My goal when choosing a new rewards credit card is always to maximize how much I'm earning. So, my card strategy definitely includes multiple 5% cash back cards, which offer some of the highest rewards rates you can find.
But what does that 5% really look like? Well, it depends on how much you spend.
What 5% cash back really looks like
On the surface, 5% may not seem like that much. (If you had 5% of a 16-inch pizza, you'd be done in three bites.) But when you add up 5% of your spending across a whole year, it can turn out to be far more than you think.
Take a look at what 5% looks like at different spending levels:
| Monthly Spend | Quarterly Spend | Quarterly 5% Cash Back | Annual Spend | Annual 5% Cash Back |
|---|---|---|---|---|
| $100 | $300 | $15 | $1,200 | $60 |
| $250 | $750 | $38 | $3,000 | $150 |
| $500 | $1,500 | $75 | $6,000 | $300 |
| $750 | $2,250 | $113 | $9,000 | $450 |
| $1,000 | $3,000 | $150 | $12,000 | $600 |
| $1,500 | $4,500 | $225 | $18,000 | $900 |
| $2,000 | $6,000 | $300 | $24,000 | $1,200 |
| $2,500 | $7,500 | $375 | $30,000 | $1,500 |
| $3,000 | $9,000 | $450 | $36,000 | $1,800 |
| $4,000 | $12,000 | $600 | $48,000 | $2,400 |
| $5,000 | $15,000 | $750 | $60,000 | $3,000 |
Data source: Author's calculations.
As you can see, it doesn't take much monthly spending on a credit card to get into the hundreds of dollars in annual rewards. And since you can find 5% cards for lots of high-spend categories, like groceries and dining, it doesn't take much effort to reach those numbers.
The best 5% cash back cards
Some of the most popular cash back rewards cards earn 5% back -- or possibly more. Here are some top picks to explore.
Chase Freedom Flex
The Chase Freedom Flex® earns 5% back in rotating bonus categories that change each quarter. Once you activate, you'll earn 5% on up to $1,500 in bonus category purchases per quarter, all with no annual fee. You can even earn a competitive welcome bonus. (Pro tip: This card technically earns Ultimate Rewards points and can be a valuable part of the Chase Trifecta.)
Citi Custom Cash Card
The Citi Custom Cash® Card is one of the easiest 5% cash back cards to use since you don't need to activate or select any categories. Instead, you automatically earn 5% cash back in your top spending category each billing cycle, on up to $500 in eligible purchases per month. You also pay no annual fee and can earn a competitive welcome bonus.
Discover it® Cash Back
The Discover it® Cash Back earns 5% cash back on your first $1,500 in bonus category purchases each quarter you activate. Bonus categories change every three months, and they can include popular categories like restaurants, grocery stores, or even Amazon.com. Plus, you pay no annual fee.
U.S. Bank Cash+
The U.S. Bank Cash+® Visa Signature® Card is a no annual fee card that lets you choose your own 5% categories -- yes, plural, you get two! -- every quarter from a list that includes some unique categories, like home utilities or furniture stores. (You also get a 2% category chosen from gas, groceries, or restaurants, and a solid welcome bonus.) Bonus rewards are capped at $2,000 in combined category purchases per activated quarter.
Amex Blue Cash Preferred
The Blue Cash Preferred® Card from American Express (see rates and fees) isn't actually a 5% cash back card -- it's a 6% cash back card. It earns 6% cash back on the first $6,000 in U.S. grocery purchases each year, plus 6% back on eligible streaming services. That's on top of its other bonus categories (gas and transit). You do have a modest annual fee, but the welcome bonus more than makes up for it. Terms apply.
Spending caps, rotating categories, and activations
As you may have already noticed, these high-earning cards aren't just a free-for-all. There are some quirks that they tend to share that may limit how many rewards you can earn. Here are some examples:
- Spending caps: Most 5% cards have a cap on how much of your spending will earn at the 5% rate. For example, you may only earn 5% back on the first $1,500 in category purchases each quarter. If you spend more than that, you'll earn just 1% back on those purchases until the next quarter.
- Rotating categories: Some of my favorite rewards cards are actually those with rotating bonus categories. These typically change each month or quarter. This can either make it easier to maximize your bonus rewards, or harder, depending on your spending habits.
- Activation requirements: If your 5% card has rotating or changeable categories, be sure to activate them every month or quarter as required to keep earning your bonus rewards. If you don't activate, you won't earn at the higher rate.
Although these types of restrictions can be irritating, they're completely manageable as long as you know the rules. Indeed, issuers may even offer tools to make managing your rewards easier, such as quarterly activation reminders or category spend trackers.
It can take a little extra effort to maximize your 5% cards, but as the math shows, it can be well worth it.
