Best ways to use the cash back from your credit card

Oct 14, 2020

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Credit card rewards are only valuable when you redeem them. With the coronavirus pandemic limiting travel, cash-back rewards may provide more immediate value than transferrable points. After all, cash-back rewards can effectively put cash right back in your pocket.

However, not all cash-back cards provide easy-to-redeem rewards. In particular, some cards only allow you to redeem for cash back once you’ve accumulated a certain amount of rewards. And, other cards may only provide the highest value for a few less-appealing redemption options.

So, today I decided to take a closer look at some of the best cash-back credit cards:

The information for the Capital One Savor and Capital One Spark Cash has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

I’ll give a quick overview of each card before describing your options for cashing out your cash-back rewards. Then, you can make a more informed decision when choosing your next cash-back card.

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In This Post

Blue Cash Preferred Card from American Express

American Express Blue Cash Preferred
(Photo by The Points Guy)

Welcome offer: $300 statement credit after you spend $3,000 in purchases on your new card in your first six months. Offer ends 12/10/2020.

Earning rate:

Annual fee: $95, waived for the first year of card membership (see rates and fees).

How to use your cash back

You’ll earn cash back in the form of Blue Cash reward dollars. You can redeem your rewards dollars for a statement credit to your account when your rewards balance is $25 or more. However, you can not use reward dollars to pay your minimum balance due.

Occasionally, Amex may provide other ways to redeem reward dollars, such as gift cards or merchandise. However, redeeming for a statement credit will usually be your best option. After all, you’ll earn rewards on purchases that may eventually be covered by the statement credit.

Related: Amex credit card showdown: Blue Cash Preferred vs. Blue Cash Everyday

Who is this card for?

If you spend $6,000 at U.S. supermarkets each year with the Blue Cash Preferred Card from American Express — which is just $500 per month — you’ll earn $360 in cash back each year on this spending. So, even if you don’t use any of the Blue Cash Preferred’s other bonus categories or perks, you’ll easily be able to justify the card’s $95 annual fee. In particular, the Blue Cash Preferred can be great for families.

For more information, check out the full Blue Cash Preferred Card from American Express review. And here’s the official application link: Blue Cash Preferred Card from American Express.

Related: What credit score do you need for the Amex Blue Cash Preferred?

Capital One Savor Cash Rewards Credit Card

Capital One Savor cash rewards credit card
(Photo by John Gribben/The Points Guy)

Sign-up bonus: $300 cash bonus once you spend $3,000 on purchases within three months from account opening

Earning rate:

Annual fee: $95

How to use your cash back

You can request your cash back as a statement credit or a check. And you can even set up an automatic redemption that’s triggered by one of the following:

  • A set time each calendar year
  • When a specific threshold ($25, $50, $100, $200, $500 or $1,500) is reached

To redeem your 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. So, I’d recommend simply redeeming for a statement credit or check periodically.

Related: Credit card showdown: Capital One Savor vs. Capital One Quicksilver

Who is this card for?

The Capital One Savor Cash Rewards Credit Card is an excellent cash-back rewards option if you spend a lot on dining, entertainment and Uber Eats (although the 5% back on Uber Eats is only through Jan. 31, 2021). But, if you don’t spend all that much in these categories, you may be better off with a different card.

If you like the  Savor but don’t want to pay an annual fee, consider the no-annual-fee Capital One® SavorOne® Cash Rewards Credit Card. The SavorOne offers a lower sign-up bonus and lesser earning rates, but there’s no annual fee to pay. So, consider how much you’d be putting on your Savor or SavorOne card and calculate which is better for you.

For more information, check out our full Capital One Savor Cash Rewards Credit Card review. And here’s the official application link: Capital One Savor Cash Rewards Credit Card.

Related: 3 reasons why you need a cash-back credit card in your wallet

Citi Double Cash Card

Citi Double Cash Card
(Photo by John Gribben/The Points Guy)

Sign-up bonus: None

Earning rate: 2% cash back, 1% when you buy and 1% as you pay, on all purchases

Annual fee: None

How to use your cash back

You’ll earn cash rewards when you make purchases with your Citi Double Cash Card. To redeem these cash rewards, log in to your online Citi account or call 1-855-473-4583. When redeeming, you can use your cash rewards in the following ways:

  • Request a check for at least $25
  • Redeem for a statement credit to your card account for at least $25
    Redeem for a credit of at least $25 to your linked Citi savings or checking account, or to a checking account from which you have paid a Citi credit card bill at least two times
  • Convert cash rewards worth at least $1 to ThankYou points

As you can see, you must have a cash rewards balance of $25 or more to utilize any of the cash back options. So, if you plan to close your account or move most of your spending to another card, you may want to wait to redeem your cash rewards balance until you’ve stopped earning rewards on your card. Otherwise, you may strand some of your rewards.

