How does cash back work on credit cards?

As you make purchases with your card, you’ll earn back a percentage of the total based on the card’s cash back rate. Then, you can redeem your cash back rewards for cash, usually in the form of a statement credit, a paper check, direct deposit to a linked bank account or gift cards.

Is getting a cash back credit card worth it?

Cash back credit cards are a great way to earn money back on everyday purchases. They can be worth it if you find one that matches your spending habits and provides enough value to justify fees, if there are any.

Do you actually get cash from cash back credit cards?

Typically, you redeem cash back rewards for a statement credit on your credit card account. Some cards allow you to instead receive a paper check in the mail, direct deposit to a linked bank account or redeem for gift cards.

When do you get your annual money back on your credit card?

Cash back rewards are typically credited to your account at the end of a statement period.

What does “cash back rate” mean?

Your cash back rate is the percentage cash back earned with each purchase. Some cards offer a flat rate across the board for all purchases. Others offer bonus rewards rates for specific spending categories.

Is cash back the same as a cash advance?

No, a cash advance is cash withdrawn from your credit card account. A cash advance puts cash in your pocket and is charged against your credit card account. It usually comes with extra fees.

What is a flat-rate cash back card?

A flat-rate cash back credit card earns the same percentage of cash back for all eligible purchases instead of earning different rates based on different spending categories.

What is a tiered cash back credit card?

A tiered cash back credit card earns cash back at different rates based on specific spending categories like travel, dining, gas and groceries.

What does “rotating cash back categories” mean?

Rotating cash back categories are spending categories that change throughout the year. Typically, rotating categories change quarterly and sometimes require cardholders to activate to earn rewards.

What other credit cards allow you to earn rewards?

Cash back is only one type of rewards credit card. The other primary option is travel rewards, which typically come in the form of points or miles.

Is 1.5% cash back good?

Yes, 1.5% cash back is an above-average rate for a flat-rate cash back credit card

Are there 3% or better cash back cards?

Yes, there are cash back cards that offer 3% cash back rates or better in select spending categories. There is no credit card on the market that currently offers 3% cash back or more on all purchases.

How do you maximize the benefits of a cash back credit card?

You can maximize your cash back card’s benefits by using it whenever you spend in the categories the card rewards. Always take advantage of other benefits offered with a cash back card, like travel perks, purchase protection and cell phone insurance.

When should you redeem your cash back?

When you redeem cash back rewards is typically up to you. Some cards automatically credit cash back rewards to your account each statement period. Also, keep in mind that some rewards can expire if you don’t use them within a set time or continue to use your card.

What are the most common cash back bonus categories?

The most common cash back bonus categories are travel, dining, gas and groceries. Business cash back cards sometimes include bonus rewards for office supply store purchases and specific services like internet and phone.

Which credit cards pay the most cash back?

Several credit cards offer higher cash back rates in select categories. The Chase Freedom Unlimited credit card earns 5% back on travel purchased through Chase, 3% back at restaurants and drug stores and 1.5% back on all other purchases. The Discover it Cash Back card earns 5% back in quarterly rotating categories plus unlimited 1% back on everything else. The Blue Cash Preferred Card from American Express earns 6% back at U.S. supermarkets up to $6,000 annually and 6% back on streaming services along with lower rates for other spending.

What are the tax implications of cash back credit cards?

Typically, the IRS views cash back rewards as a discount or rebate on what you’ve purchased and doesn’t consider them as income.

Is it better to get cash back or points?

Cash back and points are both valuable forms of credit card rewards. The better option depends on your needs and how you plan to use the rewards you earn. Some credit cards reward you with points that can also be redeemed for cash back along with other redemption options.

Is it better to get cash back or miles?

Cash back and miles are two types of credit card rewards. How you plan to use your rewards will determine which one is better for you. Miles are typically associated with airline travel rewards credit cards.

What are some things to consider when looking for a business cash back card?

