Guide to Cash-Back Credit Cards

Cash-back credit cards earn rewards simply by using your credit card to make regular purchases. While rewards rates and perks vary, the best cash-back credit cards offer up to 5% cash back (and potentially more) on certain types of purchases and a base rewards rate of 1% to 2% back on other purchases.

Many credit cards that earn cash back also have generous welcome bonuses and intro APR offers to help you temporarily avoid interest, plus consumer benefits like purchase protection and extended warranties. The key to finding the right cash-back credit card is figuring out which one offers the most rewards for your regular spending.

How cash-back credit cards work

It’s a fairly simple concept: When you use cash-back credit cards for purchases, you earn a percentage of cash back for each dollar you spend.

Different cash-back credit cards feature varying rates of cash back. For example, some cash-back credit cards offer a flat rate of 2% cash back on all purchases, or $2 back for every $100 you spend. Others let you earn 3% to 5% in bonus categories -- or specific purchase types like gas or groceries -- and a flat rate of 1% to 1.5% cash back on all other purchases.

How you redeem your cash back can also vary from card to card. While some credit cards only let you use cash-back rewards for statement credits on your account, others let you redeem for cash, gift cards, merchandise and travel.

Types of cash-back credit cards

Having an understanding of the types of cash-back credit cards can help you choose one that suits the way you spend.

Here are the most common types of cash-back credit cards:

• Flat-rate cash-back credit cards: Cards in this niche let you earn a flat rate (often 2% cash back) of rewards on all eligible purchases without any categories or limits to keep track of.
• Tiered cash-back credit cards: Tiered rewards cards typically offer 2% to 5% cash back in certain bonus categories, like dining, gas or drugstores, then a flat rate of 1% to 1.5% cash back on other eligible spending.
• Rotating category cards: Rotating category cards typically offer a higher percentage cash back on purchases in bonus categories that change quarterly. They usually have a set spending limit before their rewards drop to 1% cash back, but they often feature other static bonus categories with no limit.

If you want to maximize your rewards and you don’t mind using your card strategically, you might prefer a tiered rewards card or a rotating category card. If you don’t want to keep track of reward categories, a flat-rate cash-back credit card could be a better choice.

Benefits of cash-back credit cards

The main draw of a cash-back credit card is to return a certain amount of each dollar you spend back to you as rewards. But that’s not their only benefit.

Points are easy to earn and use

Cash-back rewards are easy enough to earn: Use your card for your everyday spending to earn cash back. Rewards for all eligible purchases are typically available within one or two billing cycles. 

Once you’ve amassed some rewards, you can redeem them as statement credits to lower the overall balance of your account or deposit them directly into a bank account. Some cards will automatically apply cash rewards to your monthly statement balance while others require you to log in to choose your redemption method -- typically cash back, a statement credit or a gift card.

Many feature an introductory 0% APR 

Many cash-back credit cards offer introductory 0% APR on purchases, balance transfers or both for a limited time. This introductory period can be helpful if you want to transfer higher-interest balances from other cards or spread out payments for a large purchase. But remember that variable interest rates apply when these offers end.

Many have automatic consumer protections

Frequently, cash-back credit cards will offer extra benefits like cellphone protection, purchase protection against damage or theft, extended warranties, and basic travel insurance benefits. Since these benefits vary from card to card, you’ll want to compare options to find one that best fits your needs.

Cash-back credit cards vs. points and miles credit cards

While cash-back credit cards can be rewarding, there are other types of rewards credit cards to consider as well. For example, there are credit cards that earn points or miles instead of cash back, which can be redeemed for travel. These cards also vary widely in their rewards rates and features, but they offer additional redemption options like airfare, hotel stays, car rentals and other travel types.

Among the most popular types of points and miles credit cards are flexible travel credit cards. These cards earn rewards that are redeemable for cash back but also let users book travel with points through an issuer’s travel portal or transfer points to a range of airline and hotel partners where they could be more valuable.

