Cash back is a benefit that gets you a discount for certain purchases. In the context of credit cards, cash back is a type of credit card rewards. You can earn cash back through signup bonuses for meeting certain spending requirements, or through ongoing rewards, as a percentage of the amount spent on qualifying purchases. Some credit cards also offer cash back anniversary bonuses in the form of statement credit for qualifying purchases.
Cash back credit cards make for a great addition to anyone’s wallet because they provide a straightforward earning and redemption mechanism in a currency that cannot be devalued by a credit card company. The best cash back credit cards tend to be those that keep things simple by providing attractive flat earning rates across all purchases, or those that offer higher rates in your biggest spending categories. Cash back credit card rewards can usually be redeemed for statement credits, bank account deposits or paper checks, depending on the credit card company.
Other types of cash back
Some also think of getting cash from a credit card's credit line, like withdrawing cash from an ATM, as cash back. This type of transaction is considered a cash advance and should be avoided. Cash advances are extremely expensive transactions that are subject to fees and a cash advance APR that applies immediately, with no grace period.
Aside from credit card rewards and cash advances, cash back could also refer to money that you get at a store register when you’re checking out. But you can pretty much only do this when using a debit card to pay. The money is added to your purchase amount and debited from your bank account. Some stores have a limit on the amount too and not every store will let you do it.
Some car dealerships offer “cash back” when you’re buying a car, too. It’s basically just a rebate on the car. You can usually get it as a check or as a discount on your down payment.
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