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Cash back credit cards reward you by reimbursing 2%, 3% or even 5% of what you spend in specific categories, plus 1% of what you spend on anything else. You’ll need to know which categories will earn you more cash back, and may have to deal with quarterly rotating categories and even register for the extra rewards each time they change. The Barclaycard CashForward™ World Mastercard® gives you a consistent 1.5% cash back on all of your spending, and adds something that you probably haven’t seen before – 5% cash back toward your next redemption each time you redeem. But one of the leading cards in this category is Chase Freedom®, offering one of the biggest cash-back percentages out there. So which is the better card?
Earning points with each card
When you hear you’ll earn 5% cash back with the Chase Freedom credit card, it immediately sounds amazing, compared to the 1% you see everywhere else. The Barclaycard CashForward World Mastercard earns you a solid 1.5% cash back on your spending. Let’s compare Chase Freedom’s 5% cash back in a specific category during a particular quarter, (in addition to the 1% cash back on all other purchases) to the CashForward card’s 5% cash back on your redemption plus 1.5% cash back on all purchases with no calendars.
Take an average spending of $2,250 a month on a credit card and multiply that by 3 months so we can compare a quarterly spend of $6,750. Now, we are ready to compare a Chase Freedom rotating 5% quarterly cash back category with the steady 1.5% cash back you’d earn with a Barclaycard CashForward World Mastercard.
Starting with the simple 1.5% on your quarterly spend of $6,750 you would have earned $101.25 cash back. You can redeem in $50 increments, so with the 5% cash back on redemption you would now have an additional $5 added to your account, which means your next redemption would total $106.25.
It gets a bit tricky with the Chase Freedom card. Let’s work with the restaurant category that’s coming up in July. The credit card industry reports the average spend per year for restaurants is $2,505. So in three months, you would spend a total of $626 in a 5% category. The 5% cash back earned for this quarter would be $31.31. To figure out your 1% earned, you need to calculate based on the remaining amount of $6,124 ($6,750 minus $626) which produces earnings of $61.24. Add that to your 5% cash back category of $31.31, and the Chase Freedom card gives you a total of $92.55 cash back.
So, the Barclaycard CashForward World Mastercard’s consistent 1.5% cash back is surprisingly better than the Chase Freedom’s 5% cash back in a particular category and 1% cash back on all other spending. Plus, with the CashForward card the earn of 5% cash back on your redemption is an additional bonus. On the other hand, if you know you are going to purchase the maximum of $1,500 in each and every one of the Chase Freedom 5% categories, you would earn $75 cash back plus $52.50 on all of your other purchases. If you commit to the Chase Freedom categories, always spend the maximum, and make sure you sign up for the rotating categories, Chase Freedom would then make a better choice. In addition, you can earn an additional $50 as a sign up bonus.
The Barclaycard CashForwardTM World Mastercard®
The Barclaycard CashForward World Mastercard earns 1.5% cash back on all purchases, and gives you a 5% cash bonus toward your next redemption when you cash in. If you redeemed $100 in rewards, for example, you’d get an additional $5 added to your rewards balance for your next redemption. That effectively raises the earn rate on this card to 1.575%. The annual fee is $0.
WHAT WE LIKE ABOUT THIS CARD
- Earn unlimited 1.5% cash rewards on every purchase
- No annual fee
- No rotating categories
- Earn cash back when you redeem
- Requires excellent credit
Get a $200 cash rewards bonus after you spend $1,000 in purchases in the first 90 days after account opening.
- Get a $200 cash rewards bonus after you spend $1,000 in purchases in the first 90 days after account opening.
- Earn unlimited 1.5% cash rewards on every purchase.
- Every time you redeem, get a 5% cash rewards redemption bonus to use toward your next redemption.
- Redeem your cash rewards for a deposit into a U.S. checking or savings account, a statement credit or gift cards. Redemptions start at $50.
- Cash rewards do not expire as long as your account is open, active and in good standing.
- Enjoy a 0% introductory APR for the first 15 months on purchases. Plus, you’ll get a 0% introductory APR for 15 months on balance transfers made within 45 days of account opening. After that a variable APR will apply, currently 15.99%, 20.99% or 25.99%, based on your creditworthiness. Please note, there is a fee for balance transfers.
- No annual fee.
