how does cash back work on credit cards

Cash back is a rewards benefit that many credit cards offer to cardholders. By taking advantage of it, you'll receive back a prespecified. Cash back is the most flexible credit card reward, since you can use it for anything. However, this does not influence our evaluations. With a cashback credit card, every time you tap, swipe or pay using the card online or offline, a percentage of the amount you spend is paid.

How does cash back work on credit cards -

How Is Cashback Profitable for Credit Card Companies?

Credit card companies are in the business of making money, yet they often advertise incentives that feature rewards such as cash back on credit card purchases. Many consumers are inundated with online offers and mailers, promising great incentives, from zero to low introductory interest rates to one-time bonus rewards offers, to cash back deals whenever they use their cards. 

Nowadays, it isn't unusual to see banks offer what seem to be very generous cash back incentives to their cardholders, even after the introductory bonus period is over. For example, Chase offers up to 5% cash back on its Chase Freedom Rewards Card, as does the Discover Card. So how can these companies offer such seemingly lucrative deals for consumers and still make a profit?

Key Takeaways

  • Most cash rewards programs have an annual maximum limit, so while they may offer a generous 5% cash back reward, there may be an annual cap or maximum limit you can reach.
  • When merchants accept payment via credit card, they are required to pay a percentage of the transaction amount as a fee to the credit card company.
  • Additionally, credit card companies make money by charging high-interest rates on balances carried over month-to-month, and issuing late fees for payments missed or made after the stated due date.

Cash Rewards Programs: The Fine Print

First, it is important to read the fine print. Most cash rewards programs have an annual maximum limit, so while they may offer a generous 5% cash back reward, there may be an annual cap or maximum limit you can reach. Other cards only offer cash back for certain categories of purchases, such as at restaurants or gas stations.

Discover's cash back card is one of those that boasts a 5% reward on purchases. But, as of 2018, the cardholder agreement states that this offer only extends to specific categories allotted to different quarters of the year. And it comes with a limit of $1,500 in purchases per quarter. The disclosure also states that using a credit card with NFC technology or from a virtual wallet such as Google Wallet may not count toward the program.

Similarly, the Chase Freedom card also has spending restrictions and caps. Cardholders can earn 5% cash back rewards on spending in certain categories. Chase caps the spending limit each quarter at $1,500, just like Discover. Any other purchases during each quarter, and above the limit, earn 1%. 

With a credit card program with a $1,500 cash back limit per year at 5%, any spending over $30,000 would not contribute to accumulating any further cash back rewards.

Because most consumers do not take the time to read the fine print, they may open a credit card account under the impression that cash back rewards programs are much more generous and universal than they actually are.

It's Not Free Cash

When merchants accept payment via credit card, they are required to pay a percentage of the transaction amount as a fee to the credit card company. If the cardholder has a participating cash back rewards program, the credit card issuer simply shares some of the merchant fees with the consumer. The goal is to incentivize people to use their credit cards when making payments rather than cash or debit cards, which earns them no rewards. The more a consumer uses a credit card, the more merchant fees the credit card company can earn.

Additionally, credit card companies make money by charging high interest rates on balances that carry over month-to-month, and issuing late fees for payments missed or made after the stated due date. The more consumers use their credit cards, the more likely it becomes that they will miss a payment or carry a balance for which they will owe fees and interest.

According to the Federal Reserve, the average credit card interest rate is 16.61% as of Q1 2020. The Federal Reserve also reported almost $1.07 trillion in outstanding revolving credit by March 2020. Approximately 45% of credit cardholders carry a balance from month to month according to the latest Federal Reserve Survey of Consumer Finances. 

Credit cards that offer the most generous sounding rewards programs also often carry the highest fees and interest rates, compared to a similar card with a lower rewards program, or none at all. 

The Bottom Line

Cash back rewards sound enticing, and they can help certain consumers save a bit on credit card purchases. However, once the restrictions and qualifications are spelled out in the fine print, including any limitations on how much cash back credit card users can earn per year, these programs do not appear as generous as they may seem on the surface.

Because these programs are incentives for consumers to use their credit cards in lieu of cash or debit cards, they generate increased merchant fees for the credit card company and may also cause some consumers to increase their debt, providing yet another source of revenue for the credit card company.

In 2017, the Federal Reserve Bank of Boston reported that the average transaction amount with a non-cash transaction is nearly four times greater than with a cash transaction, greatly adding to the revenue coming from merchant fees. And since cash back credit cards carry the subtle psychological incentive of earning money while you spend, people tend to spend even more on them than non-rewards cards. So, rather than draining corporate profits, cash back rewards programs actually dramatically increase credit card companies' bottom lines.

Источник: https://www.investopedia.com/articles/personal-finance/040715/how-cashback-profitable-credit-card-companies.asp

If you are making the bulk of your everyday purchases on a credit card, it might be a good idea to have a cash back rewards card in your wallet.

But with so many options in the cash back credit card space, you may be having a hard time deciding which rewards program is right for you. Team Clark has set out to simplify the decision process for you by highlighting the best cash back cards for different spending circumstances.

Money expert Clark Howard believes having a cash back credit card at your disposal is preferable to some of the other rewards cards on the market because it gives you the flexibility to earn and spend on the things you care most about.

“My favorite reward cards are ones that actually pay you money. I want cash, because nobody can tell you when you can or can’t spend your cash,” Clark explained.


The Best Cash Back Credit Cards to Apply for Right Now

Table of Contents

Team Clark spent hours reviewing the market for these cards and put them under the scrutiny of the guidelines for usage set by money expert Clark Howard. We considered factors like annual fees, welcome bonuses, introductory APR and cash back bonus categories when assembling the list.

You can read more on our methodology for determining the best cash back cards here.


Best for Everyday Cash Back: Citi® Double Cash

Citi Double Cash is a popular cash back card because it offers unlimited 2%.

  • Annual Fee: $0
  • Cash Back Rewards: Up to 2% in unlimited cash back on all purchases (1% when you buy, 1% when you pay)
  • Features: Introductory 18-month period for 0% APR on purchases and balance transfers, no cash back limits and no categories
  • Team Clark’s Card Review:Citi Double Cash Review: Earn Up to 2% Cash Back on All Purchases

Why This Card Made Our List

The Citi Double Cash is one of Clark’s favorites because it’s so straightforward. You can earn 2% cash back on everything that you purchase with the card. You get 1% when you make the purchase and 1% when you make payments on the purchase. If you’re regularly paying off your credit card bill each month (as Clark suggests you do), that’s going to pile up pretty quickly.

You can use it on any purchase and receive the full benefit. There are no stipulations or caps to the cash back you can earn on this card. You also get an 18-month introductory period of 0% APR on purchases and balance transfers (transfer fees apply).

If you’re looking for an everyday spender with no annual fee and easy-to-access cash back, this card makes a lot of sense.

Other Cards to Consider in This Category

The PayPal Cashback Mastercard also offers 2% cash back on all purchases, making it another great choice as an everyday spender.

Both the Chase Freedom Unlimited® and the Quicksilver from Capital One offer 1.5% unlimited Cash Back without an annual fee. Both also feature a $200 welcome bonus opportunity.

If you’re not able to secure the Citi Double Cash for the full 2%, these two cards are very similar at a slightly lower rate of cash back. You also could check with a local or regional bank or credit union, as these institutions often offer straight cash back credit cards.


Best for High-Volume Cash Back: Alliant Visa Signature Card

Why This Card Made Our List

If you are willing to do your banking with this credit union, you may be able to get 2.5% cash back on your spending of up to $10,000 per month. There are no categorical restrictions to that spending.

The extra half of a percent really does add up. For example, if you spend $5,000 per month with this card, you’d receive $1,500 cash back annually — as opposed to $1,200 with a card like Citi Double Cash.

This card does require a credit union membership with Alliant and it also requires that you stay within their “Tier One” status to receive the top rewards, so you’ll want to check our review of the card to ensure your eligibility.

Other Cards to Consider in This Category

As mentioned above in the Everyday Cash Back category, the Citi Double Cash card is also a strong option in this category. Because it is without an annual fee and locks in a 2% cash back return, you really can’t go wrong with using this one as a high-volume option.


Best for Rotating Cash Back Bonuses: Discover it® Cash Back

The Discover it card has rotating 5% cash back category and a one-time cash back match.

  • Annual Fee: $0
  • Cash Back Rewards: Rotating 5% cash back on different categories and 1% on all other purchases
  • Features: Cash back match on first year’s purchases, 14-month introductory 0% APR on purchases and balance transfers
  • Team Clark’s Card Review:Discover it® Cash Back Review: Earn Rotating 5% in Top Categories

Why This Card Made Our List

The combination of an opportunity to earn 5% cash back on popular spending categories throughout the year and Discover’s promise to match your total cash back earnings after one year with the card is pretty great. For example, if you earn $300 in cash back during your first year of membership, Discover will make an additional $300 cash back deposit into your account at the end of the year.

The rotating 5% categories for 2021 — which cap at $1,500 in spending per three-month period — include bonus periods for grocery stores, gas stations, restaurants and online shopping with Amazon, Walmart and Target.

Other Cards to Consider in This Category

The Chase Freedom Flex card has many of the same characteristics as the Discover offering. It, too, has rotating 5% bonus periods and an introductory 0% APR period. Chase also offers a $200 welcome bonus when you spend at least $500 during your first three months of card membership. That may not be as large of a potential bonus as the Discover card, but you do get it sooner.


Best for U.S. Supermarkets and Streaming TV: Blue Cash Preferred® Card from American Express

Blue Cash Preferred offers an impressive 6% cash back on supermarkets and streaming.

Why This Card Made Our List

While the annual fee may cause some to pause, there is so much to like about everything else that goes along with this Blue Cash Preferred card. We ran a few different spending simulations in our review of this card, and if you’re a regular supermarket shopper, you’ll most likely find yourself coming out ahead using this instead of a fixed cash back card.

Additionally, if you have streaming subscriptions for services like YouTube TV, Netflix and Disney+, you can easily rack up 6% back each month by using this card for your direct auto-payments.

Other Cards to Consider in This Category

If you purchase your groceries from a superstore like Walmart or Target, those superstores each offer a credit card that has perks for purchases made with their respective businesses. Since the American Express card is limited to supermarkets only, you may find that you save more on your groceries by holding one of the brand-specific cards instead.


Best for Dining and Entertainment: Capital One Savor Rewards

Capital One Savor dining and entertainment credit card

Why This Card Made Our List

If you’re the type of person who enjoys your food and entertainment, you could pile up rewards pretty consistently with a 4% cash back offering in those categories with the Capital One Savor. The definition of dining includes fast, casual, and fancy restaurants alike, so you’ll be covered no matter your food preferences.

What’s considered entertainment also is wide enough that you can really rack up some cash back. Movie theaters, sporting events, concerts and things like trips to the amusement park and zoo all qualify for the 4% cash back.

Other Cards to Consider in This Category

If you’re not keen on the annual fee associated with the Savor card, you may instead prefer the Capital One SavorOne card. While this offering has a similar name, it actually has a different set of benefits that we outline in a comparison between the Savor and SavorOne cards.

SavorOne offers 3% Cash Back on dining and entertainment and a smaller Cash Back welcome bonus opportunity ($200), but it comes with no annual fee and a 15-month 0% APR introductory period for purchases and balance transfers (transfer fees apply).


Best for Gas and Travel: Costco Anywhere Visa® by Citi

Costco Anywhere offers great cash back on gas and perks for Costco members.

  • Annual Fee: $0
  • Cash Back Rewards: 4% cash back on eligible gas purchases, 3% restaurants and travel, 2% on Costco purchases and 1% on all other purchases
  • Features: Doubles as Costco membership ID, receive special Costco rewards and no foreign transaction fees
  • Team Clark’s Card Review:Costco Anywhere Visa by Citi

Why This Card Made Our List

Clark carries this card in his wallet and likes it because it has versatile cash back offerings, especially if you’re a Costco member. Not only are you able to get a solid 4% cash back on select gas purchases, but you can also do well on travel expenses and dining at the 3% level.

And if you’re a Costco member, the 2% cash back can add up quickly on purchases you make at the store.

Other Cards to Consider in This Category

Clark also carries the Sam’s Club Mastercard as one of the four credit cards in his wallet. It actually earns more cash back than the Costco card for gas at select stores (5% vs. 4%), so this card could be the move if you are only worried about paying for gas and don’t have a preference between the two warehouse stores.

Oddly enough, Sam’s Club purchases are only eligible for 1% cash back with this card. That leaves us giving a slight edge to the Costco card when it comes to picking between them.


Clark Howard’s Strategy for Credit Cards

Money expert Clark Howard believes it is important to have a credit card for the purposes of building and maintaining a solid credit history for when big life events like a home purchase or job application require a credit check.

