Credit cards are perhaps best known for allowing you to make purchases today that you can’t afford until tomorrow. Many cards also come with a slightly less discussed perk: Cash back on all your purchases. Sure, the amount of cash you’ll earn per purchase can be small, but over time, these earnings can add up big-time. That’s why you might want to learn how to get cash back from a credit card. The guide below should tell you everything you need to know.
Table of contents
- How Cash Back Works
- Cash Back vs. Cash Advance
- How to Get Cash Back from a Credit Card
- How to Redeem Cash Back Rewards
- 10 Best Cash Back Credit Cards to Use
- 1. Wells Fargo Active Cash℠ Card
- 2. Chase Freedom Unlimited
- 3. Blue Cash Preferred® Card from American Express
- 4. Blue Cash Everyday® Card from American Express
- 5. Discover it® Cash Back
- 6. Citi® Double Cash Card
- 7. U.S. Bank Cash+™ Visa Signature® Card
- 8. Capital One SavorOne
- 9. Bank of America® Unlimited Cash Rewards
- 10. Citi Custom Cash Card
- How to Get Started With Credit Cards
How Cash Back Works
Understanding how to get cash back from a credit card is simple. Every time you make an eligible purchase on a cash back credit card, you earn a tiny percentage of that purchase as bonus cash.
Your credit card issuer will store your rewards in your account, and you can redeem your cash back rewards in numerous ways. Some rewards cards offer the ability to transfer cash directly to your bank account, and some offer retail gift cards or statement credits.
Most credit card rewards programs earn cash back at a rate of one to two percent. For example, if you use your card for a $50 purchase and your rewards rate is one percent, you’ll earn $50 * 0.01 = $0.50.
Some rewards programs offer higher rates in certain spending categories. For example, during the holiday season, some cards might offer cashback rates of up to five percent on purchases from major online retailers. These rotating categories typically go into effect automatically, though with some cards, you’ll need to manually register for them.
Cash Back vs. Cash Advance
Earning cash back on your credit card is different from using your card to obtain a cash advance. When you earn cash back, your credit card issuer gives you that money – it’s yours to keep. Cash advances, though, are loans with potentially high fees and interest rates. They allow your credit card to function as a debit card at an ATM, but you’ll be borrowing cash against your credit limit.
To quickly summarize this difference: Cashback rewards are money you earn through your normal spending and buying habits. A cash advance is an instant cash loan that comes with high interest rates and fees. As such, only cashback rewards are advised as a way to earn extra cash.
How to Get Cash Back from a Credit Card
Getting cash back from a credit card is as simple as it sounds. Your rewards will automatically accrue with every purchase you make. The more important question is: How can you get the most cash back from a credit card? The answer requires a bit more strategy.
Namely, if you have a cash back credit card, you should check your account’s rewards portal to determine your bonus categories. For example, let’s say your typical cash back rate is one percent but, at restaurants, you earn three percent in rewards. In that case, you should pay at restaurants with only the card in question. Really, though, all your purchases will earn you at least some amount of cash.
You can also look at introductory bonuses as a form of credit card cashback. Examples can include earning a certain amount of money if you spend a certain amount within that first month. The rewards amount can sometimes be as high as 40 percent in these cases, which is an order of magnitude higher than typical cashback rewards. So make your account opening choices carefully – a substantial amount of extra cash could result.
How to Redeem Cash Back Rewards
Though no two cashback credit cards disburse rewards in exactly the same manner, the general gist is the same. You’ll log into your account, visit the cashback portal, and send your rewards to your bank account or PayPal account. Alternatively, you can transform the cash you’ve earned into a statement credit or a gift card for a major retailer. You can even convert your rewards to travel points, though the conversion rate might be on the lower side.
Additionally, some cash back credit cards might only let you cash out once you’ve reached a certain minimum amount of rewards. You’ll see such options in the below list of the best cash back credit cards. Their rewards rates may merit the delay in issuing time.
10 Best Cash Back Credit Cards to Use
When comparing and contrasting cash back credit cards, you’ll see quite a few options. And that, of course, can be a bit overwhelming. You might fare better if you start with just the below 10. These picks all reliably earn rewards for first-time cardholders and longtime cashback users alike.