If you’re in the market for a business cash back credit card , you need to analyze your company’s spending to determine the best card for you. Also, look for any fees included, whether there’s access to free cards for your employees and any added benefits included with the card.

The Best Cash Back Credit Cards of 2021

Save time searching with MoneyGeek's top picks for the best cash back credit card offers of 2021 and tips for finding the best card for cash back rewards.

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Last Updated: 10/1/2021

Explore Expert Insight

The best cash back credit cards offer simple, flexible rewards to match your spending habits. Cash back rewards come in the form of something everyone loves — cash. These cards often come with other benefits and redemption options, but their primary purpose is to provide cash back rewards on all of your card purchases.

You may earn more cash back for certain types of spending like travel, dining, or at the fuel pump. Some cards feature rotating spending categories that you choose each quarter. Other cards offer one rewards rate for all purchases across the board.

To help you find the best card for you, MoneyGeek has researched over 106 credit cards to find the best cash back offers for the month. Keep reading to see our top picks, learn more about cash back credit cards, check out handy card comparison charts and find answers to common questions about cash back cards.

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"Nearly all consumers can benefit from a cash back credit card. Saving money on your day-to-day purchases is universal. However, if you enjoy traveling, consider that those same purchases could earn you more valuable rewards on a travel rewards credit card." -- Brett Holzhauer, personal finance writer for MoneyGeek and other publications.

WHICH CARDS STAND OUT IN 2021?

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MoneyGeek’s Take: Cash Back Cards You Can't Go Wrong With in 2021

At MoneyGeek, we’ve chosen the best cash back credit cards for you based on extensive research, not what is best for us. Our team compared 106 credit cards and consulted industry experts to find the absolute best cards for our readers. Our mission is to help you make the most informed credit card choice so you can maximize your rewards earning and gain access to credit card benefits and perks that make sense for you.

Best cash back cards for businesses

Chase Ink Business Cash Credit Card: If you charge $7,500 in purchases within the first three months, you’ll receive a $750 bonus.

Best cash back cards for students

Deserve EDU Mastercard for Students: This card earns cash back rewards on all purchases without the demanding credit history requirements of other cards.

Best cash back cards for someone looking to improve their credit

Credit One Bank Platinum Visa: The Platinum Visa helps you build or repair credit while still earning cash back rewards on purchases.

MONEYGEEK QUICK TIP

Cash back credit cards are a great way to ‘be rewarded’ on every day spending, but they are not the only cards to do so. Depending on your or your business’s travel habits, a co-branded airline or hotel credit card or general travel rewards card may earn you more in the long run. Note: These links will open in a new window to our partner site, CardRatings.com.

Best Cash Back Card Offers for October 2021

Not all cash back credit cards are created the same. Some are designed specifically for individuals or groups with varying needs. We’ve broken our list of the best cash back credit cards into categories to help you identify the right one for you. We’ve found the very best cards, whether you are an individual looking for the best rewards rates or a business owner who wants to take advantage of monthly expenditures to earn rewards.

Best Cash Back Business Credit Cards

We chose the following cards because they reward small business owners for the items and services they purchase the most. We also know that access to other features, like low APR or introductory offers, can pay off in the long run.

FEATURED
Chase Ink Business Cash
Best cash back business card sign-up bonus
- Excellent, GoodCredit Needed
- 5%*Cash Back Rate
- $0Annual Fee
- 13.24% - 19.24%APR
We love the Ink Business Cash Credit Card for several reasons, including its more-than-generous sign-up bonus. Business owners can earn a $750 cash bonus after $7,500 card spending in the first three months from account opening.
Ink Business Cash also earns 5% cash back on the first $25,000 combined spending in essential business spending categories like office supply stores and internet, cable and phone services each year. The card also earns your business 2% cash back on the first $25,000 combined spending at restaurants and gas stations annually. To top it off, all of your other business spending still earns 1% cash back.
Your Ink Business Cash Card is also an entrance into Chase Ultimate Rewards, one of the most versatile rewards programs available. With Chase Ultimate Rewards, you can redeem rewards for cash back or opt for other redemptions like travel, gift cards and more. More choices mean more value to your business. Also, you receive all of this value without paying an annual fee. Check out even more card details below to see if Ink Business Cash is right for you.
Pros
— Generous sign-up bonus
— High rewards rates in popular business spending categories
— Intro APR offer on purchases
— No annual fee
— Free employee cards