He also believes that focusing on a rewards credit card — like a good cash back credit card — should only be a consideration for consumers who are planning to regularly pay off their balance to avoid interest charges. If that’s not your plan, Clark would point you to the credit card with the lowest possible interest rate or advise you to avoid a credit card altogether.

Assuming you’re here because you are in search of the maximum benefits from your cash back credit card decision, Clark wants you to think about how you spend your money and how it might best be complemented by the rewards programs from the various cards.

“Really think through your charge patterns and whether or not those rewards really give you a bang for your buck.”

Clark, for example, carries the Costco Anywhere Visa card in his wallet because he’s a frequent Costco shopper. He also likes the Citi Double Cash card because of the simplicity of the unlimited 2% cash back program.


Methodology for Cash Back Credit Cards

For the purposes of determining which cards are “best” in this category, we took input from money expert Clark Howard and sought to find cards that best fit his credit card strategy.

Team Clark spent many hours reviewing the available cash back credit cards on the market, assessing them for things like:

  • Annual fees
  • Welcome bonuses
  • Introductory APR periods
  • Spending categories for maximum cash back earnings
  • Additional fees (transaction or otherwise)
  • Perks offered to cardholders

We did not factor in non-introductory APR as a part of the evaluation, because interest rates are going to vary based on your individual financial circumstance. Clark recommends not carrying a balance on these cards. That should curb the concern over the interest rate.

We also did not include offerings from local or regional banks and credit unions due to availability concerns. Often, local institutions will have desirable cards, so we do recommend that you compare your local bank or credit union’s cash back credit cards to the ones that made this list.


Frequently Asked Questions: Cash Back Credit Cards

Should I Avoid an Annual Fee With My Cash Back Card?

In most cases, this will depend on your spending volume. For instance, the Citi Double Cash card offers 2% cash back with no annual fee, while the Alliant Signature Visa offers 2.5% with a $99 annual fee.

Based on those numbers, you’d need to spend at least $2,000 monthly to see an advantage from paying Alliant’s annual fee. Otherwise, you’d be better off with Citi’s no annual fee.

Are Rotating Cash Back Bonuses Better Than a Fixed Cash Back Rate?

The answer to this could vary greatly from one rotating bonus period to the next. Using the Discover it Cash Back card (rotating 5%) and the Citi Double Cash (fixed 2%) as an example, you’d need to make at least 25% of your purchases in the 5% bonus category with Discover to match the amount of overall cash back you’d earn with the Citi card at the same spending level.

For best results, you could utilize a rotating cash back card in its bonus category only and then make other purchases with a card with a higher fixed cash back rate.

What’s the Difference Between A Cash Back Card and a Points Card?

Typically, it has to do with the way the credit card company decides to reward you for your purchases.

With a cash back card, your reward is of monetary value that can be used for things like statement credits or purchases.

A points card often rewards purchases in certain categories and allows for the accumulation of a points balance. The balance can then be used to claim rewards like free hotel nights or flights. Like a cash back card, some points cards will allow you to use your balance for statement credits.

To see the rates and fees for the American Express cards featured, please visit the following links: Blue Cash Preferred® Card from American Express: See Rates and Fees


More Clark.com Stories You Might Like: 

How Many Credit Cards Should I Have?How Many Credit Cards Should I Have?-Are you worried that the number of credit cards you have could have a negative impact on your financial life? Is there a “right” number of credit cards for one person to have? The answer is a little more nuanced…
Источник: https://clark.com/credit-cards/best-cash-back-credit-cards/

You can get more out of your everyday purchases with the right cash-back credit card. Some cash-back credit cards offer flat-rate perks, like 1% to 2% cash back on all purchases, while others reward you at higher rates, between 2% and 6%, when you spend money on groceries, at gas stations or even with certain retailers.

When you earn cash back, your rewards usually show up as a statement credit that can be used to pay your bill or be deposited into your bank account. Every time you use your credit card on eligible purchases, you'll earn real dollars and cents back. It's that simple. Check out our picks of the best cash-back credit cards below. We update this list continuously to make sure you stay informed of the best opportunities available. 

Intro Bonus$200 online cash rewards bonus after you make at least $1,000 in purchases in the first 90 days of account opening

APR13.99% - 23.99% Variable APR on purchases and balance transfers

Recommended Credit Excellent/Good

Reward Rates
  • Earn 3% cash back in the category of your choice (up to $2,500 in combined choice category/grocery store/wholesale club quarterly purchases)
  • Earn automatic 2% at grocery stores and wholesale clubs (up to $2,500 in combined choice category/grocery store/wholesale club quarterly purchases)
  • Earn unlimited 1% on all other purchases.

Annual Fee$0

Intro Purchase APR0% Intro APR for 15 billing cycles for purchases

Intro Balance Transfer APR0% Intro APR for 15 billing cycles for any BTs made in the first 60 days. A 3% fee (min. $10) applies.

Balance Transfer Fee Either $10 or 3% of the amount of each transaction, whichever is greater.

Balance Transfer APR13.99% - 23.99% Variable APR on purchases and balance transfers

Late Payment Fee Up to $40

Foreign Transaction Fees 3%

Penalty APR up to 29.99% APR

  • Earn 3% cash back in the category of your choice (up to $2,500 in combined choice category/grocery store/wholesale club quarterly purchases)
  • Earn automatic 2% at grocery stores and wholesale clubs (up to $2,500 in combined choice category/grocery store/wholesale club quarterly purchases)
  • Earn unlimited 1% on all other purchases.

Our Take

Most cards that offer category selection for maximized cash rewards limit these selections to a single quarter. But the Bank of America Customized Cash Rewards credit card* allows you to select "online shopping" as an indefinite rewards category where you can earn 3% cash back rewards. Note that you must manually choose this category via online banking or the mobile banking app, as the default category is "gas." 

You can also earn 2% cash back at grocery stores and wholesale clubs (earn 3% and 2% cash back on up to $2,500 in combined choice category/grocery store/wholesale club purchases each quarter, then 1%), and 1% cash back on all other purchases. The welcome bonus doesn't hurt, either.

Intro Bonus$200 Bonus after you spend $500 on purchases in your first 3 months from account opening.

APR14.99% - 24.74% Variable

Recommended Credit Excellent/Good

Reward Rates
  • 5% cash back on grocery store purchases (not including Target® or Walmart® purchases) on up to $12,000 spent in the first year.
  • 5% on travel purchased through Chase Ultimate Rewards®.
  • 3% cash back on dining at restaurants, including takeout and eligible delivery services and on drugstore purchases.
  • Unlimited 1.5% cash back on all other purchases.

Annual Fee$0

Intro Purchase APR0% Intro APR on Purchases for 15 months

Balance Transfer Fee Either $5 or 5% of the amount of each transfer, whichever is greater.

Balance Transfer APR14.99% - 24.74% Variable

Foreign Transaction Fees 3% of each transaction in U.S. dollars

Penalty APR Up to 29.99%

  • 5% cash back on grocery store purchases (not including Target® or Walmart® purchases) on up to $12,000 spent in the first year.
  • 5% on travel purchased through Chase Ultimate Rewards®.
  • 3% cash back on dining at restaurants, including takeout and eligible delivery services and on drugstore purchases.
  • Unlimited 1.5% cash back on all other purchases.

Our Take

While there are a few contenders for the best grocery credit card, the Chase Freedom Unlimited offers a grocery deal that's hard to beat. Not only does it offer one of the highest cash-back rates for grocery store purchases at 5% (not including Target or Walmart purchases), but it has one of the highest spending caps for this category as well, at $12,000 on these purchases for the first year. So you can earn up to $600 cash back in the first year, just on groceries -- that's without mentioning the other cash back rewards categories this card offers.

Intro BonusEarn a $300 statement credit after you spend $3,000 in purchases on your new Card within the first 6 months.

APR13.99%-23.99% Variable

Recommended Credit Excellent,Good

Reward Rates
  • 6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%)
  • 6% Cash Back on select U.S. streaming subscriptions
  • 3% Cash Back on transit including taxis/rideshare, parking, tolls, trains, buses and more
  • 3% Cash Back at U.S. gas stations
  • 1% Cash Back on other purchases

Annual Fee$0 introductory annual fee for the first year, then $95.

Intro Purchase APR0% on purchases for 12 months

Balance Transfer Fee N/A

Late Payment Fee Up to $40

Foreign Transaction Fees 2.7% of each transaction after conversion to US dollars.

Penalty APR 29.99% Variable

  • 6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%)
  • 6% Cash Back on select U.S. streaming subscriptions
  • 3% Cash Back on transit including taxis/rideshare, parking, tolls, trains, buses and more
  • 3% Cash Back at U.S. gas stations
  • 1% Cash Back on other purchases

Our Take

Terms apply to American Express benefits and offers. Enrollment may be required for select American Express benefits and offers. Visit americanexpress.com to learn more.

While there are a lot of other quality gas cards available, the Blue Cash Preferred Card from American Express boasts simplicity with straightforward cash-back rewards and no annual fee for the first year ($95 annually after that). With 3% cash back at US gas stations, it gets one of the highest returns on the market for gas purchases. 

Even for city dwellers and commuters, this card offers great transportation benefits with 3% cash back on transit (trains, buses, parking, rideshare services, taxis, tolls and more). There are plenty more cash-back categories to enjoy with this card, as well. Cash back is received in the form of Rewards Dollars that can be redeemed for a statement credit.

Intro Bonus$300 after you spend $3000 on purchases within 3 months from account opening

APR15.99% - 23.99% (Variable)

Recommended Credit Excellent, Good

Reward Rates
  • Earn unlimited 4% cash back on dining, entertainment and popular streaming services
  • Earn 3% at grocery stores
  • Earn 1% on all other purchases

Annual Fee$95

Intro Purchase APRN/A

Intro Balance Transfer APRN/A

Balance Transfer Fee None for balances transferred at the Transfer APR.

Balance Transfer APR15.99% - 23.99% (Variable)

Late Payment Fee Up to $40

Foreign Transaction Fees None

Penalty APR None

  • Earn unlimited 4% cash back on dining, entertainment and popular streaming services
  • Earn 3% at grocery stores
  • Earn 1% on all other purchases

Our Take

With the Capital One Savor Cash Rewards Credit Card*, you can earn an unlimited 4% cash back on dining and takeout. The $300 welcome bonus (when you spend at least $3,000 within the first 3 months of account opening) can essentially cover your annual fee ($95) for the first three years.

You can even earn more cash-back rewards when you make purchases on entertainment (4%), popular streaming services (4%) and grocery stores (3%). For everything else, a 1% cash-back rate covers you. If you want to avoid the annual fee, or don't have a very large dining and entertainment budget, you may also want to consider this card's sibling, the Capital One SavorOne Cash Rewards Credit Card*, or some of our other best picks for restaurant credit cards.

Intro BonusNew! Earn a $200 cash rewards bonus after spending $1,000 in purchases in the first 3 months

APR14.99%-24.99% (Variable)

Recommended Credit Excellent, Good

Reward Rates
  • Earn unlimited 2% cash rewards on purchases

Annual Fee$0

Intro Purchase APR0% intro APR for 15 months from account opening

Intro Balance Transfer APR0% intro APR for 15 months from account opening on qualifying balance transfers

Balance Transfer Fee up to 5%; min: $5

Balance Transfer APR14.99%-24.99% (Variable)

Foreign Transaction Fees 3%

Penalty APR None

  • Earn unlimited 2% cash rewards on purchases

Our Take

It doesn't get simpler than the Wells Fargo Active Cash Card*. This card boasts a 2% flat cash rewards rate on purchases -- the highest flat cash-back rate on the market. You don't have to worry which card you're going to use for which purchase. And while there are other cash-back credit cards that'll net you 2%, the sign-on bonus, $0 annual fee and introductory APR make this card stand out among the competition. This is also a great option for an emergency credit card.

FAQs

How do cash-back credit cards work?

Cash-back credit cards offer cardholders rewards on their spending in the form of statement credits or cash. A statement credit is a reduction in the amount due to the credit card company on your monthly bill. Note that rewards are not always available the month you earn them -- they are usually applied to your balance by credit card issuers after one or two billing cycles.

The redemption process for cash-back credit cards is either automatic or very simple. Some cards automatically apply cash rewards to your statement balance each month. Others require you to log in and redeem available rewards points for statement credits. Most points don't expire, but you will lose them if you close the account before redeeming them. 

What types of cash-back credit cards are there?

Cash-back credit cards generally fall into four primary categories: flat-rate, tiered, rotating or choose your own. 

Flat-rate cards offer the same rate for every purchase. Tiered cards offer a different rewards rate for different categories of spending. Rotating category cards offer different rewards each quarter, determined by the card issuer. Choose-your-own category cards allow you to choose your rewards category.

