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Help with loansWhat Is a Cash Back Credit Card and How Does It Work?
While a lot of credit cards offer rewards points for the amount spent on their credit card, others also provide cash back on purchases. As the name suggests, this type of offer gives you money back as a percentage of your spend up to a certain amount. This means that each time users tap or swipe their credit card they could be earning some of their spend back, as cash directly into their account.
For example, if your rewards credit card pays 5% cash back on purchases and you make a $200 purchase which is eligible for cash back rewards, you will earn $10 back.
A lot of people like this type of reward on their credit card because they can see the value coming back into their account each month and it’s generally easy to understand compared to major reward programs that work in points rather than dollar figures.
How do cash back credit cards work?
Cash back offers vary between cards and providers, with some earning cash back rewards as part of an ongoing feature of the card and others providing cash back for a limited introductory period. Some credit card reward programs, such as the Citi Rewards Program, even allow you to redeem reward points for cash back.
Firstly you need to find a Credit Card with a cash back offering that suits you. Check out the Citi Rewards Classic Credit Card for a rewards credit card with a cash back promotion.
It’s a good idea to check what purchases are eligible for the cash back promotion and what’s excluded – generally most spend on retail purchases are included but cash advances, balance transfers and any refunds are not.
Most cash back reward cards pay somewhere around 1% or 2% of your purchases back in cash, with some paying as much as 5% cash back. This amount is typically deposited into users account at the end of the statement period or billing cycle.
While credit cards with cash back offers follow the same principal - giving you cash back on your spend, there are a few different types of offers.
1. Introductory promotions: some credit cards offer cash back promotions for new customers whereby they are rewarded with a lump sum if they spend a specific amount within the first few months of receiving their card.
2. Cash back as a percentage of your spend: most cash back credit cards work by sending a percentage of your eligible spend as cash back to your bank account so that you can spend it. As mentioned, these usually have a cap or maximum amount of money you can get.
3. Gift cards: some cash back offers let you convert your reward credit card points into cash. These can either be in the form of cash deposited into your account or gift cards which can be spent at particular retailers.
How can I compare offers?
In order to choose the best cash back credit card offer for you, there are a few key features you should look out for.
Offer value
In order to decide if the rewards for a particular credit card are worth it, you need to weigh up the cash you will receive based on your spending habits against the overall cost of the card including fees.
Caps on rewards
Some cash back offers place a cap on the cash you can receive from your cash back credit card, these can be annual or monthly caps. Ensure you have chosen a credit card whose cap is high enough for you to receive maximum cash back from your purchases.
Introductory offers
A lot of introductory cash back offers have a minimum spend within a certain time frame. It’s important that you understand these requirements so that you are able to take advantage of the offer.
Ineligible transactions
While most everyday purchases are eligible for cash back, there are some which are not, including cash advances, and credit card fees. Be sure to check which purchases are considered eligible so that you are able to choose a card which complements your spending.
Interest rates
If you are not looking to pay off your credit card bill in full each month, choosing a card with a low interest rate is important. The interest you’ll be charged on the outstanding balance might outweigh the value to the cash back reward.
The value of rewards
If you hold a rewards credit card which lets you convert points to cash, check to see if there are other rewards such as flights or travel upgrades whose retail value is higher than the cash you would receive from your points. Sometimes, converting to cash isn’t always the most cost-effective option.
Other features
There are also other factors which need to be considered when choosing any credit card, such as the fees, charges and any complimentary offers.
If you need help choosing the right credit card for you, we make it easy to compare balance transfer, travel and rewards, premium, low-rate and no annual fee credit cards. Compare credit card features, benefits, rates and fees to choose the best card for your lifestyle.
While a lot of credit cards offer rewards points for the amount spent on their credit card, others also provide cash back on purchases. As the name suggests, this type of offer gives you money back as a percentage of your spend up to a certain amount. This means that each time users tap or swipe their credit card they could be earning some of their spend back, as cash directly into their account.
For example, if your rewards credit card pays 5% cash back on purchases and you make a $200 purchase which is eligible for cash back rewards, you will earn $10 back.
A lot of people like this type of reward on their credit card because they can see the value coming back into their account each month and it’s generally easy to understand compared to major reward programs that work in points rather than dollar figures.
How do cash back credit cards work?
Cash back offers vary between cards and providers, with some earning cash back rewards as part of an ongoing feature of the card and others providing cash back for a limited introductory period. Some credit card reward programs, such as the Citi Rewards Program, even allow you to redeem reward points for cash back.
Firstly you need to find a Credit Card with a cash back offering that suits you. Check out the Citi Rewards Classic Credit Card for a rewards credit card with a cash back promotion.
It’s a good idea to check what purchases are eligible for the cash back promotion and what’s excluded – generally most spend on retail purchases are included but cash advances, balance transfers and any refunds are not.
Most cash back reward cards pay somewhere around 1% or 2% of your purchases back in cash, with some paying as much as 5% cash back. This amount is typically deposited into users account at the end of the statement period or billing cycle.
While credit cards with cash back offers follow the same principal - giving you cash back on your spend, there are a few different types of offers.
1. Introductory promotions: some credit cards offer cash back promotions for new customers whereby they are rewarded with a lump sum if they spend a specific amount within the first few months of receiving their card.
2. Cash back as a percentage of your spend: most cash back credit cards work by sending a percentage of your eligible spend as cash back to your bank account so that you can spend it. As mentioned, these usually have a cap or maximum amount of money you can get.
3. Gift cards: some cash back offers let you convert your reward credit card points into cash. These can either be in the form of cash deposited into your account or gift cards which can be spent at particular retailers.
How can I compare offers?
In order to choose the best cash back credit card offer for you, there are a few key features you should look out for.
Offer value
In order to decide if the rewards for a particular credit card are worth it, you need to weigh up the cash you will receive based on your spending habits against the overall cost of the card including fees.
Caps on rewards
Some cash back offers place a cap on the cash you can receive from your cash back credit card, these can be annual or monthly caps. Ensure you have chosen a credit card whose cap is high enough for you to receive maximum cash back from your purchases.
Introductory offers
A lot of introductory cash back offers have a minimum spend within a certain time frame. It’s important that you understand these requirements so that you are able to take advantage of the offer.
Ineligible transactions
While most everyday purchases are eligible for cash back, there are some which are not, including cash advances, and credit card fees. Be sure to check which purchases are considered eligible so that you are able to choose a card which complements your spending.
Interest rates
If you are not looking to pay off your credit card bill in full each month, choosing a card with a low interest rate is important. The interest you’ll be charged on the outstanding balance might outweigh the value to the cash back reward.
The value of rewards
If you hold a rewards credit card which lets you convert points to cash, check to see if there are other rewards such as flights or travel upgrades whose retail value is higher than the cash you would receive from your points. Sometimes, converting to cash isn’t always the most cost-effective option.
Other features
There are also other factors which need to be considered when choosing any credit card, such as the fees, charges and any complimentary offers.
If you need help choosing the right credit card for you, we make it easy to compare balance transfer, travel and rewards, premium, low-rate and no annual fee credit cards. Compare credit card features, benefits, rates and fees to choose the best card for your lifestyle.