How Much Cash Back Could You Get From Credit Cards In 2023?
Credit cards are so ubiquitous that almost every adult has at least one in their wallet at this very moment. But, if we’re being honest, a system of convenient payment isn’t the main draw of credit cards. For many, it’s the rewards potential that makes using a credit card more appealing than a simple debit card or cash.
But credit card rewards structures can sometimes be confusing—a fact which is compounded by an economy that is always in flux. How can we know what kind of rewards to expect? Sadly, it’s impossible to know the exact course the economy will take, but with a little bit of creative math, we can make some solid guesses as to what your cash-back earnings will look like in 2023.
How Do I Determine My Cash Back for 2023?
The exact amount of cash back an individual will earn depends on your spending habits and what kind of credit cards you are using. That said, it is unfortunately true that things are getting more expensive. Inflation will more than likely continue to rise in 2023, which means price increases across all categories. With this in mind, we can look at spending habits from the average consumer in order to speculate some on future prices.
In 2022, a typical family in the 70th percentile had $32,072 in expenses that could be charged to credit cards. Breaking that down further, this hypothetical family spent:
- $6,322 on groceries
- $4,511 on restaurants
- $1,044 on drug stores, $3,849 on gas and other transit
- $4,610 on shopping
- $2,548 on phone and internet
- $2,929 on insurance
Inflation is rising at around 8% annually overall. However, certain categories may see even further price increases. Food inflation, for example, currently sits at 11.2%. So, let’s call inflation 10% on average for the sake of simplicity. For our sample family, this translates to $3,207 in additional expenses, or $35,279 total. Broken down, this works out as follows:
But as mentioned above, your spending habits are only half the equation. In order to determine your cash back earnings for 2023, you’ll have to look into your wallet and see what credit cards you are currently holding.
Cash-Back Earning Rates for Different Cards
If you have a card that earns a flat cash-back rate like the Citi® Double Cash Card or the Wells Fargo Active Cash® Card, your rewards are easy to calculate. Both cards earn 2% on purchases. So using our above numbers, a family with this card will earn $705.58 in cash back in 2023.
But what if you have a card with a more complex cash-back reward structure? There are a variety of cards that earn different rates for different types of spending. Too many in fact to discuss them all at length here. So, we will focus on some of the cards listed in our best cash-back cards article, as these provide a solid baseline to determine the average cash-back earnings one can expect in 2023.
The Blue Cash Preferred® Card from American Express (Terms apply. See rates & fees) from Amex earns . With these rates, and assuming the above numbers, you will earn $417.25 on grocery spending, $43.75 on streaming services, $127.01 on transit and gas and $233.62 in all other spending for a total of $821.63 cash back annually.
The Chase Freedom Flex℠ is a versatile card that earns . The 5% quarterly bonus to rotating categories remains capped at $75, since it’s only good for the first $1,500 in spending. However, the rest of the bonus spending is as follows: $206.91 cash back on travel (assuming all travel is booked through Chase Ultimate Rewards), $148.87 on dining, $34.45 on drugstores and $333.99 in all other spending (assuming you maxed your 5% category for the quarter). This is a total of $724.22 in cash back.
With the Citi Custom Cash℠ Card, you’ll earn . This works out to $649.79 in cash back, assuming you maximize the 5% bonus category.
Discover it® Cash Back earns . This makes its rewards comparable to the Citi Custom Cash Card, except the 5% bonus is capped at $1,500 rather than $500. With this increased cap, you will earn, as with the Citi Custom Cash Card, $649.79 in cash-back annually.
Despite what the experts on television may claim, economic forecasting is as much divination as it is science. No one can say with certainty what the economy will look like next year—or any year—so it’s impossible to arrive at an absolute number for cash-back earnings. That said, we can make some educated guesses based on past data and come up with a general idea of what kind of rewards you can expect to earn. Examine your specific financial situation, and, using the numbers above, you should be able to come up with a rough estimate of what kind of cash-back earnings you can expect to see in 2023.
To view rates and fees for Blue Cash Preferred® Card from American Express please visit this page.