How do you choose a cash-back credit card?

To choose the best cash-back credit card for you, the most important thing is to have a clear idea of how you're already spending money each month. Once you identify the categories where you have the highest, most consistent spending, use the charts in our list to determine which card will net you the highest return. Consider other features of the cards, too, such as APR, sign-on bonuses and foreign transaction fees -- make sure you get something that fits with your lifestyle and spending habits.

Your credit card choice may also be affected by your credit score. Most of the cards we recommend require a good or excellent credit score, which is typically around 670 or higher. If you don't meet the credit criteria required, there are credit cards available that are specifically for those trying to rebuild credit, like secured credit cards. Alternatively, you can look into the best credit cards for no credit and the best credit cards for bad credit.

How we picked the best cash-back credit cards

We prioritized the cash-back credit cards that reward broad spending categories where Americans tend to spend significant amounts of money, instead of narrow categories like streaming services or "home improvement." Then we compared reward offerings with potential returns based on typical spending budgets derived from Bureau of Labor Statistics data. 

In the end, we chose five high-value options from the crowded market. Some are no-annual-fee, flat-rate credit cards that earn the same amount on all purchases. Some require you make a certain qualifying purchase to start earning cash-back rewards. Some credit cards offer a sign-up bonus reward as well as cash back. Some are limited to specific spending categories (such as whether it's a grocery purchase, gas purchase, dining, transit or travel) but have a higher rewards rate, while others charge an annual fee. We then outlined important information for each card, including whether it has a transfer fee, bonus redemption thresholds or introductory APR. We also specified general credit requirements for eligibility (if you find you aren't eligible for a card that offers cash-back rewards, try a student credit card first). 

For rates and fees of the Blue Cash Preferred Card from American Express, click here.

*All information about the Bank of America Customized Cash Rewards credit card, Wells Fargo Active Cash Card, Capital One Savor Cash Rewards Credit Card and the Capital One SavorOne Cash Rewards Credit Card has been collected independently by CNET and has not been reviewed by the issuer.

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The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.

The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.

Источник: https://www.cnet.com/personal-finance/credit-cards/best-cash-back-credit-cards/

Cash back credit cards that do things other cards don’t do.

1. View pricing and terms for Sallie Mae Ignite. 
2. View pricing and terms for Sallie Mae Accelerate.
3. View pricing and terms for Sallie Mae Evolve.
4. You'll earn $50 in bonus rewards for the Sallie Mae Ignite card after you've spent $250 (net) on eligible purchases in the first three months after you open the account.  The following do not qualify as eligible purchases, do not earn cash back and do not count as part of the net spend requirement for the bonus reward: cash advances (including cash-like transactions), balance transfers, convenience check amounts, purchases that we believe have been made by or for a business, commercial or investment purpose, account fees, interest charges, and unauthorized or fraudulent transactions. Bonus rewards will be applied to your rewards balance within one or two billing periods after you spend the required amount. Your account must be open and up-to-date at time of fulfillment to earn rewards. This promotion is not valid in combination with any other promotion or offer.  See Cardmember Agreement and Rewards Terms and Conditions for full details.
5. The 25% bonus on base cash back rewards will be calculated on the base cash back rate of 1%.
6. Requires mobile app to redeem and a checking/savings account to receive direct deposit.
7. You'll earn $200 in bonus rewards for the Sallie Mae Accelerate and Evolve cards after you've spent $1,000 (net) on eligible purchases in the first three months after you open the account.  The following do not qualify as eligible purchases, do not earn cash back and do not count as part of the net spend requirement for the bonus reward: cash advances (including cash-like transactions), balance transfers, convenience check amounts, purchases that we believe have been made by or for a business, commercial or investment purpose, account fees, interest charges, and unauthorized or fraudulent transactions. Bonus rewards will be applied to your rewards balance within one or two billing periods after you spend the required amount. Your account must be open and up-to-date at time of fulfillment to earn rewards. This promotion is not valid in combination with any other promotion or offer.  See Cardmember Agreement and Rewards Terms and Conditions for full details.
8. Base cash back is earned at a rate of 1.5%. Accelerate cardmembers will earn a 33 1/3% bonus on rewards redeemed to help pay down a student loan (Bonus Rewards) which gives you a total cash back value of 2% on the amount redeemed. For example, if you redeem $100 in Rewards to pay a student loan, you will earn an additional $33.33 in Bonus Rewards, which will be included as part of the student loan payment, resulting in a total payment of $133.33 toward your student loan. Bonus Rewards only apply on reward amounts redeemed to help pay down a student loan. The reward redemption amount may not satisfy the loan payments due to your lender and you are responsible for meeting the specific payment terms of your loan.
9. Base cash back is earned at a rate of 1.5%. Evolve cardmembers will earn a 33 1/3% bonus on the two highest-spending eligible categories which gives you a total cash back value of 2% on those categories. Click here to learn more about the eligible categories. For example, if you earn $10 in rewards in dining and grocery in one billing cycle, we will award you with an additional $3.33 in rewards.
10. To access these features and benefits you must download the Sallie Mae credit card app.
11. You may initiate a dispute through the mobile app within the transaction details or by contacting us in writing at Sallie Mae, PO Box 1230, Menlo Park, CA 94026.
12. Cell phone protection is provided by Mastercard under a group insurance policy issued by New Hampshire Insurance Company, an AIG company. Policy provides secondary coverage only. The $600 benefit amount applies to each claim and is subject to a $50 co-pay per claim. Protection applies to up to 3 phones, the primary line and up to the first two secondary lines on the covered phone bill. $1,000 maximum claim benefit per 12 months. Refer to your Guide to Benefits for additional information as terms and exclusions may apply.
The Sallie Mae Ignite, Sallie Mae Accelerate, and Sallie Mae Evolve credit cards are issued by Sallie Mae Bank pursuant to a license by Mastercard International Incorporated. Mastercard and World Mastercard are registered trademarks, and the circles design is a trademark of Mastercard International Incorporated.
SALLIE MAE RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS, SERVICES, AND BENEFITS AT ANY TIME WITHOUT NOTICE. CHECK SALLIEMAE.COM FOR THE MOST UP-TO-DATE PRODUCT INFORMATION.

Источник: https://www.salliemae.com/credit-cards/

Cash Back Visa®

1.5% Unlimited Cash Back and Pay No Annual Fee

Cash Back Visa Benefits

  • No annual fee
  • Unlimited 1.5% Cash Back
  • Earn a $300 cash back bonus after you spend $3,000 on purchases in the first three months of account opening**
  • No balance transfer fees
  • No cash advance fees
  • No foreign transaction fees and other travel abroad perks
  • Variable rates as low as 10.99% APR*

Frequently Asked Questions

Cash Back Visa

New to BECU? You'll first need to apply for BECU Credit Union membership, and then you can apply for your credit card through your online banking account.

Current BECU member? Simply log in to Online Banking and select Apply for Credit Cards & Loans from tabbed options. If you are looking for a Business credit card, see our Business Credit Cards page for more information.

Members can log in to Online Banking and select Check Loan Status from the tabbed options.

BECU offers a low-rate, traditional Visa credit card and a Cash Back Visa rewards credit card that offers 1.5% cash back on every purchase. BECU also offers affinity card options. To see the full list of credit card products, visit our Credit Card page.

Once your application is approved and all required documents have been obtained, your credit card will arrive in the mail within 5-7 business days. You will receive a PIN in a separate mailing within 7-10 business days.

Compare BECU Credit Cards

No matter which card you choose, all BECU cards offer great benefits that are designed to directly benefit you, the member, not our bottom line.

Cash Back Visa

  • Unlimited 1.5% cash back
  • 10.99% - 21.99% APR
  • No annual or cash back advance fee
  • Earn a $300 cash back bonus after you spend $3,000 on purchases in the first three months of account opening**

  • Choose from 4 card design options
BECU Visa
7.99%-19.99% Variable Rate tied to Prime
BECU Cash Back Visa
10.99%-21.99% Variable Rate tied to Prime
1.5% Cash Back***Latin small letter A
New Cardholders

Introductory 0% APR for 12 months on Purchases and Balance Transfers****

Earn a $300 cash back bonus after you spend $3,000 on purchases in the first three months of account opening**

Already have our BECU Visa but interested in switching to cash back? Members don't need to reapply – just give us a call at 800-233-2328, send us a secure message in Online Banking, or stop by a Neighborhood Financial Center.

Additional Cash Back Visa Benefits

You don't just get cash back with this Visa, but you get more benefits, too.

Check out the list below for perks that are in addition to our traditional Visa:

Set up Monthly Recurring Payments

There are two ways to automatically pay your Visa® credit card every month from a BECU account:

  1. Fill out a Loan Modification Request form  and return it to a location near you, or
  2. Use DocuSign to electronically request monthly recurring payments

Automatic Visa payments can only be set up from a BECU checking, money market, or savings account.****

Call 800-233-2328 for additional assistance.

Balance Transfer

Transfer a high-interest debt to your BECU Visa card with just a few clicks in Online Banking.

Transfer a Balance

Loan Payment Protection Program

The Loan payment protection program (LPP) provides financial assistance during times of hardship. LPP is an optional benefit offered through BECU.

  • Provides minimum monthly credit card payments in case of involuntary job loss, disability or loss of life
  • Monthly program cost is based on loan balance and package options

To apply, call us at 800-233-2328 and ask about getting LPP added to your loan. View the Credit Card Loan Payment Protection Contract.

Источник: https://www.becu.org/everyday-banking/credit-card/cash-back-visa

Thematic video

How Do Cash Back Credit Cards Work? - Credit Intel by American Express

Cash back credit cards that do things other cards don’t do.

1. View pricing and terms for Sallie Mae Ignite. 
2. View pricing and terms for Sallie Mae Accelerate.
3. View pricing and terms for Sallie Mae Evolve.
4. You'll earn $50 in bonus rewards for the Sallie Mae Ignite card after you've spent $250 (net) on eligible purchases in the first three months after you open the account.  The following do not qualify as eligible purchases, do not earn cash back and do not count as part of the net spend requirement for the bonus reward: cash advances (including cash-like transactions), balance transfers, convenience check amounts, purchases that we believe have been made by or for a business, commercial or investment purpose, account fees, interest charges, and unauthorized or fraudulent transactions. Bonus rewards will be applied to your rewards balance within one or two billing periods after you spend the required amount. Your account must be open and up-to-date at time of fulfillment to earn rewards. This promotion is not valid in combination with any other promotion or offer.  See Cardmember Agreement and Rewards Terms and Conditions for full details.
5. The 25% bonus on base cash back rewards will be calculated on the base cash back rate of 1%.
6. Requires mobile app to redeem and a checking/savings account to receive direct deposit.
7. You'll earn $200 in bonus rewards for the Sallie Mae Accelerate and Evolve cards after you've spent $1,000 (net) on eligible purchases in the first three months after you open the account.  The following do not qualify as eligible purchases, do not earn cash back and do not count as part of the net spend requirement for the bonus reward: cash advances (including cash-like transactions), balance transfers, convenience check amounts, purchases that we believe have been made by or for a business, commercial or investment purpose, account fees, interest charges, and unauthorized or fraudulent transactions. Bonus rewards will be applied to your rewards balance within one or two billing periods after you spend the required amount. Your account must be open and up-to-date at time of fulfillment to earn rewards. This promotion is not valid in combination with any other promotion or offer.  See Cardmember Agreement and Rewards Terms and Conditions for full details.
8. Base cash back is earned at a rate of 1.5%. Accelerate cardmembers will earn a 33 1/3% bonus on rewards redeemed to help pay down a student loan (Bonus Rewards) which gives you a total cash back value of 2% on the amount redeemed. For example, if you redeem $100 in Rewards to pay a student loan, you will earn an additional $33.33 in Bonus Rewards, which will be included as part of the student loan payment, resulting in a total payment of $133.33 toward your student loan. Bonus Rewards only apply on reward amounts redeemed to help pay down a student loan. The reward redemption amount may not satisfy the loan payments due to your lender and you are responsible for meeting the specific payment terms of your loan.
9. Base cash back is earned at a rate of 1.5%. Evolve cardmembers will earn a 33 1/3% bonus on the two highest-spending eligible categories which gives you a total cash back value of 2% on those categories. Click here to learn more about the eligible categories. For example, if you earn $10 in rewards in dining and grocery in one billing cycle, we will award you with an additional $3.33 in rewards.
10. To access these features and benefits you must download the Sallie Mae credit card app.
11. You may initiate a dispute through the mobile app within the transaction details or by contacting us in writing at Sallie Mae, PO Box 1230, Menlo Park, CA 94026.
12. Cell phone protection is provided by Mastercard under a group insurance policy issued by New Hampshire Insurance Company, an AIG company. Policy provides secondary coverage only. The $600 benefit amount applies to each claim and is subject to a $50 co-pay per claim. Protection applies to up to 3 phones, the primary line and up to the first two secondary lines on the covered phone bill. $1,000 maximum claim benefit per 12 months. Refer to your Guide to Benefits for additional information as terms and exclusions may apply.
The Sallie Mae Ignite, Sallie Mae Accelerate, and Sallie Mae Evolve credit cards are issued by Sallie Mae Bank pursuant to a license by Mastercard International Incorporated. Mastercard and World Mastercard are registered trademarks, and the circles design is a trademark of Mastercard International Incorporated.
SALLIE MAE RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS, SERVICES, AND BENEFITS AT ANY TIME WITHOUT NOTICE. CHECK SALLIEMAE.COM FOR THE MOST UP-TO-DATE PRODUCT INFORMATION.

