Yes, believe it or not, it is possible to get a credit card with 2 percent cash back. When you think about it, this is a must-have for everyone. Why? Because even if you have a card that gives you higher rebates on certain categories (such as groceries, gas, airfare, etc) you are likely only getting around 1 percent (or less!) on everything else you buy. You’re basically losing easy money that you could be getting with 2 percent cash-back credit cards.
Which cards give you 2 percent cash back? (or a 2 percent rebate?)
Over the past decade or so, there have been a very small handful. Unfortunately many of them are no longer available. For example, the popular Schwab 2 percent cash back card was discontinued for new applicants in 2010 (and then in 2011 existing cardholders were switched over). HSBC used to have the “weekend card” that gave 2 percent but only on Saturday and Sunday… that too was discontinued. Fortunately there are still a few 2 percent cards that are going strong in 2014 if you know where to look. (Updated for 2014).
#1 Top Pick: Barclaycard Arrival (it’s 2.2 percent on everything!!!) – Forget 2 percent because now you can do even better! This new credit card offers you an unlimited 2 miles per dollar on everything you buy. Since 1 mile = a 1-cent statement credit that can be used to offset the cost of virtually any travel purchase, your 2x miles is the equivalent of a 2 percent rebate!
Wait … it gets even better — because when you redeem your miles, you get back 10 percent of them to use again. That means you’re earning 2.2 percent on everything you buy!
For a limited time, when you apply you get 40,000 bonus miles (worth $440) just for spending $3,000 or more within the first 90 days. So not only is Arrival the best rewards program, but as of right now it is also the best sign-up offer.
#2: Capital One® Venture® Rewards – Let me be clear that this isn’t a true “cash-back” card because if you redeem for cash, the value will be lower (so you will not be getting 2 percent on your spending). However, if you spend your rewards on travel, it’s like earning 2 percent on all your spending.
You see, the card gives 2 miles per dollar spent. Those miles can be redeemed to offset travel purchases you make with the credit card, at a rate of 1 mile for a 1-cent credit toward the travel purchases.
Right now this is one of the best 2 percent cards on the market, since there are no foreign transaction fees and no limits to the rewards you can earn. To learn more and to see the current promotional offer check out my Capital One Venture Rewards credit card review.
#3. Fidelity American Express – Unfortunately you can’t apply for this unless you have a Fidelity account. It is a 2 percent cash-back credit card and the rewards are deposited into your Fidelity account (brokerage account, IRA, etc.). While the Schwab card is no longer in existence, this one from Fidelity is now the best brokerage-affiliated card on the market. The major drawback with this card is that if your rewards are deposited into your retirement accounts, the amount will be counted against your annual tax-exempt contribution limit (so in other words, your rewards may basically be taxable).
#4. Discover Escape – [2013 update: No longer available] Towards the end of last year Discover announced that this card offer would no longer be available.
This little known gem is hard to beat. It gives 2 miles for every dollar spent. Each mile equals $0.01 that can be used to pay for virtually any travel related purchase you make. So you are essentially getting a straight 2 percent cash back on everything.
For example, let’s say you bought a plane ticket on Expedia… afterwords you could call up Discover and have them credit your account for the value of that purchase, using your accumulated “miles”. The only drawback is that while Discover’s domestic acceptance is now strong, using it outside of the U.S. will be tough in most parts of the world (for that reason, the Venture is a better choice).
#5. Household Bank Rewards – [updated: Now discontinued for everyone] This card was available years ago and it was re-launched in summer 2011. It gave a flat 2 percent on everything y and if you had good credit, there was no annual fee. The downside was that this card was geared towards those with mediocre credit, so there wasn’t exactly stellar service or benefits. The credit limits weren’t fabulous either. But that aside, it was the only 2 percent card that didn’t have an annual fee and anyone could apply for it. Back in 2011 they stopped accepting new applicants and the old existing accounts were phased out for 2013.
Honorable Mention: AmEx Blue Cash Preferred – This card is not a 2 percent card, but it gets an honorable mention and here’s why — you get 3 percent to 6 percent cash back on eligible category spending. Depending on your spending patterns, your average cash back might very well reach or even exceed 2 percent. To learn more check out my American Express Blue review.
I constantly update this post if/when any new 2 percent cash back credit cards hit the market and anytime changes occur.
This review was written or last updated Feb. 13, 2013