1. Wells Fargo Active Cash℠ Card
The Wells Fargo Active Cash Card offers a flat two percent cashback rate. You’ll also earn a $200 bonus if you spend $1,000 in your first three months. Your card will also lack annual fees and come with zero APR for the first 15 months. Thereafter, your variable APR will increase to somewhere between 14.99 and 24.99 percent. Foreign transaction fees will apply if you use this card abroad, and other cards may offer better cashback rates in certain categories.
2. Chase Freedom Unlimited
The Chase Freedom Unlimited card charges no annual fee and offers a $200 bonus if you spend $500 in three months. Your rewards rate will be 1.5 percent on most purchases, with higher bonus rates in other categories. You’ll earn 5 percent on travel bookings and 3 percent at restaurants and drugstores. Additionally, during your first year, you’ll earn 5 percent on grocery store purchases until you reach $12,000. Foreign transaction fees are the only big drawback.
3. Blue Cash Preferred® Card from American Express
With the Blue Cash Preferred Card from American Express, you’ll earn six percent back at supermarkets (up to $6,000) and on some streaming services. You’ll also get three percent back at gas stations and transit. All other purchases earn one percent back, and you’ll get a $300 statement credit if you spend $3,000 within six months. However, after one year without an annual fee, you’ll have to pay a $95 annual fee.
4. Blue Cash Everyday® Card from American Express
The Blue Cash Everyday Card is basically the Preferred card without an annual fee. You’ll earn three percent instead of six percent at supermarkets, though the $6,000 limit remains intact. The gas station rewards rate decreases to two percent, a rate that department store purchases also earn. Your intro offer will be slightly different: a $200 statement credit if you spend $2,000 in your first six months. As such, if you can afford the Preferred card’s fee, it may be a better pick.
5. Discover it® Cash Back
The Discover it Cash Back card earns one percent on most purchases and five percent on quarterly rotating categories. These categories are often broad and include common purchase types such as supermarket and e-commerce shopping. Your intro bonus is variable and will increase as you use your card more frequently, and you’ll never pay annual fees. However, you’ll need to manually activate the quarterly rotating categories and wait a year for your bonus.
6. Citi® Double Cash Card
With the Citi Double Cash Card, you earn one percent when you make a purchase and one percent when you pay it off. As such, your total effective cashback rate is two percent. The card lacks an annual fee or rotating bonus categories, though it also lacks an intro bonus. You’ll also have to wait until your rewards total at least $25 to cash out. Additionally, the three to six percent bonus cashback rates available with other cards may trounce this card’s rates.
7. U.S. Bank Cash+™ Visa Signature® Card
The U.S. Bank Cash+ Visa Signature® Card lets you choose your own cashback categories. You can apply a five percent cashback rate to two categories, though after you earn $2,500, your rate will drop to one percent. You can also apply a two percent rate to another category. All other purchases earn one percent cash back. You also have four months to spend $1,000 and earn a $200 bonus. However, you’ll have to manually set your categories every quarter.
8. Capital One SavorOne
The Capital One SavorOne card currently offers an eight percent cash back rate for Vivid Seats purchases. You’ll also receive three percent in rewards for dining, entertainment, grocery purchases, and some streaming subscriptions. There’s no annual fee, and you’ll earn a $200 bonus if you spend $500 in your first three months. Perhaps you can find a card with bonus categories better aligned with your spending habits, but the SavorOne is a great start.
9. Bank of America® Unlimited Cash Rewards
The Bank of America Unlimited Cash Rewards card earns you 1.5 percent cash back on all purchases, with no special bonus categories. It comes without an annual fee, and you’ll earn a $200 bonus if you spend $1,000 within your first three months. You can also enjoy a lower introductory APR on typical purchases and balance transfers. However, most other credit cards have higher cashback rates.
10. Citi Custom Cash Card
With the Citi Custom Cash Card, the category in which you spend the most per billing cycle automatically earns you five percent cash back. Your other purchases will earn one percent cash back. The intro offer is also solid: $200 if you spend $750 in your first three months. However, your five percent cash back rate has a limit of $500 in rewards before reverting to a one percent rate.
How to Get Started With Credit Cards
Ready to open your first credit card and start earning some cash back? If so, simply choose your favorite above and enroll with the card issuer. But before you do, read the MoneyMash guide to how credit cards work. You’ll learn everything you need to start using your credit card and earn the most rewards possible.