What is cash back?

Cash back works on credit cards by returning a percentage of the money you spend on purchases as a reward. Some cash back credit cards reward cardholders with the same percentage back on every type of purchase. Others give bonus cash back in designated spending categories. Most cash back credit cards give cardholders the choice of redeeming cash back rewards earnings for a statement credit to pay part of the account balance, a paper check, gift cards and more. In some cases, you can also redeem a credit card’s cash back rewards for a bank account deposit.… read full answer

The best cash back credit cards require good or excellent credit for approval, though there are options for people of all credit levels. Similarly, some cards charge annual fees in return for higher earning rates, but many cash rewards cards have no annual fee.

More generally, cash back is one of the three big types of credit card rewards. The others are points and miles, which you’ll see more often with travel cards. On that note, a credit card doesn’t have to be a “cash back credit card” to give cash back. Plenty of rewards credit cards, including some that offer miles and points, have cash back as a redemption option. Redeeming travel rewards for cash back often results in a lower redemption rate, however. True cash back rewards earned with a cash back credit card, on the other hand, are very versatile and don’t fluctuate in value. You can learn more below.

Here’s how cash back works on credit cards:

• Cash back with every purchase: The average cash rewards card offers about 1% back on all purchases. Some cards offer more cash back in certain spending categories.
• Chances for extra cash back: Many cash back credit cards offer initial rewards bonuses for spending a certain amount within the first few months your account is open. Some cards also have bonuses for referring a friend or meeting an annual spending threshold.
• Redeeming your cash: Cash rewards can usually be redeemed for a statement credit, check or direct deposit. You may also be able to redeem for a bank account deposit and set up automatic redemption.
• Restrictions: Some credit card companies make you earn a minimum amount of cash back before you can redeem.
• Cash back expiration: Sometimes, credit card cash back will expire a certain number of months after you earn it or after your card has been inactive for a certain period of time. Usually, it won’t expire as long as your card stays open.
• Rewards devaluation: Unlike points and miles, whose value is set by the card issuer, cash back can’t be devalued.
• Fees. Most cash back credit cards have no annual fee. Many have no foreign transaction fee. Some charge both types of fees, however.

Ultimately, you can check our editors’ latest picks for the best cash back cards on the market to weigh your options.

The best credit cards with 5% cash back in major spending categories are:

All of these credit cards give 5% cash back, or more, on certain expenses. Some of those categories may change quarterly or yearly, require activation and usually have a cap. There’s never been a general-purpose credit card that rewards users with 5% cash back on all purchases.

You can get cash back on your credit card at the register if you have a Walmart credit card. The Walmart® Store Card and Capital One Walmart Rewards® Mastercard® offer allows cardholders to withdraw up to $100 at Walmart stores. Other than these options, you’ll need to use a debit card to get cash back at the register.… read full answer

You can get also get cash back from a credit card at an ATM by doing what’s known as a cash advance. However, this typically comes with expensive fees and APRs, so it’s not ideal unless you’re in an emergency situation.

In addition, some credit cards give you cash back rewards with every purchase you make, redeemable for a statement credit, check, bank account deposit and more. Certain cards give you the same amount of cash back for every dollar you spend, regardless of where you spend it, while others reward you more for certain types of purchases.

In other words, there are three main ways to get cash back with a credit card: cash back at the register, cash advances and cash back rewards. But they have differing effects on your wallet. Cash rewards come at no extra cost to you and add up to extra money in your pocket, but are less immediate. Cash advances, on the other hand, are very costly and penalize you for taking them out. And cash back at the register is very rare with credit cards. With that, we’ll break down cash rewards and cash advances in a bit more detail below.

How to Get Cash Back Rewards on your Credit Card

• Pick the Right Rewards Card. Cash back rewards are one of three major types of rewards, points and miles being the other two. If your card has cash back rewards, all you need to do to earn them is use your credit card. Typically, you’ll earn at least 1% cash back on all purchases, and many cards offer higher rates for some or all categories of purchases. For example, you might get 2% cash back on travel, gas, groceries or another type of purchase while earning 1% for everything else. If you’re unsure where to start your search, take a look at WalletHub’s picks for the best cash back credit cards.
• Spend Wisely. Cash back cards may reward certain purchases (e.g. gas, groceries) more highly than others. Some cards have bonus categories that always stay the same, and others have ones that rotate each quarter.
• Redeem Regularly. Once you earn cash back, you can redeem it for a check, statement credit or bank account deposit. You may have other options, such as gift cards, but they’re not as versatile and often provide less value than cash back.

Another much costlier way to get cash from your credit card is a cash advance. This type of transaction lets you use your credit card to withdraw money from an ATM, like you would with a debit card.

How to Get a Cash Advance From Your Credit Card

1. Call your issuer and ask for a PIN.
2. Once you get the PIN, you can use it to get money from ATMs. You can withdraw up to your “cash advance limit,” which is listed on your statement.
3. The credit card issuer charges you a “cash advance fee,” usually at least 3% of the amount you withdraw.
4. Your balance starts to accrue interest immediately, at an APR that is likely to be well over 20%.

It’s not a good idea to do a cash advance unless it’s an emergency situation. And if you do have to get one, make sure you pay it back as quickly as possible to minimize the interest.