Cons
— Spending caps on most bonus spending categories
— High fees for cash advances and balance transfers
— Low rewards rate outside bonus categories
— Earn $750 bonus cash back after spending $7,500 on purchases in the first three months after opening your account.
— Earn 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable and phone services annually.
— Earn 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants annually.
— Earn 1% cash back on all other card purchases.
Disclaimer: Credit card offers are constantly changing. We work hard to stay updated with the latest information, but the offers listed on our site may no longer be available.
Terms, rates and fees apply
Compare this credit card with other top-rated business cards.

COMPARING BUSINESSES CREDIT CARDS

The Chase Ink Business Cash card is one of the best for cash back, but Chase's Ink Business Preferred card offers a great intro bonus for travel points. Compare these two Chase cards along with other business credit cards at our partner site, CardRatings.com.

Best Cash Back Credit Cards for Students

Student cash back credit cards are a way to start building your credit while earning valuable cash back rewards. We looked at factors like fees, rates and rewards to find the cards that make the most sense for college-age individuals with limited credit history. Remember that you will need some form of income to qualify for a cash back card and pay your monthly bill.

FEATURED
Deserve EDU Mastercard for Students
Best student cash back card for limited credit history
- Limited, NoneCredit Needed
- 1%Cash Back Rate
- 0$Annual Fee
- 18.74%APR
Deserve EDU opens the door to building credit responsibly for college students with limited or no credit history. You can prequalify without negatively affecting your credit, and the card doesn’t require a deposit or cosigner. The card is even available for international college students.
Besides building credit, Deserve EDU earns 1% cash back on all purchases. Plus, you can get a free year of Amazon Prime Student by meeting card spending requirements.
Deserve EDU comes with perks that make sense for college students, like cell phone protection and no foreign transaction fees (for those studying abroad). Throw in the fact that there’s no annual fee to worry about, and you have the makings of a near-perfect student credit card.
Pros
— 1% cash back on all purchases
— Amazon Prime Student free for one year
— Cell phone protection
— No foreign transaction fees
— No annual fee

Cons
— No bonus spending categories
— Balance transfers and cash advances aren’t available
— Earn 1% unlimited cash back on all purchases.
— Receive one year of Amazon Prime Student on Deserve after spending $500 in the first three billing cycles from account opening.
— Receive up to $600 in cell phone protection when you use the card to pay your monthly cell phone bill.
Disclaimer: Credit card offers are constantly changing. We work hard to stay updated with the latest information, but the offers listed on our site may no longer be available.
Terms, rates and fees apply
Compare this credit card with other top-rated student cards.

COMPARING STUDENT CREDIT CARDS

The Deserve EDU Mastercard is a great cash back card for students, but there are others like the Chase Freedom Student Credit Card that offer similar cash back rewards but may have lower APR or other benefits better suited for your spending habits.

You can learn more about student credit cards on our page, the Best Student Credit Cards of 2021, or compare these two cards and apply for one at our partner site, CardRatings.com.

Best Cash Back Credit Cards for People With Fair to Average Credit

Having less than stellar credit doesn’t mean you should miss out on valuable cash back rewards. Cash back credit cards for those with fair to average credit can help you earn rewards while building your credit history and improving your credit score.

