Cash back is essentially a rebate of a percentage of the purchases you make on the card.
Card issuers can afford to pay cash back because merchants pay an interchange fee on each transaction.
With flat-rate cash back credit cards, every purchase earns the same percentage cash back.
What does earning cash back mean?
Cash-back rewards cards are offered by credit card companies to consumers, who earn cash-back rewards when they make purchases with their cards. The term “cash back” is defined as the percentage of a credit card purchase returned back to the cardholder, in the form of a cash reward.
How does cash back rewards work?
A cash back credit card is one that offers cash rewards for spending. When you make a purchase with a cash back rewards card, you earn a cash credit for a percentage of the purchase. For example, you might earn 1% to 2% on all your purchases.
What is 5% cash back?
The 5% cash back rate usually applies only to purchases made at grocery stores, pharmacies, and gas stations for 6 months. This high rate of cash back was set to grab the attention of potential applicants for them to consider applying for the card. Typically the cash back rate for all other purchases is around 1%.
Are Cash Back Credit Cards Really Worth It?
If you’re in the habit of paying your credit card balances in full each month, a cash back credit card is a great deal and you won’t have to worry about paying interest. If you can find a cash back bonus card that carries a lower interest rate than your current credit card, it might be worth the switch.
How do you redeem cash back?
Ways to redeem cash back
- Typically, you have to contact the issuer online or by phone and request a check, a direct deposit into a bank account or a statement credit.
- In some cases, you can set up an automatic reward redemption.
Is 1.5 cash back good?
If you want to earn cash back on every purchase without the hassle of dealing with a complicated rewards structure, a flat-rate, 1.5 percent cash back credit card is a great option. Read on to see how the current 1.5 percent offers compare.