How to pick a 2% cash back card

Cash back cards are popular choices among cardholders who want to earn dollars back from each purchase they make with their cards. And consumers interested in these cards have several options, from cards that earn a flat cash back rate on all purchases to those that award a higher percent back for purchases in specific categories.

But one category of cash back card that is growing today is the 2% cash back card. If you’re interested in applying for such a card, here are the basics of how 2% cash back cards work and which ones offer the most perks.

What are 2% cash back cards?

As the name suggests, 2% cash back cards award you a flat rate of 2% cash back on every purchase you make, no matter the category of the purchase. If you charge $500 at the grocery store during the month, you’ll earn 2% of that purchase back in cash, or $10. If you charge $300 at a hotel, you’ll again earn 2% back, or $6.

Typically, you redeem your 2% cash back in the form of statement credits. If you earn $15 in cash back during the month, you can apply it to your existing credit card bill, reducing what you owe by the amount of the cash back. You may also opt to receive your cash back as a deposit in your checking account or as a check.

These cards are a good fit for consumers who want simplicity, as you won’t need to keep track of any revolving spending categories to optimize your cash back.

See related: Cash back credit cards: How do they work?

The 2% cash back category is growing

It’s not surprising that banks are offering more 2% cash back credit cards. These cards attract consumers because they’re simple and give cardholders the chance to earn cash back quickly.

It’s simple math that you’ll earn more each month with a card that offers unlimited 2% cash back than you will with one that offers a more common 1.5% cash back.

The advantage is you also won’t need to keep track of what you are spending to earn the most cash back. Many cash back cards offer higher cash back rates if you spend in certain categories. For example, a card might offer 5% cash back on the purchases you make at supermarkets and restaurants during a given quarter, but all other purchases might only earn 1% cash back. With a 2% unlimited cash back card, you won’t have to worry about where you’re spending – all purchases would earn the same percentage back.

However, their simplicity may cost you. If you’re spending mostly at restaurants and grocery stores, you may earn more with a cash back card that awards a higher return on those categories. The key is to know your spending habits.

What are the best 2% cash back cards available?

If you know a 2% cash back card is right for you, then the next step is deciding which card deserves a space in your wallet. Here are our recommendations.

Capital One Spark Cash Plus: Best for big spenders and business owners

With the Capital One Spark Cash Plus business card, you’ll earn 2% unlimited cash back on all purchases. Targeted toward business owners, the card also offers a welcome bonus of up to $1,000 cash back. You’ll earn $500 if you spend $5,000 in the first three months of opening your account and $500 more if you spend $50,000 in the first six months.

The card also offers a $200 annual cash bonus if you charge $200,000 or more with your card.

Pros and cons

This card offers the potential of big cash earnings. Not only will you get 2% cash back on all purchases, but you can also possibly earn up to $1,000 cash back in your first year of opening your account and an additional $200 annually.

The catch? You must spend a lot to earn these bonuses. You’ll need to spend an average of over $8,333 per month for your first six months to meet the $50,000 threshold in time to earn the $1,000 cash back bonus. For that $200 bonus, you’ll need to spend at least $200,000 with your card. Obviously, it’s easier to hit these spending tiers if you are using your Spark Cash Plus card to run a business that uses its card heavily.

The card also charges a $150 annual fee and is a charge card, which means you’ll have to pay your balance in full each month. If you don’t, you’ll be charged a 2.99% monthly late fee.

Who this card is best for

This card makes sense for consumers and business owners who spend a lot. The more you charge with this card, the more you’ll earn. This is important because you want to earn enough cash back each year to more than cover that $150 annual fee.

Citi Double Cash Card: Best for those who pay quickly

You can earn 2% cash back with the Citi Double Cash Card, but in a different way. You’ll earn 1% cash back on all purchases (except gift cards) when you make it, and another 1% cash back when you pay off those purchases on time.

The card also comes with an introductory 0% APR for 18 months on balance transfers completed in the first four months. After that intro period ends, any balance you’re still carrying will be charged at the card’s regular APR of 15.49% to 25.49% variable. It’s important to remember, as well, that balance transfers do not earn cash back.

Pros and cons

This is a solid cash back card that charges no annual fee. You can also transfer existing credit card debt to this card and give yourself time to pay off that debt without worrying about paying interest.

