Cash back is a type of credit card rewards. Cash back credit card rewards can usually be redeemed for statement credits, bank account deposits or paper checks, depending on the credit card company.
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 earning rates across all purchases.
Cash back could also be money that you get at a store register when you’re checking out, but you can pretty much only do this if you’re using a debit card to pay. The money is added to your purchase amount. Some stores have a limit on the amount too, like $20 or $40, 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.
Cash back credit cards work by returning a percentage of every purchase made. 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 credit cards work:
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.
The best 5% cash back credit card is Discover it – Cashback Match, but there are several other notable choices including Chase Freedom and some store credit cards. Discover it and Chase Freedom both offer 5% cash back in specified bonus categories, which change every three months, plus 1% on everything else. Store cards can only be used at the retailers they’re tied to, but if you shop there often, why not get 5% cash back? Let’s take a closer look at your choices.… read full answer
Here are the best 5% cash back credit cards:
Discover it – Cashback Match: 5% cash back on the first $1,500 spent in the quarter’s purchase categories, 1% on everything else. No annual fee. First year’s cash back matched at the end of the year. Requires good credit.
Chase Freedom: 5% cash back on the first $1,500 spent in the quarter’s purchase categories, 1% on everything else. $150 initial bonus after spending $500 in the first 3 months. Requires excellent credit.
Amex Cashback Rewards Plus: 5% cash back on $5,000 in gas and military purchases each year, 2% on the first $3,000 at supermarkets per year, unlimited 1% on everything else. Requires good credit.
Amazon Store Card: 5% cash back on all Amazon purchases for Amazon Prime members only. No annual fee. Requires fair credit.
Target REDcard: 5% cash back at Target and Target.com. No annual fee. Requires fair credit.
Lowe’s Store Card: 5% cash back at Lowe’s. No annual fee. Requires fair credit.
Staples Credit Card: 5% cash back at Staples. No annual fee. Requires fair credit.
There are even more store cards that offer 5% cash back rates, so it’s worth looking into what your favorite retailers bring to the table. Pretty much all store credit cards only require fair credit to get, too. But for overall value, Discover it – Cashback Match is your best bet for a 5% cash back credit card because it actually gives you up to 10% back the first year. You need good credit, though.
You can get cash back rewards on your credit card with every purchase you make, redeemable for a statement credit, check, bank account deposit and more. Some 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. You can also get cash from your credit card at an ATM by doing what’s known as a … read full answercash advance. You might even be able to get cash back at the register, much like with a debit card, but this is only an option with a few cards.
Those are the two main ways to get cash back with a credit card: cash back rewards and cash advances. But they have opposite effects on your wallet. Cash rewards come at no extra cost to you and add up to extra money in your pocket. Cash advances, on the other hand, are very costly and penalize you for taking them out.
So you want to maximize cash rewards and minimize cash advances. In fact, high cash advance fees and interest rates are likely to cost you a lot more than you benefit from rewards if you aren’t careful. With that in mind, let’s take a closer look at these two different methods for turning credit card use into cash.
Here’s how to get cash back 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. Some of the most prominent include Citi® Double Cash Card – 18 month BT offer and Capital One® Quicksilver® Cash Rewards Credit Card.
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.
Here’s how to get a cash advance from your credit card:
Call your issuer and ask for a PIN.
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.
The credit card issuer charges you a “cash advance fee,” usually at least 3% of the amount you withdraw.
Your balance starts to accrue interest immediately, at an APR that is likely to be well over 20%.
So 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.
Some credit card issuers might allow you to get cash back at the register as well, but it’s very uncommon. In almost all situations, you’ll need a debit card to do that. One exception, is Discover’s “Cash Over” benefit, which allows you to withdraw up to $120 every 24 hours when checking out. This doesn’t trigger a cash advance fee and the balance is subject to your normal APR. The Walmart Store Card offers the same thing.
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