FEATURED
Credit One Bank Platinum Visa
Best cash back card for those with fair credit
- FairCredit Needed
- 1%Cash Back Rate
- $39Annual Fee
- 23.99%APR
Credit One Bank Platinum Visa is an excellent starter credit card for those with less-than-stellar credit scores. In addition to helping you build your credit, you’ll earn valuable cash back rewards. The credit requirements are less than you will see with competitor cards.
The Credit One Bank Platinum Visa is unique in that there are several versions of the card, with annual fees ranging from $0 to $99. Which one you end up with is based on your credit and other factors.
All of the card versions earn cash back rewards, just with different reward rate structures.
The Platinum Visa card also comes with free access to your Experian credit score each month, so you can monitor your progress as you build credit responsibly.
Pros
— Less restrictive credit requirements
— Cash back rewards

Cons
— You may not qualify for the version of the card you hoped for
— Only one redemption option available
— High APR on purchases
— Foreign transaction fees
Credit One offers several iterations of its Platinum Visa card. You’ll find out which version you qualify for during the prequalifying process, which doesn’t negatively affect your credit.
The Credit One Bank Platinum Visa earns 1% unlimited cash back on eligible gas, grocery, mobile phone, internet, cable and satellite TV service purchases.
Disclaimer: Credit card offers are constantly changing. We work hard to stay updated with the latest information, but the offers listed on our site may no longer be available.
Terms, rates and fees apply
Compare this credit card with other top-rated cards for fair credit.

How We Rate Cash Back Cards

We independently collected information on credit card issuers, based on issuers listed in the Consumer Finance Protection Bureau's credit card agreement database. This allowed us to collect the information for approximately 2,500 credit cards. Learn more about our data collection and ranking process.

Top Rating Criteria for Cash Back Cards

Annual Earnings

Annual Fees

Spending Limits

4 Tips for Comparing Cash Back Credit Card Offers

Cash back credit cards are not all created equal, and the right card for someone else may not be the right one for you. Here are some tips to simplify the process and find the best cash back credit card for you.

Know Your Score

Knowing your credit score will help you quickly narrow down the field to only cards you qualify for right now. Having access to credit scores and understanding the factors that make up your score will help you now and in the long run.

Know Your Spending

Having a good sense of where you spend your money will also lead you to the right card. Cash back cards offer several reward structures. Some cards offer flat cash back rewards on all purchases. Other cards offer bonus rewards in select spending categories like travel, dining, groceries and gas. Look for a card with a rewards structure that matches your spending habits.

Factor in Fees

Of course, you can’t forget about fees when calculating potential card earnings. That doesn’t mean cards without annual fees are better. But you should consider how you will use the card and whether the perks and rewards the card offers justify the annual fee.

Look at Other Benefits Included

Once you’ve looked at the cash back rewards, take time to consider other benefits included with the card. Some cards offer extra features like cell phone protection, free credit score access, travel perks and purchase protection.

Cash Back Cards at a Glance

Compare some of the top cash back credits cards by their reward rates and approximate credit scores needed to get approved.

Scroll for more

Card Name
Credit Needed
Cash Back Rate
Annual Fee
Ink Business Cash Credit Card
Excellent, Good
5%*
$0
Deserve EDU Mastercard for Students
Limited, None
1%
0$
Credit One Bank Platinum Visa
Fair
1%
$39

Other Rewards Cards

Airline & Miles Cards

Hotel Credit Cards

Travel Rewards Cards

MoneyGeek’s Take: Finding the Right Cash Back Credit Card for You

A cash back credit card is a valuable tool. You earn back a percentage of your card purchases, typically as a statement credit or direct deposit. Unlike other forms of rewards, what you see is what you get with cash back rewards. For instance, the value of miles earned with an airline rewards credit card can change depending on how they are redeemed, and you often get more value when using them for international travel.

However, there are other rewards credit cards, like Chase Sapphire Reserve and Chase Sapphire Preferred, that earn valuable rewards that are redeemable in several ways, including for cash back and travel.