Related: What credit score do you need to get the Citi Double Cash Card?

Who is this card for?

The Citi Double Cash Card is a straightforward card that works great if you prefer cash-back rewards. Whether you’re looking for a single card for all your expenses or an everyday spending card to fill out your credit card portfolio, the Citi Double Cash Card can be a good fit.

Likewise, if you already have a Citi ThankYou card such as the Citi® Premier® Card or Citi Prestige® Card, the Citi Double Cash Card can compliment them. Since you can transfer your cash rewards to ThankYou points, you can effectively get a 3.4% return based on TPG’s valuations. After all, TPG’s valuations peg the value of Citi ThankYou points at 1.7 cents each.

The information for the Citi Premier and Citi Prestige has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

For more information, check out the full Citi Double Cash Card review. And here’s the official application link: Citi Double Cash Card.

Related: Is Citi ThankYou Rewards the most underappreciated and misunderstood program?

Capital One Spark Cash for Business

Capital One Spark Cash for Business credit card
(Photo by John Gribben/The Points Guy)

Sign-up bonus: $500 cash bonus once you spend $4,500 on purchases within the first three months from account opening

Earning rate: 2% cash back on all purchases

Annual fee: $0 intro for the first year, $95 after that

How to use your cash back

You can get cash back earned on your Capital One Spark Cash for Business as a statement credit or check. To do so, simply log in to your online account or call the Capital One Rewards Center.

You can also set up automatic redemptions that are triggered either:

  • At a set time each calendar year
  • When a specific threshold ($25, $50, $100, $200, $500 or $1,500) is reached

Capital One may also allow you to redeem for credits for previous purchases, gift cards and more. But, rates for these redemption options can vary. So, unless these options provide a high redemption rate, I’d recommend opting for a statement credit or check.

Related: How to complete a Capital One business credit card application

Who is this card for?

The Capital One Spark Cash for Business is a good option for businesses that prefer cash-back rewards and want to use one card for all of their purchases. Likewise, if your company has many expenses that don’t fall into traditional business spending categories, the Spark Cash can be a solid choice.

For more information, check out the full Capital One Spark Cash for Business credit card review. And, here’s the official application link: Capital One Spark Cash for Business

Related: Credit card showdown: Capital One Spark Cash for Business vs. Spark Miles for Business

Ink Business Cash Credit Card

Chase Ink Business Cash credit card
(Photo by John Gribben/The Points Guy)

Sign-up bonus: $500 cash back after you spend $3,000 on purchases in the first three months after account opening

Earning rate:

  • 5% on the first $25,000 spent in combined purchases each account anniversary year at office supply stores and on internet, cable and phone services
  • 2% on the first $25,000 spent in combined purchases each account anniversary year at gas stations and restaurants
  • 1% on all other purchases

Annual fee: None

How to use your cash back

The Ink Business Cash Credit Card earns cash back rewards, which are tracked as points. Specifically, each $1 in cash-back rewards earned is equal to 100 points. You can redeem points for any available reward options, which often include cash, gift cards, travel, products or services. However, redemption values for reward options can vary. So, make sure you’re getting at least one cent per point of value when you redeem.

If you hold a card that earns Chase Ultimate Rewards like the Chase Sapphire Preferred CardChase Sapphire Reserve or Ink Business Preferred Credit Card, you can convert your cash-back rewards into Chase Ultimate Rewards points. Doing so can provide much more than one cent per point of value if you maximize your Chase Ultimate Rewards points.

Related: Reasons to apply for the Chase Ink Business Cash Card

Who is this card for?

The Ink Business Cash Credit Card is an excellent choice for small businesses that prefer cash-back rewards and spend a lot at office supply stores and on internet, cable and phone services. However, remember the anniversary year caps on the 5% and 2% bonus categories.

For more information, check out the full Ink Business Cash Credit Card review. And here’s the official application link: Ink Business Cash Credit Card.

Related: Better together: Why the Ink Business Preferred and the Ink Business Cash are a great pair

Cash back frequently asked questions

How do you redeem for cash back?

