Is cash more useful to your family that a cache of travel points or miles for a vacation you’ll take “someday”? Plenty of cards give you a cash-back rebate on your spending, but which one should you get?
We looked at the average expenditures for families in the most recent Bureau of Labor Statistics numbers to recommend the cards that hit most of them. It turns out the average family can earn up to hundreds of dollars in cash back a year without paying big annual fees.
Spending numbers we looked at
The BLS statistics divide household spending into various categories, including “Married Couples with Children,” and it was that category we zeroed in on. Not all spending is compatible with credit cards, however, so we had to eliminate things like “mortgage payments” and “public services” from our experiment, even though they represent big outlays for families. True, you can pay such expenses with credit cards indirectly by routing them through services like Plastiq – but the fees charged will likely cancel out rewards.
So, for the purpose of recommending cards for families, we looked at the below expenses.
Families’ average spending breaks down as follows (mouse over the graph for the specific amount spent in each category):
Our cash-back card picks for families
We calculated our estimated rewards return based on the spending categories above, the card’s bonus categories and any rewards-earning caps (if applicable) as well as the card’s annual fee.
For our recommendations, we assumed a family spent the average amounts on the categories listed above annually, performed ALL that spending on the card, and that they spread out their spending efficiently to take full advantage of the bonus categories and avoid exceeding quarterly bonus-reward caps when possible.
1. U.S. Bank Cash+ ($0 annual fee)
Cash back earned per year for the average family: up to $589.26
Analysis: This card is certainly a dark-horse winner. And, granted, it takes a bit of work to milk $589 out of it yearly.
The card offers 5 percent back in 2 categories of your choice (up to $2,000 in quarterly spending combined); 2 percent in one category of your choice; and 1 percent back on everything else.
For this card, we optimized the category choices based on the spending of an average family, but your results may vary if you change up the categories. We chose: department stores and fast food as the 5 percent categories and groceries as the 2 percent category. We assumed that families would make an effort to do all their dining out at fast food restaurants, in order to take advantage of the 5 percent back (we said this would be a lot of work, remember?).
We also assumed they’d buy electronics, appliances, furniture and clothing at department stores.
Due to the relatively low cap on the 5 percent categories, $1,769 in spending in these categories earned just 1 percent back.
Best for: Families that can milk the 5 percent categories and spread out their spending strategically to avoid exceeding the quarterly caps. Families that spend more on fast food than on groceries.
2. Blue Cash Preferred ($95 annual fee)Cash back earned per year for the average family: up to $579.85 (taking into account $95 annual fee)
Analysis: The card offers 6% back at U.S. supermarkets (on up to $6k in spending per year, then 1%); 3% back at U.S. department stores and gas stations; and 1% back on everything else. It’s well known in the rewards world, due to its industry-leading return on grocery purchases. However, the annual fee was recently increased from $75 to $95. If it were still $75, it would have beaten the U.S. Bank Cash+.
For our calculations, we assumed that cardholders would purchase furniture, appliances, apparel and electronics at department stores to take advantage of the 3 percent cash back.
Best for: Families that spend a lot on groceries. The average grocery spend (“Food at home”) for U.S. families happens to be just $3 over the $6k cap on this card, so the average family can expect to max this category out.
American Express is a CreditCardForum advertising partner.
3. Citi Double Cash
Cash back earned per year for the average family: up to $417.38
Analysis: The card offers 1 percent when you make a purchase plus an additional 1 percent when you pay your bill. We assumed the cardholder would not carry over a balance and pay interest.
This card is about as simple as it gets and proves that getting a flat rate of cash back can give you a nice return (for considerably less effort, compared to category cards).
Best for: Cardholders who can pay down their balances very month to get the full benefits of that extra 1 percent cash back; families that don’t want to worry about categories.
4. Blue Cash Everyday ($0 annual fee)Cash back earned per year for the average family: $412.58
Analysis: This card offers 3 percent back at U.S. supermarkets (on up to $6k in spend per year, then 1 percent); 2 percent back at gas stations and U.S. department stores; and 1 percent cash back on everything else.
It’s the no-annual-fee counterpart to the Blue Cash Preferred above and, while its potential for grocery earnings isn’t as high, cardholders don’t have to worry about spending enough to justify an annual fee.
Best for: Families that have modest grocery spend but who aren’t confident they can earn back the Blue Cash Preferred’s annual fee.
5. BankAmericard Cash Rewards card ($0 annual fee)
Cash back earned per year for the average family: up to $339.91
Analysis: This card earns 3 percent back on gas; 2 percent on groceries/warehouse clubs (up to $2,500 quarterly combined spending); and 1 percent back on all other spending.
For our calculations, we assumed all furniture, electronics and appliances were bought at warehouse clubs.
While this card came in at the bottom of our Top 5, things might shake out differently for families that have checking accounts and mortgages with Bank of America. The bank has what’s called the Preferred Rewards Program, which gives up to a 75 percent boost on credit card rewards if you have significant assets with Bank of America.
Best for: Families that don’t spend enough on groceries to justify the Blue Cash Preferred and who spend a lot on gas. Families that have other accounts with bank of America (due to the Preferred Rewards Program).
Updated Dec. 2016