How to redeem cash-back rewards from your credit card
Editor's Note
Credit card rewards are only valuable when you redeem them. But cash-back rewards can be extremely valuable, as they effectively put cash right back in your pocket.
Not all rewards cards provide cash-back rewards, though. And, even among those that do offer a cash-back reward option, cash back may not be the most lucrative use of your rewards. Luckily, if you have a self-proclaimed cash-back rewards card, cash back is usually one of the most lucrative redemption options.
That said, even with a cash-back rewards credit card, you likely won't get cash back deposited into your wallet or account automatically. So, I'll discuss how to redeem cash-back rewards from your credit card to help you get the most out of your rewards.
How cash-back rewards work
You likely earn points, miles or cash back on your purchases if you have a rewards card. However, even if you are technically earning points or miles, you may be able to redeem them for cash back. Typically, you'll find some or all of the following cash-back options on your card:
- Statement credits applied to your account
- Check sent to your mailing address
- Deposit to a checking or savings account, which often must be with the same bank
- Gift card, either electronic or sent to your mailing address
- Payment for a student loan or mortgage, which often must be with the same bank
However, you may get a better redemption rate when choosing particular options. And, there may be minimum redemption thresholds for some methods.
Related: Best 2% cash-back credit cards
How to redeem cash-back rewards
Once you've earned rewards, you must determine how to redeem cash back on your specific card. To check your redemption options, log in to your account online or call the number on the back of your card.
Each card is different regarding earning and redeeming, but to give you a look at the breadth of redemption options, here's how to redeem rewards with several popular cash-back rewards cards.
If you have the Blue Cash Preferred® Card from American Express, for example, you'll earn cash back in the form of Reward Dollars. You can then redeem your reward dollars for a statement credit to your account and at Amazon.com checkout. However, you cannot use reward dollars to pay your minimum balance due.
Alternatively, if you have the Capital One Savor Cash Rewards Credit Card, you can request your cash back as a statement credit or a check.
You can even set up an automatic redemption trigger based on a date or amount threshold. To redeem cash back or set up an automatic redemption trigger, log in to your account or call the number on the back of your card. You can also redeem cash back to offset previous purchases, purchase gift cards and more, but the redemption rates for these options can vary.
Finally, if you have the Ink Business Cash® Credit Card (see rates and fees), every 100 points you earn equals $1 in cash-back rewards. You can redeem points for any available reward options, including cash, gift cards, travel, products and services. However, redemption values for different reward options can vary. As a result, you'll want to make sure you're getting at least 1 cent per point of value when you redeem.
As you can tell, there are many ways to redeem cash-back rewards from your credit card. So, it's best to log in to your account and access your redemption options. After all, cash-back rewards are typically held in your account until you redeem.
Related: How to choose a cash-back credit card
When to redeem cash-back rewards
You'll generally want to redeem your cash back once you earn enough cash-back rewards to redeem at the best rate. For example, some cards require you to redeem for at least $25 of cash back to access the most valuable redemption options.
However, note any expiration policies to ensure you redeem your cash back before it expires.
Some cardholders prefer to redeem cash-back rewards for one large check each year. However, if you redeem your rewards sooner and deposit your rewards in a savings account, you can earn interest on your rewards.
Finally, many higher-end travel cards also allow you to use your points or miles for cash back. However, these options typically come at a lower value. As a result, you may want to stick with travel redemptions if you have a card like the Chase Sapphire Preferred® Card (see rates and fees).
Related: 5 reasons why you want a cash-back credit card in your wallet
Bottom line
Cash-back credit cards can put money back in your pocket. But, credit cards often provide many redemption options. And some options may provide more value than others.
So, determine which redemption options provide the best value before redeeming your cash-back rewards. In general, you'll want to avoid redeeming your rewards for Amazon purchases, merchandise and gift cards, as they offer inferior value compared to a statement credit or check.
Related: Cash back vs. travel rewards
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