Cash back credit cards are a category of cards that let you earn cash back rewards on qualifying purchases. These rewards can be redeemed for cash back.
Here’s what you should know about cash back credit cards.
What is a cash back credit card?
A cash back credit card is a type of rewards credit card that offers cash rewards on qualifying purchases. You can typically redeem the cash back you earn as a statement credit, direct deposit or check. There are many different cash back cards, but they tend to work in two ways.
Cards that offer the same rate on all purchases
Some cash back credit cards offer a flat rate on all purchases, like the Citi Double Cash® Card, which offers 2% cash back (unlimited 1% cash back when you buy, plus an additional 1% as you pay on every purchase).
Cards that offer different rates in different categories
Other cards may offer additional cash back rewards in specific categories. These categories may be set (for example, always at gas stations and grocery stores), rotate every set period (such as quarterly) or be customized to your spending. The Citi Custom Cash® Card, for example, offers customized rewards with 5% cash back on your top eligible spend category each billing cycle up to $500 spent and 1% on all other purchases.
Redeeming cash back
Different cards may allow you to redeem your cash back in different ways. While many cards give you the option of depositing your cash back directly into your bank account, some cards may also allow you to redeem the cash back for a statement credit, check or gift cards.
What to consider when choosing a cash back card
How much will you earn, when and for what? It all depends. Here are the key details to look at when weighing different cash back credit cards:
- If the card offers a percentage of cash back, does it vary based on what you're buying or where you're shopping?
- Is there an annual, quarterly, or monthly cap on how much cash back you can earn?
- How often can you redeem your cash back? Some cards may allow you to redeem your earnings right away, while others allow you to redeem less frequently, or when the amount hits a set level.
- What can you redeem your cash back for? A direct deposit check? A check? A statement credit? Does the card offer multiple redemption options?
- Does the card offer a bonus? For instance, some cards may offer additional rewards when you spend enough on qualifying purchases within a certain time frame after account opening.
- Does the card charge an annual fee? If so, do the benefits make it work for your spending habits and lifestyle? For example, if you’re buying groceries for a family of 6, a $100 annual fee for a card that earns more on those purchases may be worth it.
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.
