results. In other words, calculated cash back rates shown below can and will differ based on your circumstances.
The following credit cards were used in this post’s analyses:
- Amex “Old” Blue Cash: 5% Cash Back at U.S. supermarkets, U.S. gas stations & select U.S. drugstores between $6,500 and $50,000 annual spend; otherwise 1% within EveryDay categories
- Amex Blue Cash Everyday: 3% U.S. supermarkets up to $6,000 per year in purchases, 2% U.S. gas stations and select US department stores.
- Amex Blue Cash Preferred: 6% US supermarkets up to $6,000 per year in purchases, 3% US gas stations & select US department stores
- Amex SimplyCash: 5% office supply stores and wireless phone; 3% your choice from list of categories (I assumed 3% at restaurants for these analyses)
- Barclaycard Sallie Mae: 5% gas and grocery (up to $250 spend per month each); 5% bookstores (up to $750 spend per month)
- BOA AAA Member Rewards: 3% AAA and travel; 2% gas, grocery, and drugstore
- Chase AARP 3% Restaurant & Gas: 3% restaurants and gas station purchases
- Chase AARP 3% Travel: 3% travel
- Chase Ink Cash: 5% office supplies; 5% cellular/landline/cable; 2% gas and restaurants
- Chase Freedom: 5% rotating categories (up to $1500 spend per quarter)
- Discover It: 5% rotating categories (up to $1500 spend per quarter)
- Golden1 Platinum Rewards: 3% gas, grocery, and restaurants
- Huntington Voice: Choose your own 3% category. For these analyses, I chose 3% grocery
- PenFed Platinum Cash Rewards Plus: 5% gas purchases at the pump
- Synchrony Sams Club MasterCard: 5% gas; 3% dining and travel
- US Bank Cash+: Choose your own 5% category (I coded this under “other bonus categories”); 2% gas, grocery, and restaurants
Annual fees and other requirements:
Most of the cards listed above have no annual fee and no special requirements for obtaining the card. Here are the exceptions that I’m aware of:
- Amex Blue Cash Preferred: $75 annual fee
- Golden1 Platinum Rewards: No annual fee, but you have to be a member of Golden1 credit union. One way to do that is to join the Financial Fitness Association for $8 per year. So, for this analysis, I assumed an $8 annual fee.
- PenFed Platinum Cash Rewards Plus: In order to get 5% cash back for gas at the pump, you have to qualify for the “Plus” version of the card. Qualification requires obtaining a qualified PenFed product: Active checking account with direct deposit ($250 min.); Money Market Certificate or IRA Certificate; Mortgage; Installment loan; Equity Loan or Equity Line of Credit; Thrifty Credit Service; Personal Line of Credit; Money Market Savings Accounts
Analysis 1: Individual cards
Based on the assumptions coded into my Credit Card Analysis Spreadsheet, each of the following cards average 2% cash back or better, after accounting for their annual fees (if any):
- Amex “Old” Blue Cash: Average 2.35% cash back; Best for gas, grocery, and drug store spend (5%, after $6500 annual spend)
- Sam’s Club MasterCard: Average 2.3% cash back; Best for gas (5%), travel (3%), and dining (3%)
- Golden1 Platinum Rewards: Average 2.17% cash back; Best for dining, gas, and grocery (3%)
- Amex Blue Cash Preferred: Average 2.15% cash back (after subtracting the $75 annual fee from the estimated rewards); Best for grocery (6%), gas and select department stores (3%)
- Sallie Mae MasterCard: Average 2% cash back; Best for grocery, gas, and bookstore purchases (5%)
- Citi Double Cash: 2% cash back everywhere
- Fidelity Investment Rewards Visa: 2% cash back everywhere
Anaysis 2: Pair with 2% cash back card
In the second analysis, I took each of the cards from analysis 1 that averaged 2% cash back or better and paired them with no-fee 2% cash back cards. The idea is to use whichever card earns the most in each situation. For example, the Amex Blue Cash Preferred card earns 6% cash back at grocery stores, up to $6000 in annual spend, and then earns only 1% for additional spend. So, I assumed that one would use that card for groceries until the $6000 cap was met, then one would switch to the 2% cash back card.
