The good news is that more and more people are catching on to the benefits of cash-back credit cards. These cards are a fantastic way to make everyday spending work by paying you back for a purchase you would likely make anyway. 

While travel credit cards remain popular, the reality is that cash-back rewards are still the most popular way to use a credit card and receive a tangible benefit you can enjoy. With cash-back credits now offering benefits as high as 6% cash-back on everyday purchases, some simple math can show big rewards. 

Food Savings

Purchasing food is one of the most significant expenses every American undertakes yearly. The good news is that with a cash-back credit card, you will see some of this money returned every month. Of course, how much money depends on the card you use and the percentage cash back you are eligible for. 

On average, it’s believed that the middle-income family in America spent approximately $8,989 annually on food, according to the US Department of Agriculture, in 2023. Now, if you take this number and look at it through three different cash-back percentages, you can see how much you would earn annually. 

1.5%

Some of the best cash-back cards, like the Chase Freedom Unlimited or Capital One Quicksilver, offer 1.5% cash-back. At this percentage, you’d earn $134.84 cash back annually just off food purchases or roughly $11.23 monthly. 

2%

If you use a cash-back card like the Wells Fargo Active Cash Card that receives 2% cash back on every purchase, your earnings jump to $179.78 annually or just below $15 monthly. 

2.5%

While no credit card earns 2.5% on every purchase, look at an option like the Alliant Cash Back Visa Signature Card or Capital One Savor Cash Rewards that can earn up to 2.5% on purchases. Using one of these cards would earn you $224.73 cash-back on food every year or $18.72 monthly. 

Gas Savings

According to the Bureau of Labor Statistics, the average American spent around $2,449 in 2023, which accounted for almost 3.2% of an individual’s yearly expenses. 

1.5%

If you’re using one of the best 1.5% cash back cards and spending, on average, $2,449 per year on gas, you’re looking at around $36.74 in savings. This breaks down to right around $3 per month. 

2%

Using a 2% cash-back rewards card, the cash-back rewards jump a little to earn you around $49 in rewards yearly. This would give you around $4 monthly cash-back, assuming you’re spending around the average on gas. 

2.5%

If you have one of the elusive 2.5% cash back rewards credit cards, your savings will be even more attractive, with $61.22 in cash back every month or $5.10 monthly. 

3%

Things get interesting with gas if you have a credit card like the Blue Cash Preferred Card from American Express that earns you 3% cash-back on every gas fill-up. Assuming the average expense, you’d earn $73.47 in rewards or $6.13 monthly. 

Clothing

While the amount of clothing people buy monthly can vary considerably, the Bureau of Labor Statistics looked to find an average. It came up with an average of $2,041 in annual expenses on apparel in 2023. This breaks down to roughly $170 monthly on clothing, an increase of 4.9% over 2022. 

1.5%

Assuming the average spend on clothes with a credit card that earns 1.5% cash back, you’re looking at rewards totaling $30.62 annually. This breaks down to approximately $2.55 per month. 

2%

If you have a credit card with cash-back rewards that earns 2% cash back, like the Wells Fargo Active Cash Back card, your rewards total will jump to $40.82 annually. This would break down to $3.40 per month. 

2.5%

At the highest earning level for clothing, using a credit card with 2.5% cash-back in this category can increase your savings even further. Your cash-back rewards would earn you $51.03 annually or $4.25 monthly. 

Total Savings

What would your total savings look like if you spent the average yearly in these three categories? With a 1.5% cash-back rewards card, you’d earn approximately $202.20 annually. Jump up to a 2% cash-back credit card, and your total rewards increase to $269.60 annually. At the highest level of 2.5% cash-back, your total savings are $336.98 annually.

 

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