Cash Back Credit Cards 101

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 allows a cardholder to earn cash rewards when he or she uses the credit card for purchases. Some cash back credit cards offer cash back rewards for payments based on 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. Balance transfers, for example, may not be eligible. 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 if it's right for you.

That depends on the program. Some credit card issuers award cash back every month. Others may award them quarterly or annually. Others require you to accrue a certain amount of cash (i.e., $25 or $50) back before you can redeem it.

When redeeming cash rewards, you generally have a few options:

  • 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. Ask your credit card issuer to deposit your cash back into a linked bank account, or request a paper check.
  • 3. You can purchase a gift card. Ask your credit card issuer about redeeming your cash back rewards balance toward a store-specific gift card.

Some credit card issuers may allow you to set a threshold - for instance, $50 - that automatically issues you cash back. If you prefer to let cash rewards accumulate and opt for the on-demand approach, pay attention to your credit card's terms and conditions to ensure your rewards won't expire.

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