Источник: https://www.salliemae.com/credit-cards/

There is an entire ecosystem dedicated to gaming the credit card rewards system — the Points Guy, who has made himself a household name, and a web of websites and influencers who teach all sorts of tricks and hacks. What people might not realize is that the system is already gamed, just not in the way they think: Credit card perks reward rich Americans to the detriment of the poor. The $200 in cash back you got using your fancy new rewards card often comes at the expense of someone who can’t afford it.

The US financial system is racked with inequities. Sometimes, they’re obvious: who can and can’t get approved for a loan, who has a bank account and who doesn’t. But other times, they can fly under the radar.

Many people who use rewards cards have some idea that those rewards are coming from somewhere. But they likely imagine it’s the bank, not their fellow consumers and businesses, picking up the tab.

Every time a credit card is swiped, the bank charges a fee. It seems trivial, but those fees add up — enough to help pay for rewards like points-funded hotel rooms and cash back. To compensate, businesses raise prices, and so cash users (who tend to be poorer) are often subsidizing the perks going to credit card users (who tend to be richer). And the higher the rewards, the bigger the cost to the unsuspecting people paying for it.

“The American payment system has evolved into a reverse Robin Hood whereby middle-class and working-class Americans who pay with a debit card, prepaid card, or cash are subsidizing the wealthy, who pay less for everything,” said Aaron Klein, a senior fellow in economic studies at the Brookings Institution who has studied and written about this issue extensively.

The catch on credit card rewards and points is that for the richest consumers, there might not be one. Instead, the catch is for everyone else.

When you pay with a rewards card at the bodega, the guy paying in cash behind you is picking up the tab

Credit card issuers — think American Express, Chase, and Citi — make money in three main ways: fees, like annual ones to have the card or penalties on late payments; interest on unpaid credit card bills; and interchange fees, meaning the amount they charge every time you swipe plus a small fixed fee. Generally, issuers charge about 1 to 3 percent of the total transaction amount. These swipe fees can be big moneymakers for some companies: American Express clocked $24 billion in them in 2018 alone.

“The interchange is a steady, almost annuity kind of revenue stream,” said Ted Rossman, senior industry analyst at Bankrate and CreditCards.com. He estimates swipe fees currently average about 2.3 percent, and the more elaborate the rewards card, the higher the fees. “Merchants hate paying interchange fees, but if you don’t accept credit cards, you’re turning off a huge part of your audience.”

Part of the money that banks get from interchange fees goes back to their customers in the form of rewards. In 2018, American Express spent about $10 billion on rewards.

About seven in 10 Americans have at least one credit card, and many people have multiple credit cards. The vast majority of credit card spending takes place on rewards credit cards, and over the years, rewards have become more elaborate as companies try to compete — more cash back, more perks, more miles and hotel rooms. “In some ways, the last few years have been the golden age of credit card rewards,” Rossman said.

With more credit cards and more rewards come more swipe fees. And merchants don’t want to pay those fees out of their own pockets — so they pass some of them on in prices that everybody pays, not just the credit card holders. People paying with cash or debit cards wind up footing the bill to pay for the rewards of people who pay with credit cards — people who tend to be more well-off.

“You have this phenomenon at the point of sale, which is consumers who use credit cards — and rewards cards more specifically — tend to be cross-subsidized by consumers who use cash or debit cards,” said Joanna Stavins, senior economist and policy adviser at the Federal Reserve Bank of Boston, who has studied the issue extensively. “It’s specific to what you pull out of your wallet. It just so happens that payment instrument use is correlated with income pretty strongly, so higher-income consumers are more likely to hold a credit card in their wallet.”

Stavins is the co-author of a recent paper from the Boston Fed that looked at who winds up paying for credit card reward purchases. They found that in the US, high-income consumers pay an average of $13 less per month through retail prices, and low-income people pay 60 cents more, because of swipe fees on merchants. Rich consumers spend more overall on fees, but it’s because they spend more in general. When it comes to a percentage of transaction values, it’s poorer people who lose out.

“So let’s say I spend $1,000 on my purchases and you spend $100. I may spend more in terms of all the different fees and surcharges and cost of credit card transactions that merchants will transfer to higher retail prices. But in terms of the percentage, I’ll pay a lot smaller fraction than you are,” Stavins said.

Planet Money has a short TikTok video of how this all works.

A 2010 paper, of which Stavins was also a co-author, found that in this wealth transfer system, households that use cash pay about $149 on average to households that use credit cards, and each of the credit card households gets $1,133 from cash users how does cash back work on credit cards year. And, again, because lower-income people are likelier to pay in cash than high-income people, that means the poor are losing out at the hands of the rich.

To be sure, not all rewards card holders are alike. To really reap the benefits of rewards, Rossman emphasized, people shouldn’t carry a balance on their credit cards from month to month. Otherwise, the interest they’re charged could very well wipe out the benefits. “Some people say that if you’re using cash, you’re losing cash, and it’s a missed opportunity. But it’s only a missed opportunity if you can pay in full,” Rossman said.

According to CreditCard.com’s data, more than half of people with credit card debt have had it for a year, more than a third for two years, and more than one in 10 for five years. “It’s easy to get into debt and hard to get out of it,” he said.

How else the system’s stacked, and how to maybe try to fix it

The US economy is stacked in favor of the wealthy and corporations in all sorts of ways, including the stock market and taxes. And the same goes for rewards cards.

Credit card rewards aren’t generally taxed like regular income, so to a certain extent, they’re even a bigger benefit than they appear on paper. In a 2019 piece for NBC News, Klein offered up a concrete example: Say a family spends $80,000 a year on a credit card and gets 1.5 percent cash back, translating to $1,200. By his estimate, that’s equivalent to about $2,000 in pre-tax earnings.

“Rich people get a large subsidy on everything they buy,” Klein told Vox. “The fact that they’re tax-free is a big deal also, because wealthier people pay higher income taxes, so the tax-free advantage is higher the richer you are.”

In other words, the more you spend, the better the rewards, and the better the tax break.

Klein also said that interchange fees that go up with rewards cards can disproportionately impact small businesses compared to large corporations, many of which are often able to negotiate lower fees or strike deals with big credit card companies. According to the Wall Street Journal, Walmart, Costco, and Amazon have all been able to leverage their size and reach to bring down their fees. “Not all businesses pay the same swipe fee, and many larger companies negotiate,” he said.

Businesses do have some options to try to lessen the blow of swipe fees — and therefore the price hikes they pass on to consumers — but they don’t always use them. Merchants can put a surcharge on purchases made with a credit card, though outside of gas stations, the practice is quite rare. They’re afraid of alienating customers, and training cashiers to make the calculations can be difficult. Alternatively, they can offer discounts to people who pay in cash.

Consumers are much more amenable to discounts than they are surcharges, Stavins noted. She also thinks merchants just being more transparent about the fee they’re paying with a credit card transaction could make a difference, even just a sign telling customers, “Hey, if you pay with a card, it costs me money.” They don’t prevent credit card use, but they try to discourage it.

Of course, not all businesses accept all credit cards, or accept credit cards at all. American Express has the reputation of having high transaction fees that many merchants avoid. And the nice rewards cards often have higher swipe fees than more basic cards issued by the same company. But once a merchant says that they’re going to accept one brand of credit card, whether it’s AmEx or MasterCard or Visa, they can’t really discriminate among the cards under those brands. In 2018, the Supreme Court decided that credit card issuers were allowed to bar businesses from offering consumers incentives to pay with less expensive credit cards. Essentially, if a retailer accepts one type of AmEx, it’s going to accept all of them.

Klein says he thinks if merchants were more easily able to discern which rewards cards to take and which to avoid, some of the poor-to-rich transfer problem could be solved. “A reasonable way for the market to help solve this problem is for the merchants to be able to say, ‘I’m not going to take the Sapphire, the swipe fee is too high,’” he said. “The economist in me is like, the market can correct this to some degree.”

The published fee for a Visa Signature Preferred card on a restaurant charge, for example, is 2.7 percent.

Another potential policy fix would be to lower interchange fees, which the Durbin Amendment, part of the 2010 Dodd-Frank bill, did for debit card transactions. If swipe fees for credit cards were capped, rewards would almost certainly diminish, too. But so would the regressive nature of credit card spending.

A lot of America’s financial setup is like this

Lack of access to basic financial products and services can impact people’s lives in myriad ways, many of which are invisible. The guy paying in cash at the local hardware store probably doesn’t realize the $20 purchase he’s making is partially subsidizing the next vacation of the guy who paid with a rewards card before him.

There are all sorts of places where it’s more expensive to have less access to financial services. During the pandemic, people without bank accounts often wound up being charged to cash their stimulus checks, losing out on money they were entitled to.

For many people without credit cards, the problem isn’t that they don’t want one, it’s that they can’t get one because their credit score is too low or they don’t have enough of a credit history to get approved. It’s harder for the unbanked to build up savings, get traditional loans, or pay basic bills. And so they wind up losing money — they turn to expensive payday lenders that charge exorbitant interest rates and risk getting pulled into debt traps or resort to financial products that charge them more specifically because they have less. Rich people reap most of the benefits of the stock market’s rise, a rise that’s fueled by the productivity of workers.

To put it plainly, it’s expensive to be poor in America. And when it comes to rewards cards, it’s expensive to the benefit of the rich.

“The rewards keep getting bigger, the competition to offer large rewards generates larger swipe fees, and that generates greater income inequality,” Klein said. “Unless somebody makes a substantial change, this is going to keep going in the same direction and getting worse at a time in which income inequality and historical inequalities are some of the great challenges facing our country. We have a system hiding in plain sight offering richer people ‘free money’ paid for by those who ‘don’t qualify.’”

Источник: https://www.vox.com/the-goods/22454885/who-pays-for-credit-card-rewards

The Best Cash Back Credit Cards of 2021

The best cash back credit cards offer simple, flexible rewards to match your spending habits. Cash back rewards come in the form of something everyone loves — cash. These cards often come with other benefits and redemption options, but their primary purpose is to provide cash back rewards on all of your card purchases.

You may earn more cash back for certain types of spending like travel, dining, or at the fuel pump. Some cards feature rotating spending categories that you choose each quarter. Other cards offer one rewards rate for all purchases across the board.

To help you find the best card for you, MoneyGeek has researched over 106 credit cards to find the best cash back offers for the month. Keep reading to see our top picks, learn more about cash back credit cards, check out handy card comparison charts and find answers to common questions about cash back cards.

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READY TO GET STARTED?

Use the links below to find the information you’re looking for quicker:

"Nearly all consumers can benefit from a cash back credit card. Saving money on your day-to-day purchases is universal. However, if you enjoy traveling, consider that those same purchases could earn you more valuable rewards on a travel rewards credit card." -- Brett Holzhauer, personal finance writer for MoneyGeek and other publications.

MoneyGeek’s Take: Cash Back Cards You Can't Go Wrong With in 2021

At MoneyGeek, we’ve chosen the best cash back credit cards for you based on extensive research, not what is best for us. Our team compared 106 credit cards and consulted industry experts to find the absolute best cards for our readers. Our mission is to help you make the most informed credit card choice so you can maximize your rewards earning and gain access to credit card benefits and perks that make sense for you.

1

Best cash back cards for businesses

  • Chase Ink Business Cash Credit Card: If you charge $7,500 in purchases within the first three months, you’ll receive a $750 bonus.

2

Best cash back cards for students

  • Deserve EDU Mastercard for Students: This card earns cash back rewards on all purchases without the demanding credit history requirements of other cards.

3

Best cash back cards for someone looking to improve their credit

  • Credit One Bank Platinum Visa: The Platinum Visa helps you build or repair credit while still earning cash back rewards on purchases.
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MONEYGEEK QUICK TIP

Cash back credit cards are a great way to ‘be rewarded’ on every day spending, but they are not the only cards to do so. Depending on your or your business’s travel habits, a co-branded airline or hotel credit card or general travel rewards card may earn you more in the long run. Note: These links will open in a new window to our partner site, CardRatings.com.