The downside? You’ll only earn 1% cash back when you make purchases. If you don’t pay off at least the minimum payment due on your statement by your next billing cycle, then you will not earn the total 2%.

Who this card is best for

This card makes the most sense for cardholders who pay their balances in full each month. By doing this, you’ll earn your 2% cash back quickly and regularly.

Fidelity Rewards Visa Signature Card: Best for those who want to save their cash rewards

The Fidelity Rewards Visa Signature Card is another unlimited 2% cash back card that doesn’t charge an annual fee. However, you’ll need a Fidelity bank account to use it.

When you redeem your cash back, you must deposit it in a Fidelity account, with options including Fidelity-branded retirement accounts, approved savings accounts or brokerage accounts.

Pros and cons

The biggest benefit of this card? It charges no annual fee and places no limits on the amount of cash back you can earn. However, it doesn’t offer a welcome bonus, and it restricts how you can redeem the cash you earn.

Who this card is best for

This card is a smart choice for consumers who’d rather use their cash back to build their savings instead of spending it on trips or using it to reduce their credit card bills.

Because your cash back will be deposited in a Fidelity savings or investment account, this card would help you grow your savings. If you deposit your cash back in an interest-bearing account, you will earn even more from it.

Wells Fargo Active Cash® Card: Best for those who want to earn without worrying about categories

The Wells Fargo Active Cash Card is an excellent cash back card that earns unlimited 2% cash rewards on purchases. As a sign-up bonus, if you charge $1,000 in purchases during the first three months of account opening, you’ll receive a $200 cash rewards bonus. And you’ll get these perks without paying an annual fee.

Pros and cons

Like many 2% cash back cards, the biggest benefit of the Wells Fargo Active Cash card is its simplicity: Most purchases earn you 2% cash rewards, and the card has an intro APR of 0% on purchases and qualifying balance transfers made in the first 120 days for 15 months from account opening (followed by a regular APR of 16.49%, 21.49% or 26.49% variable).

The only cons are that you can only redeem your rewards for cash back, and you cannot transfer the rewards to other programs.

Who this card is best for

The Active Cash card is a great choice for cardholders who spend widely across many categories and for those who might want to take advantage of the intro APR offer.

Alliant Visa Signature Card: Best for those who want to earn the most cash back and don’t mind joining a credit union

Here’s a bonus card to add to our list – this one offers 2.5% cash back. It takes some work, but you can earn plenty of cash back with the Alliant Visa Signature Card.

To qualify, you must join Alliant Credit Union. You also must open an Alliant High-Rate Checking account and maintain an average daily balance of $1,000 or more in the account to maximize rewards.

If so, you’ll earn 2.5% cash back on the first $10,000 in qualifying purchases for every billing cycle. Since most cardholders are unlikely to charge more than $10,000 per billing cycle, this card gives a reliable 2.5% cash back for likely all your purchases.

Pros and cons

This card has no annual fee, so you’ll earn that 2.5% cash back without paying anything. And with such a high cash back rate on everything, you can earn plenty back with the Alliant Cashback Visa Signature card.

On the negative side, you do have to join Alliant Credit Union to qualify for the card. To join, you must be a current or retired employee of one of the businesses or organizations that Alliant partners with across the country. You can also join if you live or work in one of the communities near Alliant’s corporate headquarters in Chicago or if you are a domestic partner or immediate family member of an Alliant member.

If you aren’t eligible to join through these options, you can donate to Foster Care to Success, an organization that serves foster teens across the U.S., to join the credit union.

Who this card is best for

It’s a good choice for anyone who wants to earn the most cash back without worrying about what type of purchases they are making or for someone who uses one credit card for most of their purchases.

Bottom line

Credit cards that offer 2% cash back on all purchases aren’t the best choice for everyone. If you tend to spend more heavily in one category than others – maybe you spend a lot at grocery stores each month or on dining and food delivery – a card that offers a higher cash back bonus in that category would give you more cash back throughout the year. Also, if you’re an avid traveler, a travel card earning points or miles and offering travel-focused perks may be a better fit.

However, if you use your credit cards often on a wide range of spending categories and you don’t want to track which types of purchases will earn you the most, a 2% cash back card can give you the opportunity to earn plenty of dollars every month. The best part: More and more banks now provide 2% cash back cards, which gives you more options to choose the cash back card right for you.