Not all cash back cards work the same either. For example:

The Ink Business Cash card is specifically for business owners, and its reward structure is geared towards the spending needs of a business.
The Deserve EDU is for college students with little to no credit.
Individuals with good to excellent credit can qualify for cash back cards that offer much higher rewards and other benefits.
If you like to travel, one of the top travel rewards credit cards might be a better fit.
If you’re planning on making a large purchase in the near future or have existing credit card debt racking up interest charges, a good balance transfer card or rewards card with an intro APR offer might make more sense.

Your best bet is to determine your credit card needs and then find the right fit for you.

Who Should Consider a Cash Back Card?

You might be wondering why you should consider getting a cash back credit card. Unlike other rewards credit cards, there’s no guessing when it comes to the card’s value. You’ll earn a percentage back on your card purchases based on the card’s set rewards rates. Your rewards come back to you as cash, usually as a statement credit or a deposit to your bank account. Some cards reward you the same no matter the purchase, while others offer higher rewards rates in specific categories.

That doesn’t mean everyone should get a cash back card. For example, if you’re an avid traveler, you might find more value in a travel rewards credit card that comes with a large sign-up bonus, earns points or miles towards free travel and comes with extra perks like hotel status, waived airline fees and more.

Expert Advice for First-Time or Newer Cash Back Cardholders

We continue to help your research, by gathering advice from financial, credit counselors and other credit card experts and answering common questions related to cash back cards and reward programs.

What mistakes do people make with credit cards, and specifically rewards programs?
What are the "gotchas" about credit cards and rewards programs that are not well understood by consumers?
What advice can you give consumers about managing their cash back rewards cards?

Bruce McClary

Vice President of Communications, National Foundation for Credit Counseling

Dr. Michael Shipman, CPA

Assistant Professor of Accounting at Mount Aloysius College

Callie Renner

Wealth Advisor at Beacon Pointe Advisors

Tahereh Alavi Hojjat

Chair & Professor of Economics

Peter Staples

Assistant Professor of Business and Economics at Lyon College

Demissew Ejara

Associate Professor of Finance at The University of New Haven

Caleb Martin

Professor of Accounting at Erskine College

Chris M. Lawrey, PhD

Assistant Professor at the University of South Alabama

Laura Coordes

Associate Professor of Law at Arizona State University

John Peatross

Certified Public Accountant and Adjunct Instructor at the University of Maryland, Baltimore County

Sheila A. Handy

Visiting Professor - Department of Economics at Lafayette College

Joseph R. Stasio

Associate Professor, Marketing at Merrimack College

Amit Sinha

Professor of Finance and Quantitative Methods at Bradley University

Dr. Christopher Newman

Associate Professor of Marketing at The University of Mississippi

Kunter Gunasti

Assistant Professor of Marketing at Washington State University

Jesse Veenstra

Instructor of Finance at Dordt University

Dr. Aniruddha Pangarkar

Assistant Professor of Marketing at the University of Wisconsin-Green Bay

Jacqueline R. Jaeger

Adjunct Business Faculty at the University of Dubuque

Philip Mayer

Professor of Economics and Political Science at Three Rivers Community College

Michael Manahan

Lecturer at California State University, Dominguez Hills

Michelle Gabor

Business Lecturer at the University of Wisconsin - Parkside, Entrepreneur, CPA

Dr. Han-Yen Kao

Department Chair, Assistant Professor of Business and Economics at Northwestern College

Dr. Angela Seidel

Associate Professor of Accounting and Chair of Undergraduate Business Programs at Saint Francis University

Rob Larson

Associate Professor of Management at Luther College

Dr. Kareem Tannous

Assistant Professor at Cabrini University

Dr. Angela Buchanan

Associate Professor in Business & Economics at Lyon College

Monique Beauchamp-Doll

Professor of Business Administration at Macomb Community College

Mark Ma

Assistant Professor of Business Administration at the University of Pittsburgh

S. Abraham Ravid

Sy Syms Professor of Finance, Sy Syms School of Business at Yeshiva University

Michael Dixon

Adjunct Instructor of Business Administration at Shepherd University

Tips for People Looking to Maximize Cash Back Rewards

Perhaps you already have experience using a cash back or other rewards credit card under your belt. Like anything in life, there are always new things to learn when it comes to cash back rewards.

