How do cash-back credit cards work?
Editor's Note
What is a cash-back credit card, and how does this kind of card work?
In short, cash-back credit cards are, as the name suggests, cards that provide a cash-back return on some or all purchases made with the card. The earning rates on these cards can be complex or incredibly simple.
Cash-back cards are generally compared against travel credit cards, which offer points or miles with a given card issuer, hotel or airline's loyalty program. Let's examine the ins and outs of cash-back cards to determine if they're right for you.
Related: Cash back vs. travel rewards: How to choose a credit card
What is a cash-back credit card?
Most cash-back cards offer a simple return rate on purchases made in a given set of categories. For example, if a credit card offers 2% cash back on every purchase, you'll earn 2 cents back per every dollar spent.
Some credit cards offer a flat return rate on all purchases, while others offer higher return rates on popular spending categories.
Unlike travel credit cards, cash-back cards offer rewards with a fixed cash value — a double-edged sword, depending on how you redeem your rewards.
Related: The pros and cons of cash-back credit cards
How do cash-back credit cards work?
Cash-back credit cards are typically more straightforward than their points and miles counterparts. Generally speaking, you'll earn cash back on all eligible purchases, excluding things like:
- Balance transfers
- Cash advances
- Gambling-related purchases (including lottery tickets)
- Money orders
- Purchases of foreign currency and/or cryptocurrency
Purchases made through a digital wallet or wireless card reader can also be difficult to categorize, meaning you may not always earn the full rewards rate for those transactions.
Cash-back is generally issued at the end of your card's statement period or billing cycle and can be redeemed for a bank account deposit, statement credit, check, gift card, travel or other option, depending on the card.
Related: How to choose a cash-back credit card
Bottom line
Cash-back credit cards offer simple rewards for those who don't want to deal with points and miles.
Some cash-back cards offer a flat return rate, while others offer higher returns for different categories of purchases. Cash-back rewards can generally be redeemed for statement credits, converted into online shopping credits, used for travel or deposited directly into bank accounts.
Related: Are cash-back credit cards worth it?
TPG featured card
at American Express's secure site
Terms & restrictions apply. See rates & fees.
| 3X | Earn 3X Miles on Delta purchases. |
| 1X | Earn 1X Miles on all other eligible purchases. |
Pros
- Delta SkyClub access when flying Delta
- Annual companion ticket for travel on Delta (upon renewal)
- Ability to earn MQDs through spending
- Various statement credits for eligible purchases
Cons
- Steep annual fee of $650
- Other Delta cobranded cards offer superior earning categories
- Earn 100,000 Bonus Miles after you spend $6,000 or more in purchases with your new Card within the first 6 months of Card Membership and an additional 25,000 bonus miles after you make an additional $3,000 in purchases on the Card within your first 6 months, starting from the date that your account is opened. Offer Ends 04/01/2026.
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- $650 Annual Fee.
- Apply with confidence. Know if you're approved for a Card with no impact to your credit score. If you're approved and you choose to accept this Card, your credit score may be impacted.
- Terms Apply.
- See Rates & Fees