Here are the best category bonus cards paired with 2% everywhere cards:
- Sam’s Club MasterCard + 2% card: 2.8%
- Amex Blue Cash Preferred + 2% card: 2.7%
- Sallie Mae + 2% card: 2.6%
- Golden1 Platinum Rewards + 2% card: 2.57%
- Amex “Old” Blue Cash+ 2% card: 2.48%
- Chase Freedom + 2% card: 2.45%
- PenFed Platinum Rewards Plus + 2% card: 2.45%
Analysis 3: Pair with each other, but not with 2% card
Several card pairs in the above analysis averaged approximately 2.6% cash back, or better. I was curious if it was possible to find a pair of cards that beat the 2.6% rate without including a flat 2% cash back card. Here were the best combinations:
- Amex Blue Cash Preferred + Sams Club MasterCard: 3.15%
- Sams Club MasterCard + Sallie Mae MasterCard: 2.9%
- Amex Blue Cash Preferred + Sallie Mae MasterCard: 2.65%
- Amex Blue Cash Preferred + Chase Freedom: 2.65%
- Sams Club MasterCard + Chase Freedom: 2.65%
Interestingly, quite a few pairs were identified that are as good or better than those identified in Analysis 2.
Analysis 4: Best triplets: best pairs, with 2% card added in
Taking the best combinations from Analysis 3, I added in a 2% everywhere card as the third card:
- Amex Blue Cash Preferred + Sams Club MasterCard + 2% card: 3.35%
- Amex Blue Cash Preferred + Sallie Mae MasterCard + 2% card: 3.35%
- Amex Blue Cash Preferred + Chase Freedom + 2% card: 3.2%
- Sams Club MasterCard + Sallie Mae MasterCard + 2% card: 3.1%
- Sams Club MasterCard + Chase Freedom + 2% card: 2.85%
As expected, results are better than Analysis 3, but not by a huge margin.
Analysis 5: Theoretic best
What if you’re willing to carry more than 3 cards? Can you do better than the rates shown above in Analysis 4? By looking at the best category bonuses available in each of analyzed cards, we can compute the theoretic best combination:
- 3% travel
- 3.5% dining (Assume 1 quarter at 5% via Freedom or Discover It, and other quarters at 3%)
- 5% gas
- 5% grocery (even though the Blue Cash Preferred earns as much as 6%, its annual fee causes its theoretic best rate to drop to just below 5%)
- 5% special category
- 2% All other
Ideal average: 3.8%
In analysis 4, we found a couple of 3 card combinations that averaged 3.35% cash back, given all of our assumptions. The ideal maximum, based on the cards analyzed in this roundup, averages 3.8% cash back. That’s a difference of .45% cash back. With $30,000 annual spend, that comes to a difference of $135. Personally, I don’t think its worth juggling more than three cards for that extra $135, but you may feel otherwise.
If you’re interested in assembling an ideal combination of cards, make sure to have at least one card from the “options” column for each row in the table below:
|Dining 3.5%||Requires rotating category 5X card:
And, 3% dining card:
|5% Special Category||
|2% All Other||
Example ideal combo:
- Chase Freedom: Use for 5X rotating categories. Always use this card before others within the rotating categories only.
- Sams Club MasterCard: Use for 5% gas; 3% dining and travel
- Sallie Mae: Use for 5% gas & grocery (up to $250 per month), 5% bookstores. You may need to get 2 of these cards to cover your grocery expenses at 5%
- Fidelity Investment Rewards: Use for 2% everywhere else
Analysis 6: Less than ideal
The problem with the theoretic best options shown above in analysis 5 is that a number of cards in the analysis are far from ideal, each for different reasons:
- Sams Club Mastercard: This one has a fantastic combination of category bonuses, but cash back can only be retrieved once per year. It is paid in the form of a check made out to Sam’s Club. In order to cash the check, you have 180 days to get yourself physically to a Sam’s Club store. Yeesh.
- Sallie Mae: It’s hard to beat 5% cash back for groceries, but the $250 monthly spend limit makes it challenging to get the most out of this card. I think that the best bet is to go to your grocery store once a month to buy a $250 gift card then sock drawer this card (except where used for 5% cash back for gas or bookstores).
