3% Cash Back Credit Card

credit card with hundred dollar billsQ: Is there such thing as a credit card with 3% cash back? I think I remember seeing one years ago but is it still around for 2013?

A: Thanks for your email Paul. Over the past fifteen or so years, we have seen a surge in the popularity (and variety) of cash back credit cards. This is no surprise – after all, we might as well get a little something back on the money we spend, right 🙂 But can you really get as high as 3% cash back?

3% cash back on regular purchases?

There is no card on the market that gives a 3% rebate on all purchases. If credit cards did they, they would actually be losing money. You see the credit card transaction fee paid by the merchant hovers around 2% to 2.5% of the total amount. That amount is then split with the payment network (either Visa, MasterCard, Discover, American Express) and the bank the issues the card (Bank of America, Citi, Chase, etc).

So the bank that issues the card may only be getting around half of that transaction fee (around 1%). Since they are the ones that are responsible for creating rewards programs and paying them out, you can see why it would be impossible for them to pay out 3% cash back if they are only making around 1% on your purchase.

However, since Discover and American Express operate as both the bank that issues the card as well as the payment network, they have the ability to be more generous in their rewards (we’ll talk more about this in a moment).

But 2.2% rewards on everything IS possible in 2013…

Earlier this year Barclays came out with the Arrival card that gives 2.2% rewards on everything you buy, without any limit to how much you can earn. This is how it works:

  • You earn 2 “miles” per dollar spent. Since each “mile” is worth exactly 1 cent in statement credits to offset any travel purchase made with the card, you’re essentially earning a 2% rebate.
  • To sweeten the pie, they give you 10% of your miles back when you redeem them. For example, if you redeemed 20,000 of them they would give you 2,000 back to use again.
  • Between the two, you’re earning 2.2%. Technically, it’s actually 2.22% since you keep getting the 10% back to re-use every time you redeem.

And right now is time to apply because of this promotion they’re running:

3% cash back on certain categories?

Now you mentioned that you recall seeing cards with a 3% rebate in the past. What you must be referring to are those credit cards that give a higher reward for certain categories of spending. At the early part of last decade (around ’00 to ’05) there was more than one 3% cash back credit card available; they would give 3% (sometimes even 5%) on categories like gas, groceries, and drugstores.

Chase and Citi each had cards that did this. Although they were losing money on the 3%, they counted on the fact that those categories would only be a portion of your total spending – so they could make the money back on your regular purchases, as well as any interest you may be paying.

Those 3% cash back credit cards were great but unfortunately, since they were issued by Chase and Citi, it ended up not being profitable for them. Since they also had to pay Visa/MasterCard to process the transactions, what was left simply wasn’t enough to warrant paying out such high cash back. So those cards were either discontinued completely, or their reward structures were changed to give only average rebates instead.

How to get 5% cash back?

In 2012 there are several credit cards on the market that offer up to 5% cash back in select categories. Many forum posters have reported averaging out at a rebate above three percent between the 5% categories and the 1% to 2% on everything else. Check out our sponsored ranking to see the current offers:

Top Cash Back Credit Cards

This article last updated August 10, 2013

The responses below 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.
Cash Back Credit Cards Fan

The Discover it Miles card will pay you 3% cash back on everything for the first year. (1.5% now and 1.5% bonus at the end of the year.)

However, some other cards or combinations of cards can still outperform it with their initial spending bonuses and special reward categories with up to 6% cash back.

You can use the reward calculator at CreditCardTuneUp. com to find get sets of cards for your expenses.

Capital One Spark Visa Business card offers 2% cash back on everything everyday – no limit, no categories. We spend $1MM a year on our eCommerce products…makes a nice bonus going in my pocket at the end of the year.

I have capital one business card with 2% cash back on everything, no limits. Just received check for this years purchases $4320, so yes it does pay. The credit card company paid me to use their card, they made $0 on me this year.


I’ve been looking around for this also and found one! (In 2012)

*Santander 123 Credit Card*

“You will receive 3% cashback at all major petrol stations and on National Rail and Transport for London travel (capped at £300 spend per month), 2% cashback on department store spending and 1% cashback on supermarket spending”

Great find Kris! Too bad that’s not available in the US 🙁


Yeah actually it is a big help… Spend $1,500 per month? Well 2% of that is $360 per year. If you carry a balance, you shouldn’t use them. But if you pay in full, it’s free money.

What a MORON!

Brant Robinette

What’s wrong with getting a discount on purchases, exactly?

Since I pay my card off in full every month and never carry a balance, plus the card I use has no annual fee, I quite enjoy my discount. In fact, I’ve used the cash back to fund my vacations every year for the past 5 years.

Economy is great for those are smart with their money, even if they don’t make a lot in their job. Carry no debts, build up wealth and investments (not just stocks), and use an attitude that looks at those who are better of than you with admiration instead of envy and you can do well. Resorting to name calling and blaming neighbor and companies alike won’t do anything for you, nor will it win over anyone with the ability to help you.

– Dumb Customer Vacationing in Hawaii

Hi, Brant Robinette which card are you suggesting or carrying with no annual fee and decent cash back?
Thanks in advance


Just so you all know – you are getting what the COMPANY YOU PURCHASE FROM does not get. You spend $1000, get $2% back = $20. That means the company was charged a 2.5-3% fee for the transaction.

Debit cards have a much lower fee, and thus benefit the business you patronize more.

Non-rewards cards have a smaller fee, and thus benefit the business you patronize more.

Rewards cards have a larger fee, and thus instead of paying the company the full value of the product/service, you decide to pocket the money you agreed to pay them in the first place.

Nothing wrong with it, just know when you swipe that expensive card, if the company you are doing business with did some good work, you are cutting 1-2% off what you agreed to pay them. If that sits well with you, you’re probably a liberal or an uninformed conservative!

Use debit if you value the business you’re spending at!

Wasn’t aware anyone was forcing businesses to accept credit cards…

The smart thing to do is use credit. You gain the interest from the bank on your cash not being spent. You gain heft sign up bonuses. You gain cash back, miles or other rewards.

There are Business Credit Cards out there as well. Do you not use one and pass your added costs onto your own customers? I’m sure they’ll thank you for that and not go to shop at your competitor’s store.