Maximizing Your Cash Back Rewards

To maximize cash back rewards, you’ll want to be in tune with your spending habits. Do a deep dive into your past spending to see where you spend money the most. Then, align your cash back cards with your spending so that you earn the best rates.

Having more than one credit card can also help you take advantage of increased rewards rates from both cards. If you have a card that offers a higher cash back rate for grocery purchases but only 1% cash back for other purchases, you can pair it with a flat-rate cash back card that earns more than 1% to earn more cash back.

Comparing Cash Back Rates to Find the Right Card

It’s also wise to check your card’s cash back rates so that you’re aware of any restrictions or limitations. Some cash back cards, like Chase Freedom Flex, offer rotating bonus categories that you have to activate each quarter. Keeping track of details like that every few months is often hard to do.

Some cash back credit cards have maximum spending limits. The Ink Business Cash Credit Card, for example, caps several spending categories at the first $25,000 spent each year. Personal cash back cards will have lower annual limits. You can maximize your cash back rewards by at least hitting spending limits or finding a cash back card without any limitations, depending on your needs.

Comparing Cash Back to Points and Miles Deals

Typically, rewards points and miles carry more value than cash rewards. They are also often more complicated to understand, earn and use than cash back rewards.

The real value is in understanding your own credit card needs. Rewards credit cards that earn points and miles make sense if you travel often. If you only travel a couple of times a year, your rewards could go to waste and possibly expire. A card like Chase Sapphire Preferred offers more flexibility with redemptions, even as a card that earns points. You can use Chase Ultimate Rewards points towards flights, hotels, gift cards, and yes — cash. Knowing how you want to use your rewards will lead you towards the right type of rewards credit card.

Maximizing Your Cash Back Rewards FAQs

Below are answers to common questions on how to maximize cash back credit cards.

Cash back credit cards reward you for your everyday spending, unlike using a debit card. Always use cash back cards responsibly, making sure not to spend more than you can afford to pay. Interest charges cause your account balance to skyrocket and quickly negate the rewards you earned.

If you prefer earning cash to travel rewards, take time to compare the best cash back credit cards to find the right one for you.

Next Steps

About the Author

Kevin Payne is a personal finance writer specializing in credit cards, banking, and student loans. He is a regular contributor to Forbes Advisor, The Ascent, Investing Answers, and Student Loan Planner. Kevin is the budget and family travel expert behind FamilyMoneyAdventure.com.

sources

Intuit TurboTax. "Are Cash Back Rewards Taxable Income?." Accessed March 18, 2021.
Better Money Habits. "What is a credit card cash advance?." Accessed March 18, 2021.
Chase. "Chase Ink Business Cash Card." Accessed March 18, 2021.
Chase. "Chase Freedom Flex Credit Card." Accessed March 18, 2021.
Chase. "Chase Ultimate Rewards." Accessed March 18, 2021.
Chase. "Chase Sapphire Preferred credit card." Accessed March 18, 2021.
Chase. "Chase Sapphire Reserve." Accessed March 18, 2021.
Deserve. "Deserve EDU." Accessed March 18, 2021.
Deserve. "Deserve® EDU Cardholder Agreement." Accessed March 18, 2021.
Credit One Bank. "Platinum Visa." Accessed March 18, 2021.
Credit One Bank. "Choosing a Credit Card." Accessed March 18, 2021.
American Express. "Blue Cash Preferred Card." Accessed March 18, 2021.

*Rates or fees may vary or include specific stipulations. We recommend visiting the card issuer’s website for the most up-to-date information available.
Advertiser Disclosure: MoneyGeek has partnered with CardRatings for our coverage of credit card products. MoneyGeek and CardRatings may receive a commission from card issuers. To ensure thorough comparisons and reviews, MoneyGeek features products from both paid partners and unaffiliated card issuers that are not paid partners.