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How to Maximize Your Credit Card Cash Back

The most important thing is to choose a credit card that matches how you spend naturally.

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Cash back is one of the main perks of using a credit card. It’s a simple way to earn a return on some of your expenses. If you can earn extra rewards for purchases you regularly make, like gas and groceries, it’s all the better. And rewards aren’t the only reason to use credit cards. They can also help make your shopping safer through consumer protections and virtual credit cards.

What is a cash-back credit card?

A cash-back card gives a percentage of qualifying purchases back to you as rewards. Though redemption options vary by card, you can typically redeem your cash back as a statement credit (which lowers the overall balance of your account), deposit it directly into your bank account as cash or use it toward gift cards or for purchases with specific retailers. Generally speaking, 1% cash back will equal one cent of rewards per dollar spent, but it can vary by card issuer and redemption method.

What are the different types of cash-back credit cards?

There are three main kinds of cash-back credit cards: flat-rate, tiered and rotating rewards credit cards.

Flat-rate cash-back cards are the easiest to use. You’ll earn the same rewards rate on all purchases regardless of where you shop. Many don’t charge an annual fee and pair well with tiered rewards cards and travel credit cards.

Tiered credit cards offer higher reward rates for specific categories of spending. For example, gas credit cards and grocery credit cards often offer higher cash-back rates for fuel and grocery purchases, respectively. You can also find tiered cash-back cards focused on dining, entertainment, travel or multiple different categories. 

This type of card may make sense if you spend a considerable amount in a few categories and want to maximize credit card rewards. Just make sure to pick a card that fits well with your spending habits and never overspend to earn more.

Cash-back cards with rotating rewards offer higher cash-back rates on categories that change on a regular basis, typically every quarter. These cards take a bit more work but can be the most rewarding if you’re able to strategically plan out your spending throughout the year to maximize each quarter’s bonus categories. Some cards require you to manually activate new categories, so pay attention or you might miss out on rewards.

What are the benefits of using a cash-back credit card?

Aside from the main benefit of earning rewards, some cash-back credit cards (and other types of credit cards) offer additional perks. Common credit card benefits include purchase protection, extended warranties, roadside dispatch services and cell phone protection. 

Purchase protection covers your new purchases against damage or theft, usually for up to 90 to 180 days, while an extended warranty can stretch out a manufacturer’s warranty by up to one to two years. Roadside dispatch sends help if you run into car trouble while traveling and cellphone protection insures your phone against damage or theft -- as long as you pay your bill with the credit card.

Virtual credit cards add another layer of protection while shopping online. Many credit card issuers, including American Express and Capital One, offer virtual card access for cardholders. A virtual card lets you use a unique, digital card number in place of your physical card. This prevents the merchant from saving any of your financial information, which can help further protect you from credit card fraud.

How do I maximize my cash back?

Keep these tips in mind as you use your cash-back credit card.

  • Don’t overspend to earn rewards. You could wipe away any positive gains you might earn if you can’t pay off your balance and start accruing debt, interest charges and late payment fees. Never spend more than you usually would to earn credit card rewards.
  • Pay off your statement balance in full each month. This helps you avoid expensive interest charges, which would cut into your cash-back rewards.
  • Choose a credit card that matches your spending. For example, if you spend a lot on eating out and on Uber or Lyft, choose a card that provides dining and ride-share rewards. Don’t get a card first, without regard to its rewards structure, and then try to tailor your spending to fit the card.
  • Earn a welcome bonus. Many cash-back credit cards offer a welcome bonus if you spend a certain amount within a specific time frame. So long as you’re not overspending to reach it, it’s a good way to push your cash-back earnings even higher.
  • Don’t forget to manually activate reward categories. If you have a credit card that features rotating rewards, don’t forget to activate them each quarter if your card issuer requires this step. If you forget to, you might miss out on higher cash-back rates.

How should I redeem my cash back?

Your cash back rewards can be redeemed in several ways, though it might vary by issuer and card. Some of the most common ways to redeem cash back include: 

  •  A statement credit
  • A direct deposit into a linked bank account
  • A gift card
  • For purchases with select merchants, like Amazon

Generally speaking, redeeming your cash back as a statement credit or direct deposit is your best option. The former will decrease your credit card account balance (reducing your bill), while the latter will increase your bank account balance.

If your credit card calculates its rewards in points, one point is usually worth one cent when redeemed for cash back -- though this can vary depending on the issuer and your specific card.

The bottom line

A cash-back credit card can make a rewarding addition to your wallet. Use it for purchases you make regularly to maximize credit card rewards. Avoid overspending and carrying a balance to get the most from your card.


The best way to maximize your credit card rewards is to use your card for purchases you make regularly and to pay off your balance right away. Letting interest accrue on your credit card balance can quickly eliminate any value you’d get from rewards.

The highest cash-back rate we’ve seen on a credit card is 10%, but it’s few and far between. For the few cards that do offer 10% cash back, the rate typically applies only to very specific purchases, like how the Chase Sapphire Reserve® offers 10x total points on hotels and car rentals booked through Chase Ultimate Rewards. Otherwise, 5% or 6% cash back is typically the highest you’ll see regularly.

Editors’ note: An earlier version of this article was assisted by an AI engine. This version has been substantially updated by a staff writer.

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.

Evan Zimmer has been writing about finance for years. After graduating with a journalism degree from SUNY Oswego, he wrote credit card content for Credit Card Insider (now Money Tips) before moving to ZDNET Finance to cover credit card, banking and blockchain news. He currently works with CNET Money to bring readers the most accurate and up-to-date financial information. Otherwise, you can find him reading, rock climbing, snowboarding and enjoying the outdoors.
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