Points and miles cards also stand out because they tend to offer the potential for more lucrative redemptions. For example, Chase Ultimate Rewards points earned with the Chase Sapphire Preferred® Card are worth 1 cent each when redeemed for cash back or statement credits, yet users can redeem them for 1.25 cents each when booking travel through Chase Travel℠ or -- according to The Points Guy -- get more than 2 cents per point (and potentially more) when transferring to partners to make a premium travel redemption.

However, cash-back card rewards are typically easier to earn and use, often letting you redeem rewards in smaller increments. 

The Wells Fargo Active Cash® Card, for instance, lets you redeem your cash rewards to cover purchases as small as $1. Some cards have minimum redemption amounts. If you aren’t saving for a trip or could use the rewards now to save money, a cash-back card might be more helpful for you.

Pros and cons of cash-back credit cards

These credit cards have their advantages and disadvantages, especially when compared to other types of rewards credit cards.

Factors to consider when choosing a cash-back credit card

• Welcome offers: Look for cash-back credit cards with welcome bonuses you can easily earn through normal spending. If you need to spend $1,500 within three months of account opening to earn a welcome bonus, for example, make sure you can charge $500 per month to the card in regular spending and bills. Overspending to reach a bonus will only take away from the value you’d get from it.
• Earning rates: Choose a rewards card that offers the best rewards rate for the way you spend, whether you want a rotating category card, a tiered cash-back credit card or a flat-rate card.
• Fees and charges: Check for credit card annual fees, balance transfer fees and regular variable APRs to make sure you know what they are and how they work.
• Intro APR offers: If you need to carry a balance for a limited time, compare cards’ intro APR offers, including how long their introductory periods last.
• Eligibility requirements: Where most rewards cards require good to excellent credit, some are available to consumers with fair credit. There are even secured credit cards that earn cash back for people with bad credit or limited credit history.

How to maximize cash-back rewards

Maximizing your rewards can look different depending on your goals and how much effort you want to put into your rewards game. Consider these tips:. 

Avoid credit card interest completely

Average credit card interest rates are currently over 20%, according to Bankrate, so you’ll only get value from a rewards card if you pay off the card balances in full each month. 

Otherwise, the interest charges will likely wipe out the value of your rewards. If you’re taking advantage of a 0% intro APR offer, make a plan to pay off the balance before your introductory period ends to avoid interest charges. You can figure out how much you’ll need to pay each month by dividing the card balance by the number of months in the intro offer.

Pair several cash-back credit cards

Consider pairing several cash-back credit cards to maximize rewards on all your purchases. For example, you could use one card that offers a higher rate on gas and restaurants, then switch to a flat-rate cash back credit card that offers 2% cash back for other spending.

Charge your purchases and bills

You can also maximize cash back by using your credit card for most of your regular purchases, like gas, groceries, utility bills and insurance bills. But be sure to check if there are any convenience fees charged for using a credit card -- if so, you’ll need to figure out if you can earn more rewards than you’ll pay in convenience fees.

For example, if your utility company charges $5 to use your credit card to pay a $200 bill, you’ll need to earn at least 2.5% cash back on the purchase to earn enough rewards to offset the fee. 

Best cash-back credit cards on the market

How to apply for a cash-back credit card

• Compare cards and offers. Compare the best cash-back credit cards to find the right one for you based on rewards rates, welcome bonuses, fees and other factors.
• Apply for a card. Hit the button that says “apply now” to begin filling out the application.
• Supply personal and financial information. Fill out the application with information like your full name and contact details, your household income, your monthly housing payment and your Social Security number (SSN).
• Find out if you’re approved. You may find out if you’re approved in a matter of minutes online, or you may receive notification via email or physical mail.

FAQs

Additional Resources and Links

The following resources can help you expand your knowledge and get the most out of cash-back credit card:

• Are Credit Card Rewards Taxable?
• Best Apps for Tracking Credit Card Rewards
• These 3 Debit Cards Earn Cash-Back Rewards
• 6 Important Dates to Know for Your Credit Cards

*All information about the Capital One SavorOne Cash Rewards Credit Card, Blue Cash Everyday Card from American Express, and Chase Freedom Flex has been collected independently by CNET and has not been reviewed by the issuer.

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.