Best Cash Back Card Offers for November 2021

Not all cash back credit cards are created the same. Some are designed specifically for individuals or groups with varying needs. We’ve broken our list of the best cash back credit cards into categories to help you identify the right one for you. We’ve found the very best cards, whether you are an individual looking for the best rewards rates or a business owner who wants to take advantage of monthly expenditures to earn rewards.

Best Cash Back Business Credit Cards

We chose the following cards because they reward small business owners for the items and services they purchase the most. We also know that access to other features, like low APR or introductory offers, can pay off in the long run.


  • creditApproved icon

    FEATURED

    Chase Ink Business Cash

    Best cash back business card sign-up bonus

    • Excellent, GoodCredit Needed
    • 5%*Cash Back Rate
    • $0Annual Fee
    • 13.24% - 19.24%APR

    We love the Ink Business Cash Credit Card for several reasons, including its more-than-generous sign-up bonus. Business owners can earn a $750 cash bonus after $7,500 card spending in the first three months from account opening.

    Ink Business Cash also earns 5% cash back on the first $25,000 combined spending in essential business spending categories like office supply stores and internet, cable and phone services each year. The card also earns your business 2% cash back on the first $25,000 combined spending at restaurants and gas stations annually. To top it off, all of your other business spending still earns 1% cash back.

    Your Ink Business Cash Card is also an entrance into Chase Ultimate Rewards, one of the most versatile rewards programs available. With Chase Ultimate Rewards, you can redeem rewards for cash back or opt for other redemptions like travel, gift cards and more. More choices mean more value to your business. Also, you receive all of this value without paying an annual fee. Check out even more card details below to see if Ink Business Cash is right for you.

    Pros
    — Generous sign-up bonus
    — High rewards rates in popular business spending categories
    — Intro APR offer on purchases
    — No annual fee
    — Free employee cards

    Cons
    — Spending caps on most bonus spending categories
    — High fees for cash advances and balance transfers
    — Low rewards rate outside bonus categories

    — Earn $750 bonus cash back after spending $7,500 on purchases in the first three months after opening your account.
    — Earn 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable and phone services annually.
    — Earn 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants annually.
    — Earn 1% cash back on all other card purchases.

    Disclaimer: Credit card offers are constantly changing. We work hard to stay updated with the latest information, but the offers listed on our site may no longer be available.

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COMPARING BUSINESSES CREDIT CARDS

The Chase Ink Business Cash card is one of the best for cash back, but Chase's Ink Business Preferred card offers a great intro bonus for travel points. Compare these two Chase cards along with other business credit cards at our partner site, CardRatings.com.

Best Cash Back Credit Cards for Students

Student cash back credit cards are a way to start building your credit while earning valuable cash back rewards. We looked at factors like fees, rates and rewards to find the cards that make the most sense for college-age individuals with limited credit history. Remember that you will need some form of income to qualify for a cash back card and pay your monthly bill.


  • creditApproved icon

    FEATURED

    Deserve EDU Mastercard for Students

    Best student cash back card for limited credit history

    • Limited, NoneCredit Needed
    • 1%Cash Back Rate
    • 0$Annual Fee
    • 18.74%APR

    Deserve EDU opens the door to building credit responsibly for college students with limited or no credit history. You can prequalify without negatively affecting your credit, and the card doesn’t require a deposit or cosigner. The card is even available for international college students.

    Besides building credit, Deserve EDU earns 1% cash back on all purchases. Plus, you can get a free year of Amazon Prime Student by meeting card spending requirements.

    Deserve EDU comes with perks that make sense for college students, like cell phone protection and no foreign transaction fees (for those studying abroad). Throw in the fact that there’s no annual fee to worry about, and you have the makings of a near-perfect student credit card.

    Pros
    — 1% cash back on all purchases
    — Amazon Prime Student free for one year
    — Cell phone protection
    — No foreign transaction fees
    — No annual fee

    Cons
    — No bonus spending categories
    — Balance transfers and cash advances aren’t available

    — Earn 1% unlimited cash back on all purchases.
    — Receive one year of Amazon Prime Student on Deserve after spending $500 in the first three billing cycles from account opening.
    — Receive up to $600 in cell phone protection when you use the card to pay your monthly cell phone bill.

    Disclaimer: Credit card offers are constantly changing. We work hard to stay updated with the latest information, but the offers listed on our site may no longer be available.

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COMPARING STUDENT CREDIT CARDS

The Deserve EDU Mastercard is a great cash back card for students, but there are others like the Chase Freedom Student Credit Card that offer similar cash back rewards but may have lower APR or other benefits better suited for your spending habits.

You can learn more about student credit cards on our page, the Best Student Credit Cards of 2021, or compare these two cards and apply for one at our partner site, CardRatings.com.

Best Cash Back Credit Cards for People With Fair to Average Credit

Having less than stellar credit doesn’t mean you should miss out on valuable cash back rewards. Cash back credit cards for those with fair to average credit can help you earn rewards while building your credit history and improving your credit score.


  • creditApproved icon

    FEATURED

    Credit One Bank Platinum Visa

    Best cash back card for those with fair credit

    • FairCredit Needed
    • 1%Cash Back Rate
    • $39Annual Fee
    • 23.99%APR

    Credit One Bank Platinum Visa is an excellent starter credit card for those with less-than-stellar credit scores. In addition to helping you build your credit, you’ll earn valuable cash back rewards. The credit requirements are less than you will see with competitor cards.

    The Credit One Bank Platinum Visa is unique in that there are several versions of the card, with annual fees ranging from $0 to $99. Which one you end up with is based on your credit and other factors.

    All of the card versions earn cash back rewards, just with different reward rate structures.

    The Platinum Visa card also comes with free access to your Experian credit score each month, so you can monitor your progress as you build credit responsibly.

    Pros
    — Less restrictive credit requirements
    — Cash back rewards

    Cons
    — You may not qualify for the version of the card you hoped for
    — Only one redemption option available
    — High APR on purchases
    — Foreign transaction fees

    Credit One offers several iterations of its Platinum Visa card. You’ll find out which version you qualify for during the prequalifying process, which doesn’t negatively affect your credit.

    The Credit One Bank Platinum Visa earns 1% unlimited cash back on eligible gas, grocery, mobile phone, internet, cable and satellite TV service purchases.

    Disclaimer: Credit card offers are constantly changing. We work hard to stay updated with the latest information, but the offers listed on our site may no longer be available.

How We Rate Cash Back Commercial real estate loan officer job description independently collected information on credit card issuers, based on issuers listed in the Consumer Finance Protection Bureau's credit card agreement database. This allowed us to collect the information for approximately 2,500 credit cards. Learn more about our data collection and ranking process.

Top Rating Criteria for Cash Back Cards
rewards

Annual Earnings

refound

Annual Fees

creditDenied

Spending Limits

4 Tips for Comparing Cash Back Credit Card Offers

Cash back credit cards are not all created equal, and the right card for someone else may not be the right one for you. Here are some tips to simplify the process and find the best cash back credit card for you.

1

Know Your Score

Knowing your credit score will help you quickly narrow down the field to only cards you qualify for right now. Having access to credit scores and understanding the factors that make up your score will help you now and in the long run.

2

Know Your Spending

Having a good sense of where you spend your money will also lead you to the right card. Cash back cards offer several reward structures. Some cards offer flat cash back rewards on all purchases. Other cards offer bonus rewards in select spending categories like travel, dining, groceries and gas. Look for a card with a rewards structure that matches your spending habits.

3

Factor in Fees

Of course, you can’t forget about fees when calculating potential card earnings. That doesn’t mean cards without annual fees are better. But you should consider how you will use the card and whether the perks and rewards the card offers justify the annual fee.

4

Look at Other Benefits Included

Once you’ve looked at the cash back rewards, take time to consider other benefits included with the card. Some cards offer extra features like cell phone protection, free credit score access, travel perks and purchase protection.

Cash Back Cards at a Glance

Compare some of the top cash back credits cards by their reward rates and approximate credit scores needed to get approved.

Scroll for more

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  • Card Name

    Credit Needed

    Cash Back Rate

    Annual Fee

  • Ink Business Cash Credit Card

    Excellent, Good

    5%*

    $0

  • Deserve EDU Mastercard for Students

    Limited, None

    1%

    0$

  • Credit One Bank Platinum Visa

    Fair

    1%

    $39

MoneyGeek’s Take: Finding the Right Cash Back Credit Card for You

A cash back credit card is a valuable tool. You earn back a percentage of your card purchases, typically as a statement credit or direct deposit. Unlike other forms of rewards, what you see is what you get with cash back rewards. For instance, the value of miles earned with an airline rewards credit card can change depending on how they are redeemed, and you often get more value when using them for international travel.

However, there are other rewards credit cards, like Chase Sapphire Reserve and Chase Sapphire Preferred, that earn valuable rewards that are redeemable in several ways, including for cash back and travel.

Not all cash back cards work the same either. For example:

  • The Ink Business Cash card is specifically for business owners, and its reward structure is geared towards the spending needs of a business.
  • The Deserve EDU is for college students with little to no credit.
  • Individuals with good to excellent credit can qualify for cash back cards that offer much higher rewards and other benefits.
  • If you like to travel, one of the top travel rewards credit cards might be a better fit.
  • If you’re planning on making a large purchase in the near future or have existing credit card debt racking up interest charges, a good balance transfer card or rewards card with an intro APR offer might make more sense.

Your best bet is to determine your credit card needs and then find the right fit for you.

Who Should Consider a Cash Back Card?

You might be wondering why you should consider getting a cash back credit card. Unlike other rewards credit cards, there’s no guessing when it comes to the card’s value. You’ll earn a percentage back on your card purchases based on the card’s set rewards rates. Your rewards come back to you as cash, usually as a statement credit or a deposit to your bank account. Some cards reward you the same no matter the purchase, while others offer higher rewards rates in specific categories.

That doesn’t mean everyone should get a cash back card. For example, if you’re an avid traveler, you might find more value in a travel rewards credit card that comes with a large sign-up bonus, earns points or miles towards free travel and comes with extra perks like hotel status, waived airline fees and more.

Expert Advice for First-Time or Newer Cash Back Cardholders

We continue to help your research, by gathering advice from financial, credit counselors and other credit card experts and answering common questions related to cash back cards and reward programs.

  1. What mistakes do people make with credit cards, and specifically rewards programs?
  2. What are the "gotchas" about credit cards and rewards programs that are not well understood by consumers?
  3. What advice can you give consumers about managing their cash back rewards cards?
Bruce McClary
Bruce McClary

Vice President of Communications, National Foundation for Credit Counseling

Dr. Michael Shipman, CPA
Dr. Michael Shipman, CPA

Assistant Professor of Accounting at Mount Aloysius College

Callie Renner
Callie Renner

Wealth Advisor at Beacon Pointe Advisors

Tahereh Alavi Hojjat
Tahereh Alavi Hojjat

Chair & Professor of Economics

Peter Staples
Peter Staples

Assistant Professor of Business and Economics at Lyon College

Demissew Ejara
Demissew Ejara

Associate Professor of Finance at The University of New Haven

Caleb Martin
Caleb Martin

Professor of Accounting at Erskine College

Chris M. Lawrey, PhD
Chris M. Lawrey, PhD

Assistant Professor at the University of South Alabama

Laura Coordes
Laura Coordes

Associate Professor of Law at Arizona State University

John Peatross
John Peatross

Certified Public Accountant and Adjunct Instructor at the University of Maryland, Baltimore County

Sheila A. Handy
Sheila A. Handy

Visiting Professor - Department of Economics at Lafayette College

Joseph R. Stasio
Joseph R. Stasio

Associate Professor, Marketing at Merrimack College

Amit Sinha
Amit Sinha

Professor of Finance and Quantitative Methods at Bradley University

Dr. Christopher Newman
Dr. Christopher Newman

Associate Professor of Marketing at The University of Mississippi

Kunter Gunasti
Kunter Gunasti

Assistant Professor of Marketing at Washington State University

Jesse Veenstra
Jesse Veenstra

Instructor of Finance at Dordt University

Dr. Aniruddha Pangarkar
Dr. Aniruddha Pangarkar

Assistant Professor of Marketing at the University of Wisconsin-Green Bay

Jacqueline R. Jaeger
Jacqueline R. Jaeger

Adjunct Business Faculty at the University of Dubuque

Philip Mayer
Philip Mayer

Professor of Economics and Political Science at Three Rivers Community College

Michael Manahan
Michael Manahan

Lecturer at California State University, Dominguez Hills

Michelle Gabor
Michelle Gabor

Business Lecturer at the University of Wisconsin - Parkside, Entrepreneur, CPA

Dr. Han-Yen Kao
Dr. Han-Yen Kao

Department Chair, Assistant Professor of Business and Economics at Northwestern College

Dr. Angela Seidel
Dr. Angela Seidel

Associate Professor of Accounting and Chair of Undergraduate Business Programs at Saint Francis University

Rob Larson
Rob Larson

Associate Professor of Management at Luther College

Katherine Aumer
Katherine Aumer

Assistant Professor of Psychology at the University of Hawaii-West Oahu

Dr. Kareem Tannous
Dr. Kareem Tannous

Assistant Professor at Cabrini University

Dr. Angela Buchanan
Dr. Angela Buchanan

Associate Professor in Business & Economics at Lyon College

Monique Beauchamp-Doll
Monique Beauchamp-Doll

Professor of Business Administration at Macomb Community College

Mark Ma
Mark Ma

Assistant Professor of Business Administration at the University of Pittsburgh

S. Abraham Ravid
S. Abraham Ravid

Sy Syms Professor of Finance, Sy Syms School of Business at Yeshiva University

Michael Dixon
Michael Dixon

Adjunct Instructor of Business Administration at Shepherd University

Top Cash Back Cards FAQs Answered by The Geeks

Cash back credit cards come in many different forms, and having the answers to some of the most frequently asked questions about cash back cards and rewards will help you find the best card for you.

