For many years, credit card users were happy to earn 1% cash back on all their purchases. Those days now seem quaint, as there have been cards that feature 2% cash back for over a decade. But in the last few months, credit card industry experts have been surprised to learn of the announcement of 3% cash back credit cards and even 4% cash back credit cards, with these offers being valid for all purchases, with no limits.
But as you probably suspect, these new credit cards will come with a catch, so they aren’t ideal for everyone. Thankfully, there are other 3% cash back credit cards and 4% cash back credit cards, that offer these elevated rewards for some of your everyday purchases. Let’s take a look at the details:
The Robinhood Gold Card
The investment app Robinhood and issuer Coastal Community Bank offer this card, which is made of stainless steel. But more importantly, this card offers 3% cash back on all purchases, as well as 5% on reservations booked through Robinhood’s travel portal. This card has no foreign transaction fees and comes with a range of travel insurance and purchase protection benefits including rental car insurance, trip interruption coverage, extended warranty and a purchase security plan.
What’s the catch?
While there’s no annual fee for this card, you must be a Robinhood Gold member to receive it. This subscription costs $5 per month, or $50 per year if paid annually. And before you get too excited, you should know that this card isn’t immediately available to new applicants. As of this writing, their website merely allows you to “Reserve your spot,” without even specifying a promised delivery date. Reports indicated that cards are already being issued in the order of those who signed up for the waitlist first, but there’s no indication of when you might expect the card if you signed up now.
U.S. Bank Smartly Visa Signature Credit Card
Not to be outdone, U.S. Bank recently announced its Smartly Visa card, which can offer as much as 4% cash back on all purchases, with no limits. This card has no annual fee and even offers 12 months of 0% APR financing on both purchases and balance transfers before regular APR applies.
What’s the catch?
This card offers everyone 2% cash back on all purchases, but the rewards rate increases for those who have qualifying balances in U.S. Bank deposit, trust or investment accounts. You earn 2.5% cash back when you have a qualifying balance between $5,000 to $49,999, and 3% cash back with a qualifying balance between $50,000 to $99,999. To earn the full 4% cash back, you must have a qualifying balance of $100,000 or more. So clearly, you need to have significant assets with U.S. Bank in order to earn the highest rewards rate.
Are 3% and 4% cash back credit card offers sustainable?
It’s pretty easy for credit card issuers to introduce products with headline-grabbing rewards, only to quietly scale them back later. As both the Robinhood Gold and the U.S. Bank Smartly are new products, it’s too early to tell if their 3% and 4% cash back rewards are sustainable. What we do know is that credit card issuers earn between 2% and 3% of each transaction as merchant fees, so they will lose money on each transaction that returns 3% cash back or 4% cash back.
With the Robinhood Gold card, the motivation appears to be attracting new customers to its investment app, and rewarding existing customers. This makes the Robinhood Gold Card a loss leader. Likewise, the strategy for the U.S. Bank Smartly Card is to attract new customers for the bank’s deposit and investment accounts. But once these new customers are acquired, it’s unclear how long either of these card issuers will be able to maintain these offers.
Information regarding The Robinhood Gold Card and the U.S. Bank Smartly Visa Signature Credit Card was collected independently by CardRatings and the details were not provided directly from the card issuers. The information related to these cards is not regularly maintained. Please refer to the issuers’ websites to ensure information is up to date before submitting an application for either product.
More sustainable 3% cash back and 4% cash back credit card options
If you’re turned off by the “catches” inherent to these 3% cash back credit cards and 4% cash back credit cards, perhaps you should consider a more time-tested, sustainable alternative. Here are some cards that feature 3% cash back or more on some of your most frequent, everyday purchases.
- The card_name discontinued_disclaimer offers 3% cash back at U.S. gas stations and on transit purchases including taxis, rideshare, parking, tolls, trains and buses. It even offers 6% cash back on select U.S. streaming services and on up to $6,000 spent each year at U.S. supermarkets (then 1%). You earn 1% cash back on other purchases, and there’s a annual_fees American Express is a CardRatings advertiser. See Rates and Fees
- card_name offers unlimited 3% cash back at grocery stores (excluding superstores like Walmart and Target), on dining, entertainment and popular streaming services. You also earn 5% cash back on hotels and rental cars booked through Capital One, and there’s no annual fee for this card.
- card_name discontinued_disclaimer offers 3% cash back at U.S. supermarkets, on U.S. online retail purchases, and at U.S. gas stations, on up to $6,000 spent each year (then 1%). You earn 1% cash back on other purchases, and there’s no annual fee for this card. See Rates and Fees
Bottom line
The latest 3% cash back credit cards and 4% cash back credit cards may be attracting attention, but they both come with significant drawbacks, and may not be sustainable. By taking a broader look at some of the best pre-existing cash back cards, you can find the best credit cards for your needs.
➤ SEE MORE:Best cash back credit cards
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