- Freedom and Discover It: I’m a fan of both cards thanks to their rotating 5% cash back categories. However, they do require enrolling each quarter and keeping up to date with the current 5% categories and planning ahead (by buying gift cards, for example, during 5% bonus periods).
- Chase Ink Cash and Amex SimplyCash: Both are excellent business cards. If you don’t have a business, you can’t apply.
So, what if we take away all of the above “problematic” cards as options? Without those cards, our ideal combination choices reduce to the following:
|5% Special Category||
|2% All Other||
By selecting an ideal choice from each of the above categories, one could average 3.5% cash back (based on assumptions coded into the analysis spreadsheet).
Example less than ideal combo:
- Bank of America AAA Member Rewards: Use for 3% travel. Also get extra cash back for BOA relationship bonus.
- AARP Restaurants & Gas: Use for 3% restaurants
- PenFed Platinum Rewards Plus: Use for 5% gas
- Amex Blue Cash Preferred: Use for 6% grocery, up to $6K per year, then use 2% card
- US Bank Cash+: Use for selection of 5% cash back categories
- Fidelity Investment Rewards: Use for 2% everywhere else
The best combination of cards, based on assumptions given above, depend on how many cards you’re willing to carry and how many inconveniences you’re willing to endure. Here’s a summary:
|# of cards||Average cash back rate||Cards||Inconveniences|
|1||2.3%||Sam’s Club MasterCard||Redeem cash back only once per year. Requires cashing rewards check at Sam’s Club store.|
|1||2.35%||Amex “Old” Blue Cash||First $6500 of spend per year earns paltry rewards (.5% to 1%). Necessary to spend big in bonus categories to make up for that.|
|2||2.7%||Amex Blue Cash Preferred + 2% cash back card||$75 annual fee for Blue Cash Preferred (fee is accounted for in the 2.7% effective rate)|
|2||2.8%||Sam’s Club MasterCard + 2% cash back card||Redeem cash back only once per year. Requires cashing rewards check at Sam’s Club store.|
|2||2.9%||Sam’s Club MasterCard + Sallie Mae MasterCard||Sam’s Club: Redeem once per year; Sallie Mae: work w/ $250 monthly limits|
|2||3.15%||Amex Blue Cash Preferred + Sam’s Club MasterCard||Amex: $75 annual fee; Sam’s Club: Redeem once per year|
|3||3.2%||Amex Blue Cash Preferred + Chase Freedom + 2% card||Amex: $75 annual fee; Freedom: deal with rotating categories|
|3||3.35%||Amex Blue Cash Preferred + Sallie Mae MasterCard + 2% card||Amex: $75 annual fee; Sallie Mae: work w/ $250 monthly limits|
|3||3.35%||Amex Blue Cash Preferred + Sams Club MasterCard + 2% card: 3.35%||Amex: $75 annual fee; Sam’s Club: Redeem once per year|
|4||3.8%||Example “best” combo: Chase Freedom + Sam’s Club MasterCard + Sallie Mae MasterCard + 2% card||Freedom: Deal with rotating categories; Sam’s Club: Redeem once per year; Sallie Mae: work w/ $250 monthly limits|
|6||3.5%||BOA AAA Member Rewards + AARP Restaurants & Gas + PenFed Platinum Rewards Plus + Amex Blue Cash Preferred + US Bank Cash Plus + 2% card||To get 5% gas, PenFed “Plus” requires having qualified PenFed product in addition to credit card.|
If your goal is to maximize cash back earnings, it could make sense to pick a combination of cards from those shown above. First, though, you should add your own spending assumptions to the Google Docs spreadsheet (make a copy first so that you can edit cells). Pay particular attention to the tabs labeled “Cash Back Cards”, “Cash Back Combos”, and “Cash Back Combos 2”. If the results come out similar to those presented above, then the next step would be to decide how many cards you’re willing to juggle and which inconveniences you’re willing to endure. Use the table above to pick out the ideal combination of cards for your needs. If your selection includes a 2% cash back card, then I’d recommend choosing either the Citi Double Cash MasterCard or the Fidelity Investment Rewards Visa. Both have no annual fee.