As you make purchases with your card, you’ll earn back a percentage of the total based on the card’s cash back rate. Then, you can redeem your cash back rewards for cash, usually in the form of a statement credit, a paper check, direct deposit to a linked bank account or gift cards.

Cash back credit cards are a great way to earn money back on everyday purchases. They can be worth it if you find one that matches your spending habits and provides enough value to justify fees, if there are any.

Typically, you redeem cash back rewards for a statement credit on your credit card account. Some cards allow you to instead receive a paper check in the mail, direct deposit to a linked bank account or redeem for gift cards.

Cash back rewards are typically credited to your account at the end of a statement period.

Your cash back rate is the percentage cash back earned with each purchase. Some cards offer a flat rate across the board for all purchases. Others offer bonus rewards rates for specific spending categories.

No, a cash advance is cash withdrawn from your credit card account. A cash advance puts cash in your pocket and is charged against your credit card account. It usually comes with extra fees.

A flat-rate cash back credit card earns the same percentage of cash back for all eligible purchases instead of earning different rates based on different spending categories.

A tiered cash back credit card earns cash back at different rates based on specific spending categories like travel, dining, gas and groceries.

Rotating cash back categories are spending categories that change throughout the year. Typically, rotating categories change quarterly and sometimes require cardholders to activate to earn rewards.

Cash back is only one type of rewards credit card. The other primary option is travel rewards, which typically come in the form of points or miles.

Tips for People Looking to Maximize Cash Back Rewards

Perhaps you already have experience using a cash back or other rewards credit card under your belt. Like anything in life, there are always new things to learn when it comes to cash back rewards.

1

Maximizing Your Cash Back Rewards

To maximize cash back rewards, you’ll want to be in tune with your spending habits. Do a deep dive into your past spending to see where you spend money the most. Then, align your cash back cards with your spending so that you earn the best rates.

Having more than one credit card can also help you take advantage of increased rewards rates from both cards. If you have a card that offers a higher cash back rate for grocery purchases but only 1% cash back for other purchases, you can pair it with a flat-rate cash back card that earns more than 1% to earn more cash back.

2

Comparing Cash Back Rates to Find the Right Card

It’s also wise to check your card’s cash back rates so that you’re aware of any restrictions or limitations. Some cash back cards, like Chase Freedom Flex, offer rotating bonus categories that you have to activate each quarter. Keeping track of details like that every few months is often hard to do.

Some cash back credit cards have maximum spending limits. The Ink Business Cash Credit Card, for example, caps several spending categories at the first $25,000 spent each year. Personal cash back cards will have lower annual limits. You can maximize your cash back rewards by at least hitting spending limits or finding a cash back card without any limitations, depending on your needs.

3

Comparing Cash Back to Points and Miles Deals

Typically, rewards points and miles carry more value than cash rewards. They are also often more complicated to understand, earn and use than cash back rewards.

The real value is in understanding your own credit card needs. Rewards credit cards that earn points and miles make sense if you travel often. If you only travel a couple of times a year, your rewards could go to waste and possibly expire. A card like Chase Sapphire Preferred offers more flexibility with redemptions, even as a card that earns points. You can use Chase Ultimate Rewards points towards flights, hotels, gift cards, and yes — cash. Knowing how you want to use your rewards will lead you towards the right type of rewards credit card.

Maximizing Your Cash Back Rewards FAQs

Below are answers to common questions on how to maximize cash back credit cards.

Yes, there are cash back cards that offer 3% cash back rates or better in select spending categories. There is no credit card on the market that currently offers 3% cash back or more on all purchases.

You can maximize your cash back card’s benefits by using it whenever you spend in the categories the card rewards. Always take advantage of other benefits offered with a cash back card, like travel perks, purchase protection and cell phone insurance.

When you redeem cash back rewards is typically up to you. Some cards automatically credit cash back rewards to your account each statement period. Also, keep in mind that some rewards can expire if you don’t use them within a set time or continue to use your card.

The most common cash back bonus categories are travel, dining, gas and groceries. Business cash back cards sometimes include bonus rewards for office supply store purchases and specific services like internet and phone.

Several credit cards offer higher cash back rates in select categories. The Chase Freedom Unlimited credit card earns 5% back on travel purchased through Chase, 3% back at restaurants and drug stores and 1.5% back on all other purchases. The Discover it Cash Back card earns 5% back in quarterly rotating categories plus unlimited 1% back on everything else. The Blue Cash Preferred Card from American Express earns 6% back at U.S. supermarkets up to $6,000 annually and 6% back on streaming services along with lower rates for other spending.

Cash back and points are both valuable forms of credit card rewards. The better option depends on your needs and how you plan to use the rewards you earn. Some credit cards reward you with points that can also be redeemed for cash back along with other redemption options.

Cash back and miles are two types of credit card rewards. How you plan to use your rewards will determine which one is better for you. Miles are typically associated with airline travel rewards credit cards.

If you’re in the market for a business cash back credit card, you need to analyze your company’s spending to determine the best card for you. Also, look for any fees included, whether there’s access to free cards for your employees and any added benefits included with the card.

Cash back credit cards reward you for your everyday spending, unlike using a debit card. Always use cash back cards responsibly, making sure not to spend more than you can afford to pay. Interest charges cause your account balance to skyrocket and quickly negate the rewards you earned.

If you prefer earning cash to travel rewards, take time to compare the best cash back credit cards to find the right one for you.

Next Steps

About the Author

Kevin Payne is a personal finance writer specializing in credit cards, banking, and student loans. He is a regular contributor to Forbes Advisor, The Ascent, Investing Answers, and Student Loan Planner. Kevin is the budget and family travel expert behind FamilyMoneyAdventure.com.

sources
  • Intuit TurboTax. "Are Cash Back Rewards Taxable Income?." Accessed March 18, 2021.
  • Better Money Habits. "What is a credit card cash advance?." Accessed March 18, 2021.
  • Chase. "Chase Ink Business Cash Card." Accessed March 18, 2021.
  • Chase. "Chase Freedom Flex Credit Card." Accessed March 18, 2021.
  • Chase. "Chase Ultimate Rewards." Accessed March 18, 2021.
  • Chase. "Chase Sapphire Preferred credit card." Accessed March 18, 2021.
  • Chase. "Chase Sapphire Reserve." Accessed March 18, 2021.
  • Deserve. "Deserve EDU." Accessed March 18, 2021.
  • Deserve. "Deserve® EDU Cardholder Agreement." Accessed March 18, 2021.
  • Credit One Bank. "Platinum Visa." Accessed March 18, 2021.
  • Credit One Bank. "Choosing a Credit Card." Accessed March 18, 2021.
  • American Express. "Blue Cash Preferred Card." Accessed March 18, 2021.

*Rates or fees may vary or include specific stipulations. We recommend visiting the card issuer’s website for the most up-to-date information available.
Advertiser Disclosure: MoneyGeek has partnered with CardRatings for our coverage of credit card products. MoneyGeek and CardRatings may receive a commission from card issuers. To ensure thorough comparisons and reviews, MoneyGeek features products from both paid partners and unaffiliated card issuers that are not paid partners.

Источник: https://www.moneygeek.com/credit-cards/cash-back/

How Is Cashback Profitable for Credit Card Companies?

Credit card companies are in the business of making money, yet they often advertise incentives that feature rewards such as cash back on credit card purchases. Many consumers are inundated with online offers and mailers, promising great incentives, from zero to low introductory interest rates to one-time bonus rewards offers, to cash back deals whenever they use their cards. 

Nowadays, it isn't unusual to see banks offer what seem to be very generous cash back incentives to their cardholders, even after the introductory bonus period is over. For example, Chase offers up to 5% cash back on its Chase Freedom Rewards Card, as does the Discover Card. So how can these companies offer such seemingly lucrative deals for consumers and still make a profit?

Key Takeaways

  • Most cash rewards programs have an annual maximum limit, so while they may offer a generous 5% cash back reward, there may be an annual cap or maximum limit you can reach.
  • When merchants accept payment via credit card, they are required to pay a percentage of the transaction amount as a fee to the credit card company.
  • Additionally, credit card companies make money by charging high-interest rates on balances carried over month-to-month, and issuing late fees for payments missed or made after the stated due date.

Cash Rewards Programs: The Fine Print

First, it is important to read the fine print. Most cash rewards programs have an annual maximum limit, so while they may offer a generous 5% cash back reward, there may be an annual cap or maximum limit you can reach. Other cards only offer cash back for certain categories of purchases, such as at restaurants or gas stations.

Discover's cash back card is one of those that boasts a 5% reward on purchases. But, as of 2018, the cardholder agreement states that this offer only extends to specific categories allotted to different quarters of the year. And it comes with a limit of $1,500 in purchases per quarter. The disclosure also states that using a credit card with NFC technology or from a virtual wallet such as Google Wallet may not count toward the program.

Similarly, the Chase Freedom card also has spending restrictions and caps. Cardholders can earn 5% cash back rewards on spending in certain categories. Chase caps the spending limit each quarter at $1,500, just like Discover. Any other purchases during each quarter, and above the limit, earn 1%. 

With a credit card program with a $1,500 cash back limit per year at 5%, any spending over $30,000 would not contribute to accumulating any further cash back rewards.

Because most consumers do not take the time to read the fine print, they may open a credit card account under the impression that cash back rewards programs are much more generous and universal than they actually are.

It's Not Free Cash

When merchants accept payment via credit card, they are required to pay a percentage of the transaction amount as a fee to the credit card company. If the cardholder has a participating cash back rewards program, the credit card issuer simply shares some of the merchant fees with the consumer. The goal is to incentivize people to use their credit cards when making payments rather than cash or debit cards, which earns them no rewards. The more a consumer uses a credit card, the more merchant fees the credit card company can earn.

Additionally, credit card companies make money by charging high interest rates on balances that carry over month-to-month, and issuing late fees for payments missed or made after the stated due date. The more consumers use their credit cards, the more likely it becomes that they will miss a payment or carry a balance for which they will owe fees and interest.

According to the Federal Reserve, the average credit card interest rate is 16.61% as of Q1 2020. The Federal Reserve also reported almost $1.07 trillion in outstanding revolving credit by March 2020. Approximately 45% of credit cardholders carry a balance from month to month according to the latest Federal Reserve Survey of Consumer Finances. 

Credit cards that offer the most generous sounding rewards programs also often carry the highest fees and interest rates, compared to a similar card with a lower rewards program, or none at all. 

The Bottom Line

Cash back rewards sound enticing, and they can help certain consumers save a bit on credit card purchases. However, once the restrictions and qualifications are spelled out in the fine print, including any limitations on how much cash back credit card users can earn per year, these programs do not appear as generous as they may seem on the surface.

Because these programs are incentives for consumers to use their credit cards in lieu of cash or debit cards, they generate increased merchant fees for the credit card company and may also cause some consumers to increase their debt, providing yet another source of revenue for the credit card company.

In 2017, the Federal Reserve Bank of Boston reported that the average transaction amount with a non-cash transaction is nearly four times greater than with a cash transaction, greatly adding to the revenue coming from merchant fees. And since cash back credit cards carry the subtle psychological incentive of earning money while you spend, people tend to spend even more on them than non-rewards cards. So, rather than draining corporate profits, cash back rewards programs actually dramatically increase credit card companies' bottom lines.

Источник: https://www.investopedia.com/articles/personal-finance/040715/how-cashback-profitable-credit-card-companies.asp

What is Cash Back and How Does Cash Back Work?

Cash back is a perk many credit card companies offer on their rewards credit cards. It refers to earning back a percentage of the money you spend on your credit card. Some cards offer the opportunity to earn even more cash back on purchases by enrolling in quarterly promotions or making purchases through their virtual shopping portals.

