The Ultimate Guide to Credit Cards
Tuesday, November 12, 2019

Can You Get Cash Back on a Credit Card? 3 Steps

Can You Get Cash Back on a Credit Card? 3 Steps

credit card advice

Adam West
By: Adam West
Posted: October 25, 2019

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Cash back is one of the most popular forms of credit card rewards on the market today. In fact, 49% of Americans say that cash back is their favorite credit card reward, according to a poll from creditcards.com.

So, yes — you can get cash back on a credit card — and, if you play your cards right, you can get a decent sum of money back.

Below are three steps to help you earn this highly sought-after reward and start saving money on all your purchases. If you don’t already have a cash back card, the first step is to get one.

1. Get a Cash Back Credit Card

Credit card issuers pay out billions of dollars each year in rewards. If you regularly use your credit card but don’t currently earn rewards, you’re basically giving up your chance to earn free money.

But each cash back rewards credit card has its own rules. Some offer higher cash back percentages for certain purchases and a lower percentage on everything else. Others offer a modest flat-rate cash back percentage on every purchase you make.

Five of our favorite cash back cards are featured below.

CASH BACK RATING

★★★★★
5.0

OVERALL RATING

5.0/5.0
  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening.
  • Earn unlimited 1.5% cash back on all purchases.
  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 16.74-25.49%.
  • 3% intro balance transfer fee when you transfer a balance during the first 60 days your account is open, with a minimum of $5
  • No annual fee
  • No minimum to redeem for cash back
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR on Purchases 15 months
0% Intro APR on Balance Transfers 15 months
16.74% - 25.49% Variable
$0
Good/Excellent
Discover it® Cash Back Review

at Discover Card'ssecure website

CASH BACK RATING

★★★★★
4.9

OVERALL RATING

5.0/5.0
  • INTRO OFFER: Discover will match ALL the cash back you've earned at the end of your first year, automatically. There's no signing up. And no limit to how much is matched.
  • Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com and more up to the quarterly maximum, each time you activate.
  • Plus, earn unlimited 1% cash back on all other purchases - automatically.
  • Redeem cash back any amount, any time. Rewards never expire.
  • Use your rewards at Amazon.com checkout.
  • Get an alert if we find your Social Security number on any of thousands of Dark Web sites.* Activate for free.
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 14 months
0% for 14 months
13.49% - 24.49% Variable
$0
Good/Excellent

CASH BACK RATING

★★★★★
4.8

OVERALL RATING

4.8/5.0
  • Earn a one-time $300 cash bonus after you spend $3000 on purchases within the first 3 months from account opening
  • Earn unlimited 4% cash back on dining and entertainment, 2% at grocery stores and 1% on all other purchases. Plus, earn 8% cash back on tickets at Vivid Seats through May 2020.
  • No rotating categories or sign-ups needed to earn cash rewards; plus cash back won't expire for the life of the account and there's no limit to how much you can earn
  • No foreign transaction fees
  • Capital One cardholders get access to premium experiences in dining, entertainment and more
  • $0 intro annual fee for the first year, $95 after that
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
N/A
N/A
16.24% - 25.24% (Variable)
$0 intro for first year; $95 after that
Excellent, Good

CASH BACK RATING

★★★★★
4.8

OVERALL RATING

4.8/5.0
  • Earn a one-time $150 cash bonus after you spend $500 on purchases within the first 3 months from account opening
  • Earn unlimited 3% cash back on dining and entertainment, 2% at grocery stores and 1% on all other purchases
  • No rotating categories or sign-ups needed to earn cash rewards; plus cash back won't expire for the life of the account and there's no limit to how much you can earn
  • 0% intro APR on purchases for 15 months; 15.74% - 25.74% variable APR after that
  • 0% intro APR on balance transfers for 15 months; 15.74% - 25.74% variable APR after that; 3% fee on the amounts transferred within the first 15 months
  • No foreign transaction fee
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% for 15 months
0% for 15 months
15.74% - 25.74% (Variable)
$0
Excellent, Good
Ink Business Cash℠ Credit Card Review

at the issuer'ssecure website

CASH BACK RATING

★★★★★
4.8

OVERALL RATING

4.6/5.0
  • Earn $500 bonus cash back after you spend $3,000 on purchases in the first 3 months from account opening
  • Earn 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable and phone services each account anniversary year
  • Earn 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year
  • Earn 1% cash back on all other card purchases with no limit to the amount you can earn
  • 0% introductory APR for 12 months on purchases
  • Employee cards at no additional cost
Intro (Purchases)
Intro (Transfers)
Regular APR
Annual Fee
Credit Needed
0% Intro APR on Purchases 12 months
N/A 12 months
14.99% - 20.99% Variable
$0
Good/Excellent

Whether you’re looking to save up for a big purchase or grow your savings, a good cash back credit card can add extra utility to the plastic in your wallet. But be cognizant of cards that charge an annual fee. The annual fee will negate some of the cash back earnings, so if you’re not a high spender, find a card that doesn’t charge an annual fee.

2. Use it On Qualifying Purchases

Many credit card gurus leverage their purchasing power to net big rewards from their everyday spending. While there are many intricacies involved in maximizing rewards from your spending, the first lesson in mastering your credit card rewards is to learn the different types of rewards offered and which purchases qualify to earn those rewards.

