Cash Back Credit Cards 101

cash back
rewards
credit cards
Oct 20, 2023

"Cash back" credit cards can help you earn cash rewards as you use your credit card for purchases. How much you can earn and under what conditions depend on the credit card's terms and conditions, but for consumers who tend to pay their statement balances in full, cash back credit cards can provide significant financial benefits. Check out the answers to these commonly asked questions to help figure out if a cash back credit card is right for you.

Cash back cards allow a cardholder to earn cash rewards when they use the credit card for purchases. Some cash back credit cards offer the same amount of cash back rewards for all purchases made with the card. Other cash back credit cards offer accelerated cash back in certain or rotating categories with a base earn on other purchases. Depending on your credit card program, you may need to enroll to earn category cash back.

Keep in mind that not every purchase may earn cash back. As with all credit cards, you need to make sure to read the terms and conditions and consider how you will use the card when determining whether it's right for you.

That depends the credit card. Some credit cards award the cash back you earned on purchases at certain periods; perhaps quarterly or annually, for example. Other cards may allow you to redeem at any point, although it may only be after you accrue a minimum amount of cash back (for example., $25 or $50).

When redeeming cash back rewards, your credit card may have a few options. Common methods include:

  1. You can redeem accumulated cash back for a statement credit. This way, you can apply earned cash back toward your credit card balance.
  2. You can request a bank deposit or paper check.
  3. You can redeem your rewards for specific items, such as gift cards.

While most cards don't charge a fee to redeem cash back rewards, there may be an annual fee on the card. Consider the fee carefully to ensure it doesn't cost more than the cash back rewards you're likely to earn. Pay attention to the interest rate, especially if you carry a balance, as a card with a high interest rate could also lessen the benefit of earned cash rewards.

You can earn cash rewards from your very first purchase - no matter how big or small that purchase is, and assuming the transaction is eligible to earn cash back (remember, certain transactions like balance transfers, interest charges and late fees are typically not considered purchases and, thus, would not qualify for cash back). There also may be a minimum cash back balance you must earn before you can redeem your rewards. For instance, you may need to earn $25 in cash back before you can request redemption.

That depends on the credit card, so be sure to carefully read the terms and conditions. Some offer unlimited cash back. Others, for example, may have a periodic cap on the total cash back you can earn in specific purchase categories.

Check the terms and conditions of your card for the consequences of late payments. Terms on earning and redeeming cash back when bills are paid late or if an account is no longer open can vary by card.

Some cards offer a higher rate for specific types of purchases, such as groceries or restaurants. Depending on your card program, you may need to enroll to receive the accelerated earn. There may also be a maximum earn on those purchases within specified periods.

Many credit card options allow you to redeem your cash rewards for a statement credit. This typically does not count toward your minimum payment due, so check your card’s terms and conditions. 

Your rewards may expire under certain conditions, so check the terms and conditions of your cash back reward program. For instance, your rewards could expire due to account inactivity.

Some cash back cards require that you accrue a minimum level of rewards before you can begin to redeem your cash back, so make sure to check the terms and conditions of your cash reward program.

Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.

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