Often, there is a cap on how much cash back you can earn on purchases through promotions or quarterly rewards programs. For example, the Discover it® Cash Back allows cardmembers to earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when they pay using PayPal, up to the quarterly maximum ($1,500 in purchases) when they activate*. You can see the 2021 rotating categories available on Discover.com. Be sure to read the terms and conditions to fully understand (and take advantage of) your card’s cash back rewards program.

  1. How Does Cash Back Redemption Work?
  2. How Does Discover Cash Back Work?
  3. When Do I Get My Cash Back from Discover?
  4. Should I Spend as Much as Possible to Earn Cash Back?
  5. Choosing the Right Cash Back Credit Card for You

How Does Cash Back Redemption Work?

Cash back may be redeemed in a number of ways depending on the bank and credit card. Below are a few examples, be sure to check the terms and conditions of any card you’re looking at:

  1. Bank Deposit: You may be able to deposit cash back directly into your checking or savings account. With Discover, you can cash out your rewards balance at any time, while other banks may require a minimum rewards balance before you can cash out. Be sure to read your terms and conditions to understand your redemption thresholds.
  2. Statement Credit: You may be able to apply your cash back to your credit card balance.
  3. Gift Cards: Some credit card companies allow you to redeem your cash back in the form of gift cards or e-certificates for popular retailers.
  4. Charitable Donations: Some credit card companies allow you to donate some or all of your cash back to a charity of your choosing.

How Does Discover Cash Back Work?

Below are details on how does cash back work on credit cards cash back works for various Discover credit cards. See terms at the bottom of this article or by clicking through to each card’s web page:

The Discover it® Cash Back card allows cardmembers to earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when they pay using PayPal, up to the quarterly maximum ($1,500 in purchases) when they activate. How does cash back work on credit cards also get unlimited 1% cash back on all other purchases.

With the Discover it® Chrome card, cardmembers earn 2% Cashback Bonus® at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter.* Plus, cardmembers earn unlimited 1% cash back on all other purchases – automatically.

The Discover it® Miles card earns unlimited 1.5x Miles for every dollar spent on all purchases – from airfare and hotels to groceries and online shopping. Cardmembers can turn Miles into cash, or redeem as a statement credit for travel purchases like airfare, hotels, rideshares, gas stations, restaurants and more.* However cardmembers redeem, Miles have the same value and Miles never expire.*

The Discover freedom mortgage payment schedule Student Cash Back and Discover it® Student Chrome  cards offer the same  cash back rewards listed above. Students can earn rewards and build credit with responsible use with either card.*

The Discover it® Secured Credit Card is a credit-building credit card and requires a refundable security deposit.* However, it also allows cardmembers to earn 2%Cashback Bonus® at Gas Stations and Restaurants on up to $1,000 in combined purchases each quarter* as well as an unlimited 1% cash back on all other purchases – automatically. Plus, it can help you build your credit history with responsible use.*

Finally, keep in mind that Discover matches all the Cash Back or Miles you’ve earned at the end of your first year as a new cardmember.*

When Do I Get My Cash Back from Discover?

When you receive your cash back from Discover varies based on the type of redemption you choose:

  • Gift cards are sent by U.S. Mail to your billing address in 7–10 business days after you submit the order, but you should allow up to three weeks (and keep in mind that there could be delays around the holidays).
  • Bank deposits will be sent to your chosen financial institution within three days.
  • Statement credits will post to your Discover account within three business days.

Should I Spend as Much as Possible to Earn Cash Back?

Cash back should not to be misinterpreted as an incentive to spend too much. Instead, you should look at cash back as a bonus for the money you would spend absent rewards.

(The last thing you should do is charge more than you can afford just to get more cash back. If you overspend and fall into debt, you risk running up interest charges that could cancel out the perks of rewards.

Choosing the Right Cash Back Credit Card for You

It’s always a good idea to research the credit cards available to you and then weigh your options. Let’s break down the benefits so you can compare cards:

  • Understand the offers. First, make sure you understand the details of each offer. Does the cash back apply to all purchases, select categories or a combination of both? Some cards may return a higher percentage back for groceries than they do for gas, as an example. Also, be sure you understand the maximum amounts you can earn and when and where you can redeem your bonuses. Lastly, remember that cash back cards may come with expiration rules. So, don’t leave money on the table for missing regularly scheduled payments or going months without using your card.
  • Know your spending habits. Once you’ve nailed down the specifics of each offer, the next step is to analyze your spending habits and matching the cash back categories to your style. What types of products and services do you purchase the most – books and movies? Home improvement? Travel? Some credit cards offer cash back bonuses at different places throughout the year, so you have even more ways to earn. 
  • Look beyond the cash back. While the cash back perks are enticing, don’t forget to compare the non-cash back features of the card with your spending style. Do you pay off your credit card in full every month or just make the minimum payment? If you want to get the maximum benefit from a cash back rewards card, it can be a good idea to pay off your balance each month to avoid paying interest.
  • Don’t forget about APRs. Even on a single credit card account, APRs can vary depending on a few different factors. For instance, one APR may be charged for purchases and another for balance transfers. Promotional APRs can help you save over the short term by offering you a low or 0% promotional APR on certain kinds of transactions, for a limited period of time. Keep in mind that some credit card companies will increase your APR if certain conditions are not met. Paying your balance on time may help you keep your low APR.
  • Compare fees. When it comes to credit card fees, be sure to read the fine print. Credit cards can vary significantly in what they’ll charge you for annual fees, late payments, balance transfer fees, etc. – so make sure you understand how these fees may affect you. For Example, Discover’s cards all have No Annual Fee.

When choosing the right cash back credit card for you, read through the entire offer and get familiar with all the terms and conditions. Then carefully monitor your spending habits over the next few weeks to see how well your new card fits your lifestyle.

Originally published June 29, 2016.

Updated May 27, 2021.

Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

Applies to all categories:  Certain digital wallet transactions qualify for 5%, for more information see Discover.com/digitalwallets. Purchases made through third-party payment accounts, mobile or wireless card readers, virtual wallets or similar technology will not be eligible if the technology does not provide sufficient transaction details for rewards qualification. 5% Cashback Categories: In accordance with standard industry practices, merchants are assigned a merchant category code (MCC) typically based on their line of business, or the type of products and/or services they primarily sell or provide. Discover Card does not assign MCCs to merchants. Even if you make purchases at a merchant of items that appear to fit in a rewards category, the merchant m ay not have an assigned MCC in that rewards category. Only purchases made from merchants located in the United States are eligible for 5% Cashback Bonus. Rewards are added to your Cashback Bonus account within two billing periods. See Cashback Bonus Program Terms and Conditions for more information about your rewards.

Amazon is not a sponsor of this promotion. Amazon, the Amazon.com logo and the smile logo are trademarks of Amazon or its affiliates.

PayPal: PayPal, the PayPal logo are trademarks of PayPal or its Affiliates. Listed merchants are in no way sponsoring or affiliated with this program

Chrome Disclosure: You earn a full 2% Cashback Bonus® on your first $1000 in combined purchases at Gas Stations (stand-alone), and Restaurants each calendar quarter. Calendar quarters are how does cash back work on credit cards as the three-month periods beginning January 1, April 1, July 1, and October 1. Purchases at Gas Stations and Restaurants over the quarterly cap, and all other purchases, earn 1% cash back. Purchases made at Gas Stations include only merchants in the category that sell automotive gasoline that can be paid for either at the pump or inside the station. Gas Stations affiliated with supermarkets and supercenters may not be eligible. Restaurant purchases include only those made at merchants classified as full-service restaurants, cafes, cafeterias and fast food locations. Certain digital wallet transactions qualify for 2% Cashback Bonus, for more information see Discover.com/digitalwallets. Purchases made through third-party payment accounts, mobile or wireless card readers, virtual wallets or similar technology will not be eligible if the technology does not provide sufficient transaction details for rewards qualification. 2% Cashback Categories: In accordance with standard industry practices, merchants are assigned a merchant category code (MCC) typically based on their line of business, or the type of products and/or services they primarily sell or provide. Discover Card does not assign MCCs to merchants. Even if you make purchases at a merchant of items that appear to fit in a rewards category, the merchant may not have an assigned MCC in that rewards category. Only purchases made from merchants located in the United States are eligible for 2% Cashback Bonus. In order for a purchase to qualify for the 2% Cashback Bonus Program, the transaction date must be before or on the last day of the offer or promotion. Rewards are added to your Cashback Bonus account within two billing periods. See Cashback Bonus  Program Terms and Conditions for more information about your rewards.

Miles Never Expire: We will credit your account with your rewards balance if your account is closed or has not been used in 18 months. See Miles Terms and Conditions for details.

Starting at 1 Mile, you can redeem your Miles as a credit to your account to pay for all or part of your bill, for cash as an electronic deposit to your bank account, or for a credit for Travel Purchases made on your statement within the last 180 days. Travel Purchases include airline tickets, hotel rooms, car rentals, travel agents, online travel sites, commuter transportation, restaurants and gas stations.

Builds credit with responsible use: Discover reports your credit history to the three major credit bureaus so it can help build your credit if used responsibly. Late payments, delinquencies or other derogatory activity with your other credit card accounts and loans may impact your ability to build credit.

Minimum Security Deposit: A minimum security deposit of $200 is required to open this account and your security deposit must equal your credit limit. Your maximum credit limit (up to $2500) will be determined by your income and ability to pay.

Cashback Match: We’ll match all the cash back rewards you’ve earned on your credit card from the day your new account is approved through your first 12 consecutive billing periods or 365 days, whichever is longer, and add it to your rewards account within two billing periods. You’ve earned cash back rewards only when they’re processed, which may be after the transaction date. We will not match: rewards that are southern ocean world heritage site after your match period ends; statement credits; rewards transfers from Discover checking or other deposit accounts; or rewards for accounts that are closed. This promotional offer may not be available in the future and is exclusively for new cardmembers. No purchase minimums.

Discover Match®: We’ll match all the Miles rewards you’ve earned on your credit card from the day your new account is approved through your first 12 consecutive billing periods or 365 days, whichever is longer, and add it to your rewards account within two billing periods. You’ve earned Miles rewards only when they’re processed, which may be after the transaction date. We will not match: rewards that are processed after your match period ends; statement credits; rewards transfers from Discover checking or other deposit accounts; or rewards for accounts that are closed. This promotional offer may not be available in the future and is exclusively for new cardmembers. No purchase minimums.

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Источник: https://www.discover.com/credit-cards/resources/how-does-cash-back-work/

You may not realize that the debit or prepaid card you use regularly may come with benefits when you make purchases at certain businesses. Some banks offer cash back programs or cash back rewards, which give you back a percentage of your purchase.

The form of the reward varies by bank, but common methods include crediting your account, awarding points that can be converted to cash, or mailing you a gift card. Some cash back programs are tailored how does cash back work on credit cards your personal shopping activity, and unlike rebate coupons that require you to fill out and mail in forms, cash back programs make it easy to get started and automate the process.

Still unsure? Check out answers to some of the most common questions around cash back programs.

How Do Cash Back Programs Work?

Depending on the type of cash back program you are using, you may earn a certain percentage of rewards on your purchase, usually up to a certain dollar amount per transaction or year, or you may earn cash back with participating merchants by activating deals presented to you through your online banking portal or mobile banking app. Just be sure to check whether the offer is valid in-store or online. For most programs, the reward will be automatically credited to your account within two months. 

What Should I Look for in a Cash Back Program?

When looking for the best cash back program for your needs, consider the program's ease of use. Does it provide cash back on all purchases? Does it provide alerts via email or text about new offers, and can you activate those offers through your mobile device if you're on the go? Make sure you use frequently offer cash back through the program.

How Do I Get How does cash back work on credit cards with a Cash Back Program?

If you're already using a debit or prepaid card to make purchases, ask a representative from your bank whether they offer a cash back program. If they do, find out how you can start earning rewards when shopping. Look for a program that is easy to participate in so you can begin receiving cash back offers from businesses based on purchases you are already making with your card.

How Can I Make Sure the Cash Back Offers Are Relevant to Me?

In merchant-funded programs, the deals you'll have access to are from businesses that have partnered with your bank. In some cases, the more frequently you use your card, the stronger your shopping profile will be, which may help the partner businesses provide more relevant offers you can use. For example, if you often use your card to shop for pet food at one store, another pet shop might offer cash back for purchases at its business.

"Participating retailers who seek your business advertise offers based on spending profiles of customers that spend money in targeted merchant categories," says Bryan Shimko, Vice President, Rewards and Loyalty Program Management for Regions Bank. "These offers are typically not tied to a specific product, but they act like coupons that reward you for your overall purchase at that retailer."

