Personal Finance
Advertiser Disclosure

How Do Cash Back Credit Cards Work?

cash back credit cards

Our evaluations and opinions are not influenced by our advertising relationships, but we may earn a commission from our partners’ links. This content is created independently from TIME’s editorial staff. Learn more about it.

updated: February 18, 2024

Did you know you can earn cash back when you check out at the grocery store, buy gas, make a purchase online, or use a card to pay nearly anywhere else? Cash back rewards cards often pay around 1% to 2% back on daily purchases you already make, with opportunities to earn even more on bonus categories when using the best cash back credit cards for your unique spending needs.

Here’s a closer look at how cash back credit cards work so you can decide which could be the right fit for your wallet.

Ways to redeem cash back

With most cash back rewards credit cards, you can redeem rewards as a statement credit, which lowers your account balance, for a deposit to your linked checking or savings account, or as a paper check sent to you in the mail. Some cash back cards feature rewards points redeemable for cash back, typically at a rate of one point to one cent.

As long as you pay off your balance in full by the monthly due date and don’t spend more because you’re earning rewards, you should come out ahead in the long run with a cash back card.

Because one cent is always worth one cent, the most important consideration for most cash back cards is how much you earn for the purchases you make most often.

Flat-rate cash back cards

Flat-rate cash back cards offer a fixed rewards rate for every dollar you spend with the card. Most cards in this category pay around 1% to 2% cash back. When you use one of these cards, it’s like everything you buy is on sale.

The default rate for many cards is 1% back, but the best cards pay 1.5% or 2% back. Shopping around can help you find the best deal.

Top cards in this category include:

  • PayPal Cashback Mastercard: Earns 3% cash back checking out with PayPal and 2% everywhere else.
  • SoFi Credit Card: Earns a flat 2% cash back. Some users earn 3% back the first year.
  • card_name: Earn 1.5% cash back on all purchases.

Bonus category cash back cards

Many cash back cards offer bonuses in certain spending categories, such as groceries, gas, restaurants, travel, or online shopping. If you spend heavily in one category, choosing a card with a strong bonus in that category can maximize your earnings.

Popular bonus category cash back cards include:

  • card_name: Earn 3% back on restaurant and restaurant delivery services, 3% at drugstores, 5% on travel booked through Chase, and 1.5% everywhere else.
  • card_name: Earn 4% back on dining, entertainment, and eligible streaming services, and 3% at grocery stores. Entertainment booked through Capital One earns 8% cash back. Hotels and rental cars booked through Capital One earn 5% back. You’ll get 1% back everywhere else.
  • card_name: Earn 6% back at U.S. supermarkets up to $6,000 per year, 6% back on select U.S. streaming subscriptions, 3% back on transit, 3% back on gas, and 1% everywhere else. There’s a $95 annual fee, waived the first year.

Rotating-category cash back cards

Rotating cash back rewards cards feature bonuses in categories that change every three months. Some make you click a link to register, and there is more to keep track of to ensure you earn the most possible.

Top options for rotating cash back rewards include:

  • Chase Freedom Flex: Earn 5% back in quarterly rotating categories up to $1,500 in quarterly purchases. Also, get 3% back on dining and delivery, 3% at drugstores, and 5% on travel booked through Chase. You’ll get 1% everywhere else.

Choose-your-own-category cash back cards

Another group of cash back cards includes a feature to pick your favorite category to earn a bonus, typically from a specific list of bonus rewards categories. Here, you should look at your budget to understand where you spend most or consider major upcoming purchases to maximize your earnings.

Examples of choose-your-category cash back rewards cards include:

  • U.S. Bank Cash+ Visa Signature Card: Earn 5% back on up to $2,000 in purchases each quarter in two categories you choose, 2% back on popular categories, including gas stations, EV charging, groceries, or restaurants, and 1% everywhere else.
  • Bank of America Customized Cash Rewards card: Earn 3% back on a category of your choice and 2% back at grocery stores and wholesale clubs on up to $2,500 in combined quarterly purchases and 1% on all other purchases.
  • card_name: Earn 3% and 2% back in two categories you choose with no limits and 1% everywhere else.

TIME Stamp: Maximize your cash back rewards

When you focus on the categories you spend in most often, you can find a way to earn the top cash back rewards for your unique budget and lifestyle. And there’s no rule saying you can’t get two or more cash back rewards cards to maximize your earnings across multiple categories with a minimum of 2% everywhere else.

Your credit score and history influence which cards you qualify for—and remember to always pay your balance in full by the monthly due date to avoid paying interest. If you can follow that strategy, you’re in a good position to come out ahead with cash back rewards.

Frequently Asked Questions (FAQs)

What is cash back on credit cards?

Credit card cash back is a reward you can earn from your credit card company for making purchases. Rewards are typically earned as a percentage of each eligible purchase.

Which credit cards give cash back?

Many credit cards give you cash back. You could qualify for several top cash back rewards cards depending on your credit history. Check with your bank and our list of the best cash back credit cards for potential options.

Which stores offer cash back on credit cards?

With a cash back rewards card from a popular issuer, you can earn cash back rewards at every store when making regular purchases. Some store cards offer specific rewards when shopping using their branded credit card. Target, Walmart, and Amazon are among the best store cards to earn cash back. The Amazon card, for example, features 5% cash back on standard purchases at

The information presented here is created independently from the TIME editorial staff. To learn more, see our About page.