The easiest type of cash back card to understand and utilize is a flat-rate cash back card. These cards pay you an unlimited amount of cash back based on a set percentage — typically between 1% and 2% — of your total credit card purchases each month.

The next type of cash back card has what’s known as tiered rewards. These cards pick specific expenses — such as purchases made at gas stations, restaurants, and grocery stores — and offer elevated cash back earnings when you use your card to pay. You may earn between 3% and 5% cash back with these specific purchases and a smaller 1% on all other purchases.

The third type of cash back card changes the top-earning category every three months – known as rotating categories — while others may require you to choose your bonus category for that quarter. If you fail to choose or activate the bonus category, all your purchases revert to the smaller rewards amount. That’s why it’s important to stay on top of these cards so you can maximize your earnings.

Types of Cash Back Credit Cards

If keeping up with rotating rewards categories and signing into your account every three months to activate a new offer seems overwhelming or uninteresting, a flat-rate cash back card probably makes more sense.

Cash back cards usually allow you to redeem your rewards for statement credits that lower your balance, deposit cash directly into your bank account or mail you a check, but we’ll get more into the various redemption options below. As you progress, you can learn more about specialty credit cards that can reward you with travel deals, discounted gas, or free merchandise.

3. Redeem Your Cash Back

The next step in mastering the art of the cash back credit card is understanding how you’ll receive the cash back you earn. Not every card distributes your rewards the same way — and that may be a good thing.

Some cards only allow you to use your rewards as statement credits, meaning the cash back you accrue essentially eliminates part of the balance you owe. Other cards may send you quarterly checks to pay out your earned rewards. Some will deposit the funds directly into your linked checking or savings account, while others allow you to cash out your rewards for retail gift cards. And some may offer all of the above so you can choose the redemption method that suits your needs.

How to Maximize Credit Card Rewards

Depending on which method you choose, you could collect your cash back in a matter of minutes or days. Paper checks tend to take longer to arrive, whereas most banks process direct deposit transactions in one business day. Statement credits typically reflect on your available balance by the next day.

If you have a card that pays rewards points instead of a cash back percentage, you may still be able to redeem those points for cash back, among other rewards. Each credit card issuer sets the value of its points and may offer varying redemption values.

Clicking around in your issuer’s rewards portal can usually show you how the value of your rewards may fluctuate if you were to apply them to travel, cash back, merchandise, etc.

But, in the long run, some points cards offer more flexibility than cash back cards because they provide more redemption options, and sometimes offer increased values when you transfer them to an issuer’s partner loyalty program.

Additional FAQs About Cash Back Cards

We hear from lots of readers who want to up their credit card rewards game, but don’t feel completely confident in taking the next step. Below are a few common questions we’re often asked.

Do I Need a PIN to Get Cash Back on a Credit Card?

Absolutely not. Many credit cards on the market today don’t even require a PIN to use at your favorite brick-and-mortar store or online merchant.

Cash back rewards aren’t based on your PIN, but rather on the actual transaction that takes place. Most rewards credit cards pay back a percentage of your total purchase in the form of cash or statement credits.

So, for example, if you have a 1.5% flat-rate cash back card, and you make a $100 purchase using the card, you’ll receive $1.50 in cash back rewards. These rewards won’t change based on whether you used a PIN or swiped, inserted, or tapped the card to complete the transaction.

Which Stores Offer Cash Back on Credit Cards?

You’re not actually getting money from the merchant when you receive cash back rewards from your credit card purchases. Instead, your credit card issuer pays these rewards as a way of incentivizing you to use the card more often.

A credit card is essentially an on-demand loan. When you swipe your card to make a purchase, the issuing bank loans you the money by sending it directly to the merchant or service provider you’re doing business with.

The merchant receives the money from the bank, and you pay the bank back with your monthly payments. The bank — not the merchant — also pays out your cash back earnings.

Even though it may seem like the credit card issuer is simply giving away free money, banks still make a nice profit with these rewards programs. That’s because the cash back rewards are typically just a fraction of the money that many cardholders pay each month in interest payments.

Are Cash Back Cards Worth It?

Not only are cash back credit cards worth your time, but you could potentially make a profit from these cards if you use them properly. At the same time, these cards can cost you a lot if you aren’t responsible with your spending.

The average credit card interest rate today is around 17%. Meanwhile, the average cash back rate on most rewards credit cards falls between 1% and 2%.

Cash Back Earnings at 1% and 2%

If you don’t pay your balance in full each month, and eventually have to pay interest on your purchases, you’re going to quickly pay well more than you’ll earn through cash back. But, if you pay your balance in full, you can easily come out ahead on your everyday purchases.

And that’s not the only way you can use your cash back card to your advantage. You can invest your cash back returns or even sell your rewards points, among several other creative ways to put that money to work for you.

Cash Back is Free Money if You Avoid Interest Fees

There’s a reason why cash back credit cards are the most popular rewards cards on the market. Cash is still king, and getting some money back from every purchase you make is a great way to save a little money — or a lot of money if you’re a high spender.

Of course, this only works well if you use your card responsibly. Credit cards are a healthy part of your financial portfolio when used wisely. Just as you wouldn’t want to overdo your pizza, soda, and ice cream consumption, you don’t want to swipe or insert your credit card too often.

But if you stick to a budget and pay your balance on time every month, you can add your earned cash back rewards as a passive income stream to help pay bills, grow savings, or just have a little extra spending money.