Although merchants receive aggregate information on your shopping patterns, they shouldn't receive any of your personal details. 

Some deals are online only, while others may be used with in-store purchases. When you're looking at available offers, read the description to ensure you understand how the offer works.

How Much Can I Save Through a Cash Back Programs?

While the initial savings may only be a few dollars per purchase, over the course of a year you might see a substantial amount add up in your account. "It's really like having a built-in benefit for using your card," Shimko says. "In the long-term you are saving money on everyday purchases without having to do anything extra."

What are Some Limitations of a Cash Back Program?

Depending on the cash back program you're using, there may be a limit on the amount you can get back per year, or you may only earn cash back on certain items or at certain merchants participating in the program. Also, if you forget to activate deals presented to you, you won't receive the credit, and you'll want to make sure you activate and use any deals before they expire. By reading and understanding the program terms, you'll be able to maximize your rewards.

Find out how you can participate in Regions Cashback Rewards®, so you can get money back when you use your debit or prepaid card to make purchases and watch your Cashback Rewards add up.

Источник: https://www.regions.com/Insights/Personal/Personal-Finances/Managing-credit-and-debt/how-do-cashback-rewards-work

If you are making the bulk of your everyday purchases on a credit card, it might be a good idea to have a cash back rewards card in your wallet.

But with so many options in the cash back credit card space, you may be having a hard time how does cash back work on credit cards which rewards program is right for you. Team Clark has set out to simplify the decision process for you by highlighting the best cash back cards for different spending circumstances.

Money expert Clark Howard believes having a cash back credit card at your disposal is preferable to some of the other rewards cards on the market because it gives you the flexibility to earn and spend on the things you care most about.

“My favorite reward cards are ones that actually pay you money. I want cash, because nobody can tell you when you can or can’t spend your cash,” Clark explained.


The Best Cash Back Credit Cards to Apply for Right Now

Table of Contents

Team Clark spent hours reviewing the market for these cards and put them under the scrutiny of the guidelines for usage set by money expert Clark Howard. We considered factors like annual fees, welcome bonuses, introductory APR and cash back bonus categories when assembling the list.

You can read more on our methodology for determining the best cash back cards here.


Best for Everyday Cash Back: Citi® Double Cash

Citi Double Cash is a popular cash back card because it offers unlimited 2%.

  • Annual Fee: $0
  • Cash Back Rewards: Up to 2% in unlimited cash back on all purchases (1% when you buy, 1% when you pay)
  • Features: Introductory 18-month period for 0% APR on purchases and balance transfers, no cash back limits and no categories
  • Team Clark’s Card Review:Citi Double Cash Review: Earn Up to 2% Cash Back on All Purchases

Why This Card Made Our List

The Citi Double Cash is one of Clark’s favorites because it’s so straightforward. You can earn 2% cash back on everything that you purchase with the card. You get 1% when you make the purchase and 1% when you make payments on the purchase. If you’re regularly paying off your credit card bill each month (as Clark suggests you do), that’s going to pile up pretty quickly.

You can use it on any purchase and receive the full benefit. There are no stipulations or caps to the cash back you can earn on this card. You also get an 18-month introductory period of 0% APR on purchases and balance transfers (transfer fees apply).

If you’re looking for an everyday spender with no annual fee and easy-to-access cash back, this card makes a lot of sense.

Other Cards to Consider in This Category

The PayPal Cashback Mastercard also offers 2% cash back on all purchases, making it another great choice as an everyday spender.

Both the Chase Freedom Unlimited® and the Quicksilver from Capital One offer 1.5% unlimited Cash Back without an annual fee. Both also feature a $200 welcome bonus opportunity.

If you’re not able to secure the Citi Double Cash for the full 2%, these two cards are very similar at a slightly lower rate of cash back. You also could check with a local or regional bank or credit union, how does cash back work on credit cards these institutions often offer straight cash back credit cards.


Best for High-Volume Cash Back: Alliant Visa Signature Card

Why This Card Made Our List

If you are willing to do your banking with this credit union, you may be able to get 2.5% cash back on your spending of up to $10,000 per month. There are no categorical restrictions to that spending.

The extra half of a percent really does add up. For example, if you spend $5,000 per month with this card, you’d receive $1,500 cash back annually — as opposed to $1,200 with a card like Citi Double Cash.

This card does require a credit union membership with Alliant and it also requires that you stay within their “Tier One” status to receive the top rewards, so you’ll want to check our review of the card to ensure your eligibility.

Other Cards to Consider in This Category

As mentioned above in the Everyday Cash Back category, the Citi Double Cash card is also a strong option in this category. Because it is without an annual fee and locks in a 2% cash back return, you really can’t go wrong with using this one as a high-volume option.


Best for Rotating Cash Back Bonuses: Discover it® Cash Back

The Discover it card has rotating 5% cash back category and a one-time cash back match.

  • Annual Fee: $0
  • Cash Back Rewards: Rotating 5% cash back on different categories and 1% on all other purchases
  • Features: Cash back match on first year’s purchases, 14-month introductory 0% APR on purchases and balance transfers
  • Team Clark’s Card Review:Discover it® Cash Back Review: Earn Rotating 5% in Top Categories

Why This Card Made Our List

The combination of an opportunity to earn 5% cash back on popular spending categories throughout the year and Discover’s promise to match your total cash back earnings after one year with the card is pretty great. For example, if you earn $300 in cash back during your first year of membership, Discover will make an additional $300 cash back deposit into your account at the end of the year.

The rotating 5% categories for 2021 — which cap at $1,500 in spending per three-month period — include bonus periods for grocery stores, gas stations, restaurants and online shopping with Amazon, Walmart and Target.

Other Cards to Consider in This Category

The Chase Freedom Flex card has many of the same characteristics as the Discover offering. It, too, has rotating 5% bonus periods and an introductory 0% APR period. Chase also offers a $200 welcome bonus when you spend at least $500 during your first three months of card membership. That may not be as large of a potential bonus as the Discover card, but you do get it sooner.


Best for U.S. Supermarkets and Streaming TV: Blue Cash Preferred® Card from American Express

Blue Cash Preferred offers an impressive 6% cash back on supermarkets and streaming.

Why This Card Made Our List

While the annual fee may cause some to pause, there is so much to like about everything else that goes along with this Blue Cash Preferred card. We ran a few different spending simulations in our review of this card, and if you’re a regular supermarket shopper, you’ll most likely find yourself coming out ahead using this instead of a fixed cash back card.

Additionally, if you have streaming subscriptions for services like YouTube TV, Netflix and Disney+, you can easily rack up 6% back each month by using this card for your direct auto-payments.

Other Cards to Consider in This Category

If you purchase your groceries from a superstore like Walmart or Target, those superstores each offer a credit card that has perks for purchases made with their respective businesses. Since the American Express card is limited to supermarkets only, you may find that you save more on your groceries by holding one of the brand-specific cards instead.


Best for Dining and Entertainment: Capital One Savor Rewards

Capital One Savor dining and entertainment credit card

Why This Card Made Our List

If you’re the type of person who enjoys your food and entertainment, you could pile up rewards pretty consistently with a 4% cash back offering in those categories with the Capital One Savor. The definition of dining includes fast, casual, and fancy restaurants alike, so you’ll be covered no matter your food preferences.

What’s considered entertainment also is wide enough that you can really rack up some cash back. Movie theaters, sporting events, concerts and things like trips to the amusement park and zoo all qualify for the 4% cash back.

Other Cards to Consider in This Category

If you’re not keen on the annual fee associated with the Savor card, you may instead prefer the Capital One SavorOne card. While this offering has a similar name, it actually has a different set of benefits that we outline in a comparison between the Savor and SavorOne cards.

SavorOne offers 3% Cash Back on dining and entertainment and a smaller Cash Back welcome bonus opportunity ($200), but it comes with no annual fee and a 15-month 0% APR introductory period for purchases and balance transfers (transfer fees apply).


Best for Gas and Travel: Costco Anywhere Visa® by Citi

Costco Anywhere offers great cash back on gas and perks for Costco members.

  • Annual Fee: $0
  • Cash Back Rewards: 4% cash back on eligible gas purchases, 3% restaurants and travel, 2% on Costco purchases and 1% on all other purchases
  • Features: Doubles as Costco membership ID, receive special Costco rewards and no foreign transaction fees
  • Team Clark’s Card Review:Costco Anywhere Visa by Citi

Why This Card Made Our List

Clark carries this card in his wallet and likes it because it has versatile cash back offerings, especially if you’re a Costco member. Not only are you able to get a solid 4% cash back on select gas purchases, but you can also do well on travel expenses and dining at the 3% level.

And if you’re a Costco member, the 2% cash back can add up quickly on purchases you make at the store.

Other Cards to Consider in This Category

Clark also carries the Sam’s Club Mastercard as one of the four credit cards in his wallet. It actually earns more cash back than the Costco card for gas at select stores (5% vs. 4%), so this card could be the move if you are only worried about paying for gas and don’t have a preference between the two warehouse stores.

Oddly enough, Sam’s Club purchases are only eligible for 1% cash back with this card. That leaves us giving a slight edge to the Costco card when it comes to picking between them.


Clark Howard’s Strategy for Credit Cards

Money expert Clark Howard believes it is important to have a credit card for the purposes of building and maintaining a solid credit history for when big life events like a home purchase or job application require a credit check.

He also believes that focusing on a rewards credit card — like a good cash back credit card — should only be a consideration for consumers who are planning to regularly pay off their balance to avoid interest charges. If that’s not your plan, Clark would point you to the credit card with the lowest possible interest rate or advise you to avoid a credit card altogether.

Assuming you’re here because you are in search of the maximum benefits from your cash back credit card decision, Clark wants you to think about how you spend your money and how it might best be complemented by the rewards programs from the various cards.

“Really think through your charge patterns and whether or not those rewards really give you how does cash back work on credit cards bang for your buck.”

Clark, for example, carries the Costco Anywhere Visa card in his wallet because he’s a frequent Costco shopper. He also likes the Citi Double Cash card because of the simplicity of the unlimited 2% cash back program.


Methodology for Cash Back Credit Cards

For the purposes of determining which cards are “best” in this category, we took input from money expert Clark Howard and sought to find cards that best fit his credit card strategy.

Team Clark spent many hours reviewing the available cash back credit cards on the market, assessing them for things like:

  • Annual fees
  • Welcome bonuses
  • Introductory APR periods
  • Spending categories for maximum cash back earnings
  • Additional fees (transaction or otherwise)
  • Perks offered to cardholders

We did not factor in non-introductory APR as a part of call bank mobile vibe customer service evaluation, because interest rates are going to vary based on your individual financial circumstance. Clark recommends not carrying a balance on these cards. That should curb the concern over the interest rate.

We also did not include offerings from local or regional banks and credit unions due to availability concerns. Often, local institutions will have desirable cards, so we do recommend that you compare your local bank or credit union’s cash back credit cards to the ones that made this list.


Frequently Asked Questions: Cash Back Credit Cards

Should I Avoid an Annual Fee With My Cash Back Card?

In most cases, this will depend on your spending volume. For instance, the Citi Double Cash card offers 2% cash back with no annual fee, while the Alliant Signature Visa offers 2.5% with a $99 annual fee.

Based on those numbers, you’d need to spend at least $2,000 monthly to see an advantage from paying Alliant’s annual fee. Otherwise, you’d be better off with Citi’s no annual fee.

Are Rotating Cash Back Bonuses Better Than a Fixed Cash Back Rate?

The answer to this could vary greatly from one rotating bonus period to the next. Using the Discover it Cash Back card (rotating 5%) and the Citi Double Cash (fixed 2%) as an example, you’d need to make at least 25% of your purchases in the 5% bonus category with Discover to match the amount of overall cash back you’d earn with the Citi card at the same spending level.

For best results, you could utilize a rotating cash back card in its bonus category only and then make other purchases with a card with a higher fixed cash back rate.

What’s the Difference Between A Cash Back Card and a Points Card?

Typically, it has to do with the way the credit card company decides to reward you for your purchases.

With a cash back card, your reward is of monetary value that can be used for things like statement credits or purchases.

A points card often rewards purchases in certain categories and allows for the accumulation of a points balance. The balance can then be used to claim rewards like free hotel nights or flights. Like a cash back card, some points cards will allow you to use your balance for statement credits.

To see the rates and fees for the American Express cards featured, please visit the following links: Blue Cash Preferred® Card from American Express: See Rates and Fees


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How Many Credit Cards Should I Have?How Many Credit Cards Should I Have?-Are you worried that the number of credit cards you have could have a negative impact on your financial life? Is there a “right” number of credit cards for one person to have? The answer is a little more nuanced…
Источник: https://clark.com/credit-cards/best-cash-back-credit-cards/
how does cash back work on credit cards

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