Best Fallback Credit Cards
Which credit card get you the highest cash back on all categories...
Definition
A fallback credit card is one that you use for expenses that do not fall under specialized spending categories where you might earn higher rewards. Typically, travel-related expenses can yield the highest cashback, with some American Express and Capital One cards offering 5-10% back. Other categories, such as dining and groceries, often provide 5-6% cashback.
However, if you are spending in categories that do not offer these higher cashback rates—such as insurance, healthcare premiums, or co-pays—a fallback credit card becomes essential. This card ensures you still receive some form of reward for your spending, even if it does not fall under a high-earning category.
The best fallback card on paper is the Robinhood Gold card. You can register yourself to be in the waiting list and it is offering 3% on everything. This make it a very good fallback card, in fact it is the best in the industry. This however is $60 fee annually due to Robinhood Gold subscription that bundle a few benefits together (like 5.25% APR HYSA equivalent). Robinhood will be losing money on the 3% cash back for sure, they are hoping to claw back on Margin fee, subscription fee & encouraging more trading.
While I am not sure when Robinhood will send me the Gold card, let’s move on to some more tangible card that already exists today.
SoFi credit card (with SoFi Plus) — 2.2% cash back on all categories.
With direct deposit setup, it qualifies you for SoFi Plus membership. It is no annual fee, no subscription fees, direct deposit is paid 2 days earlier, $2M FDIC insurance and offers you 4.6% APR on HYSA. Looks like a winner. FTR, I am using this card.
You need to start with a bank account before you can apply for SoFi Plus and then the credit card. This link will get you started.
Fidelity Reward credit card — 2.0% cash back on all categories.
You can apply for it here and get sign up bonus as well.
No annual fee but the cash back will be deposit into Fidelity account.
Wells Fargo Active Cash card — 2.0% cash back on all categories.
No annual fee
More details about this card here, plus sign up bonus.
Interchange Fee
Banks earn a percentage of each credit card transaction from the merchants, a fee known as the interchange fee. This fee generally ranges from 1.5% to 3% of the transaction amount. Interchange fee for travel (airlines & hotel) can go higher than 3%.
If you are using fallback credit card for less common category — like paying for healthcare premium (Obamacare), co-pay for doctors, auto/home insurance. I do use it and spent $28k/year on it. Now if I can get a 3% cash back credit card, that will save me $840 a year. That is great news on just 1 spending.
Bottomline
The margin is really slim for these banks. Remember, they have operating expenses to run these credit card business as well. The only real reason they are willing to offer these great deals is to get more customers into their platform, cross-sell happens (if you are Robinhood credit card user, you trade more, put more $$$ in, take more margin loans etc) & late fees (~11% of credit card holders not paying on time in the US).
Bonus: Although unrelated to fallback cash back, if you are renting, you probably know that you don’t get any cash back for paying rent. BILT can get you 1% cash back. Check out more details here.