Some credit cards allow you to redeem your rewards for cash back. To do so, log in to your account online and check the redemption options. Or, call the number on the back of your card and ask about your redemption options.

Related: Not traveling for now? How to maximize your rewards points on other redemptions

Where does credit card cash back go?

If your credit card earns cash-back rewards, these rewards are usually held in your account until you redeem. So, log in to your online account or call the number on the back of your card to inquire about your redemption options.

Related: Top credit cards for cash-back rewards and statement credits

What should I do with my cash back?

If you have a credit card that earns cash-back rewards, you’ll usually get the best value when you redeem your cash back for a check, statement credit or deposit into a linked account.

However, some cash-back rewards cards may offer other, more valuable redemptions options if you have other cards or a bank account with the same issuer. For example, you can convert cash rewards earned by the Citi Double Cash Card to ThankYou points. And, you can convert cash-back rewards points earned by some Chase cards to Ultimate Rewards points if you also hold a card that earns Chase Ultimate Rewards points.

Related: Which Chase card should I use to consolidate my Ultimate Rewards points?

How often should I redeem cash back?

In general, you’ll 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, such as my parents, prefer to redeem their cash-back rewards for one large check each year. However, if you redeemed your rewards sooner and deposited these rewards in a bank account, you could earn interest on your rewards.

Related: How to use cash back — not just points and miles — to hit your travel goals

What is 5% cash back?

5% cash back means that you’ll get 5% of the purchase back. So, if you make a $100 purchase, you’ll earn $5 of cash back on the purchase.

Related: Don’t forget to activate your 5% cash-back categories each quarter

Is it better to get points or cash back?

There’s no right answer to whether points or cash-back rewards are better. Instead, it depends on your goals and preferences. If you want to plan a trip using points and miles, you may be better off with a travel rewards card that earns points. But, if you’re busy or want a more immediate return on your purchases, a cash-back rewards card may be better.

Or, if you can’t decide between points and cash back, consider the Capital One® Venture® Rewards Credit Card. You can redeem Capital One Venture miles at a fixed value or transfer miles to airline and hotel partners.

Related: 5 reasons to get the Capital One Venture Rewards card

Is a cash-back credit card worth it?

A cash-back credit card can be worth it, especially if you’re not currently earning rewards on your purchases. After all, you might as well be earning rewards on your purchases.

But, if you’re debating whether a cash-back rewards card is worth it compared to a travel rewards card, that’s a more difficult question. In the end, you need to decide where your goals and preferences lie and pick the rewards type that best fits your lifestyle.

Related: How to choose the right credit card for you

Bottom line

Cash-back credit cards can put money back in your pocket. But, credit cards often provide many options for redeeming cash-back rewards. And, some of these options may not provide maximum value.

So, before redeeming your cash-back rewards, determine which redemption options provide the best value for your rewards. In general, you’ll want to avoid redeeming your rewards for Amazon, merchandise and gift cards.

For rates and fees of the Amex Blue Cash Preferred, click here.

Featured photo by Andrew Matthews/PA Images via Getty Images

Blue Cash Preferred® Card from American Express

WELCOME OFFER: $300 Cash Back Terms Apply.

TPG'S BONUS VALUATION: $300

CARD HIGHLIGHTS: New! Earn 6% cash back on select U.S. streaming services and 3% cash back on transit. Plus earn 6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%) and 3% Cash Back at U.S. gas stations

Apply Now
More Things to Know
  • Limited Time Offer: Earn a $300 statement credit after you spend $3,000 in purchases on your new Card within the first 6 months. Offer Expires 12/10/2020
  • Limited Time Offer: $0 introductory annual fee for one year, then $95. Offer Expires 12/10/2020
  • 6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%).
  • 6% Cash Back on select U.S. streaming subscriptions.
  • 3% Cash Back at U.S. gas stations and on transit (including taxis/rideshare, parking, tolls, trains, buses and more).
  • 1% Cash Back on other purchases.
  • Plan It® gives the option to select purchases of $100 or more to split up into monthly payments with a fixed fee and no interest.
  • Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit.
  • Terms Apply.
  • See Rates & Fees
Intro APR on Purchases
0% on purchases for 12 months
Regular APR
13.99%-23.99% Variable
Annual Fee
Limited Time Offer: $0 introductory annual fee for one year, then $95. Offer Expires 12/10/2020
Balance Transfer Fee
N/A
Recommended Credit
Excellent, Good
Terms and restrictions apply. See rates & fees.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.