Why we like the 5% redemption bonus. Not everyone remembers or makes time to redeem their cash back, but the Barclaycard CashForward World Mastercard’s redemption bonus will help motivate you to do so. You can redeem a minimum of $50 in cash back rewards for a gift card, statement credit, or a deposit into your bank account.
You’ll get a free FICO score online. Barclaycard will send you alerts when your score changes.
The card offers travel protections, including trip cancellation and interruption insurance. If you pay for your travel with this card, you can be reimbursed for nonrefundable traveling costs if you have to change your plans because of sickness, severe weather, or other covered events. Such benefits aren’t available on most other cash-back cards.
It doesn’t offer the highest flat-rate cash back rewards rate. The Barclaycard CashForward World Mastercard’s effective earn rate of 1.575% is better than the other 1.5% rewards many cash-back cards offer with its 5% cash rewards when you redeem. It’s important to note that this is a better choice than the 5% cash back cards if your spending in those categories is comparable to the average spend for most consumers.
With an annual fee of $0 and hefty cash back rewards, the Chase Freedom® card is a smart choice for those who find the categories align with their actual spending habits. It offers 5% cash back on rotating quarterly bonus categories, and 1% elsewhere. On top of that, you can earn a $150 bonus after you spend $500 on purchases in your first three months from account opening.
WHAT WE LIKE ABOUT THIS CARD
- Earn 5% cash back on bonus categories that change every quarter, up to $1,500 spent quarterly. Here are the 2016, bonus categories:
Q1 (January 1 – March 31): Gas stations, local commuter transportation, and taxis (not including parking, tolls and Amtrak purchases)
Q2 (April 1 – June 30): Grocery stores (not including Walmart® and Target® purchases)
Q3 (July 1 – September 30): Restaurants
Q4 (October 1 – December 31): Holiday shopping
- No annual fee
- Does not require excellent credit
- Must sign up for rotating category each quarter
- Your spending has to fit closely to the bonus categories
Get a $150 cash rewards bonus after you spend $500 in purchases in the first 90 days after account opening.
- Earn unlimited 1% cash back on all other purchases
- Cash rewards do not expire as long as your account is open, active, and in good standing
- 0% intro APR for the first 15 months on purchases. Plus, 0% introductory APR for the first 15 months on balance transfers
- After that, a variable APR will apply, which is currently 14.24%, 19.24% or 23.24%, depending on your creditworthiness
- No annual fee
We like the rotating categories because they were designed to include places where people make the most everyday purchases, seasonally. Each quarter includes broad categories, such as restaurants or gas stations. For many people, earning these rewards doesn’t require much change to their existing spending habits.
You can generally qualify without a long credit history. You may be approved for Chase Freedom® even if you don’t have excellent credit, so it’s a great choice if you’re looking for your first cash-back credit card.
The rotating rewards can be a difficult. Chase Freedom® rewards categories change every three months, which can be a headache to keep up with — especially if your spending doesn’t align with the new categories. To qualify for the 5% rotating rewards, you have to log on to your account and activate the rewards every three months. If you miss the deadline, you may be stuck with only 1% cash back on everything for that quarter. You do have until the 14th day of the third month in the quarter to sign up, and can earn rewards for that quarter retroactively.
It’s not good for traveling abroad. Like most cash-back cards, Chase Freedom® charges a foreign transaction fee.
Some other options for a cash back credit card:
The Citi® Double Cash Card offers an unlimited 1% cash back on all purchases, and another 1% cash back on every dollar you pay off. Like the Barclaycard CashForward World MasterCard, it also comes with a free FICO score, trip cancellation insurance and an annual fee of $0. If you don’t plan on carrying a balance, and know you will pay off your bill each month, you may be better off applying for a card that delivers more rewards.
The Capital One® Quicksilver® Rewards Credit Card
If you have good credit, the Capital One® Quicksilver® Rewards Credit Card might be a good choice. It comes with a similar 1.5% cash back rewards structure and a similar sign-up bonus: One-time $100 bonus after you spend $500 on purchases within the first three months. Like the Barclaycard CashForward World MasterCard, it offers a great intro rate: 0% intro APR on purchases until September 2016 and 0% intro APR on balance transfers until September 2016. After that, it offers an ongoing APR of 13.24% – 23.24% (variable). Even though the card doesn’t require excellent credit, it offers good long-term value that enables you to build up your credit score by paying off your balances every month.