Of the hundreds of credit cards out there, there are only 3 that currently stand out with rewards in the form of 2% cash back on everything . A 2% cash back on everything is sort of the benchmark that’s used for comparing other cards and helps determine value of miles and hotel points. Let’s go over the 3 best 2% cards to see how they compare and how you can benefit from each one differently.
The Fidelity American Express credit card is perhaps the all time benchmark for 2% cash back on everything. It’s one of the very best cards out there. I have one and I think that everyone out there should have one. This card has no annual fee. There is currently no signup bonus, but in the past, Fidelity has offered a $50 signup bonus and a $75 bonus as well.
It is a card issued by FIA card services, a subsidiary of Bank of America. Rewards are paid out in the form of worldpoints. You earn 2 worldpoints for every dollar spent. Those 2 points are equal to 2 cents but only if the card is linked to a Fidelity account. You can link it to a Fidelity Cash Management Account or a Fidelity Brokerage account. If you redeem for anything else besides transferring to your Fidelity, you will get less than 2% back. Check out this post from Saverocity to learn how to redeem your points correctly.
Since the card uses the American Express network, it doesn’t quite have the worldwide acceptance of Mastercard or Visa. However, one benefit of being an Amex is that you can use it for Amex Sync offers or the annual Small Business Saturday to save some money. The foreign transaction fee is 1% which is actually better than other Amex cards. Finally, you can actually use the card to get over 3% value when used for flights.
The new Citi Double Cash Card is a new offer from Citi. It is also a no annual fee card like the Fidelity Amex. Although there is no public offer for a bonus, there are targeted offers of $100 to $200. The public offer gives 0% APR for the first 15 months, although there’s a balance transfer fee.
It’s earning structure is a little different than the Fidelity Amex. You earn 1% on your purchases, and another 1% when you pay off those purchases. As a result, you only earn the full 2% when you fully pay for your purchases, which you should be doing anyway. It is a mastercard, so it has wider acceptance. You can also downgrade to this card from other Citi cards if you choose. This maybe the way to go so don’t waste a credit inquiry. Rewards can be redeemed when you have a minimum of $25. They can be redeemed in the form of cash, gift cards, or statement credits.
The Barclaycard Arrival card has been around for while. It’s issued by Barclays bank. It has no annual fee the first year, but $89 thereafter. Contrary to the other 2 cards, the public offer does come with a signup bonus of 40,000 points (worth $440 when used for travel).
First of all, you earn “miles” with this card. However, these “miles” should really be called points because they are not directly transferrable to any airline.
You earn 2 “miles” for every $1 spend, and each “mile” is worth 1 cent only when redeemed for travel. Thus, your rate of return on the card is 2% when used for travel. However, when redeemed for travel, you get 10% miles returned, which makes the effective return 2.2%. Each mile is worth 0.5 cent when redeemed for cash back. This equates to just 1% when redeeming for cash back. So, technically, this isn’t a pure 2% cash back. However, if you travel enough, it’s as good as cash.
Considering the large annual fee the second year, the other 2 cards have the edge with the no annual fee. However, plenty of people have gotten the fee waived the second year.
If you don’t have any of these cards yet, perhaps the first one to get should be the Barclaycard Arrival card as Barclays Bank is stingy in issuing cards to people that have many credit inquiries or too much credit already. In addition, you are getting $440 value, whereas you get nothing with the other cards. The Fidelity Amex is fairly easy to get as Bank of America (FIA card services) is fairly lenient. I wouldn’t jump on the Citi Double Cash card just yet unless you get a targeted offer for a signup bonus. These three are the current best 2% cards out there.
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