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In this article:
- How Do Cash Back Credit Cards Work?
- How to Redeem Cash Back Rewards
- How to Get a Cash Back Credit Card
- Finding the Best Cash Back Card
You generally can get cash back from your credit card by making eligible purchases and then requesting your rewards as a statement credit, check or transfer to an eligible bank account. Depending on your card and the rewards program, you may also be able to set up automatic redemptions. However, you may need to earn a certain amount of rewards before cashing out.
How Do Cash Back Credit Cards Work?
Cash back credit cards are a type of rewards credit card you can use to earn cash back when you make eligible purchases. Your rewards will build up in your account, and you may be able to redeem them in several ways.
Most purchases made with a cash back credit card will qualify for rewards, but read your card's rates and terms page or cardholder agreement for the list of possible exemptions. Certain types of transactions may be excluded, such as:
- Credit card fees
- Interest charges
- Balance transfers
- Cash advances
- Unauthorized purchases
- Purchases related to illegal activity
- Cash-like purchases, such as travelers checks, prepaid cards, money orders, wire transfers or foreign currencies
- Gambling-related purchases, such as lottery tickets or casino chips
- Transactions that are currently in dispute
- The amount of a transaction that's refunded or offset by a statement credit
If your purchase is eligible, the amount you'll earn in cash back will depend on your card, how much you spend and where you make your purchase.
With some credit cards, for example, you'll earn a flat rate, such as 1.5% cash back on all eligible purchases. Other cards have tiered rewards with bonus cash back on certain purchases and a base 1% cash back on non-bonus purchases.
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How to Redeem Cash Back Rewards
Depending on your cash back card and the program, you may have several options to redeem your cash back rewards. You can:
- Receive a statement credit. The cash back gets applied to your credit card's balance.
- Request a check. The issuer sends you a check for your cash back rewards.
- Transfer rewards to a bank account. The rewards are electronically transferred into a linked bank account. However, you may need a bank account with the card's issuer to use this option.
- Use your cash rewards as rewards points. Some cash back cards are linked to their issuer's rewards program, allowing you to convert them into points or use them as points instead of requesting cash back.
Check your card's details to see if there's a minimum threshold for redeeming your rewards. This could vary depending on the redemption option. For example, you may be able to request a check once you have $25 in rewards, or make a transfer to a bank account from the same issuer if you have $20 or more.
Also, know that choosing the statement credit option may lead to earning less rewards overall. With some programs, you only earn cash back on your net purchases—your purchase balance minus returns and credits. In these cases, you may want to request a check or bank transfer to ensure you'll earn cash back from all your eligible purchases.
How to Get a Cash Back Credit Card
Many credit card issuers offer cash back credit cards, and there are options available to those with poor credit or are new credit.
Once you find a card you like, applying is no different from applying for a non-rewards card. You can often fill out an online application and submit it online. Once you apply, the card issuer will likely perform a hard inquiry on your credit report to check your creditworthiness, which can lead to a small drop in your credit scores. If you're approved, the issuer will send you the card in the mail and you can start using it to earn cash back rewards.
Finding the Best Cash Back Card
Finding the best cash back card for your wallet will depend on which cards you can qualify for, what types of rewards program you want to use and how much you usually spend with credit cards.
Ask yourself these questions to narrow down your choices:
- Do you want a flat-rate rewards card or one that offers bonus cash back on certain purchases?
- Are you willing to pay an annual fee for a higher rewards rate? If so, calculate how much you expect to earn from the rewards to make sure the fee is worth it.
- Do you regularly pay off your bill in full? If not, a cash back card with a high interest rate might be worse overall than a low-rate card that doesn't offer rewards.
With your answers in mind, you can start comparing cards from different issuers to see which one matches your needs. You can also use a tool, such as Experian CreditMatchTM, to quickly compare cards and filter the results based on your credit, card fees and types of rewards.
