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
Rewards
| 5X miles | Earn 5X miles on hotels, vacation rentals and rental cars booked through Capital One Travel |
| 2X miles | Earn unlimited 2X miles on every purchase, every day |
Intro offer
Annual Fee
Recommended Credit
Why We Chose It
If you’re looking for a credit card that provides simple ways to earn rewards and plenty of ways to redeem them, look no further than the Capital One Venture Rewards card. Cardholders can transfer points to 15-plus transfer partners and use miles to pay for travel purchases. (Partner offer)Pros
- Stellar welcome offer of 75,000 miles after spending $4,000 on purchases in the first three months from account opening. Plus, a $250 Capital One Travel credit to use in your first cardholder year upon account opening.
- You'll earn 2 miles per dollar on every purchase, which means you won't have to worry about memorizing bonus categories
- Rewards are versatile and can be redeemed for a statement credit or transferred to Capital One’s transfer partners
Cons
- Highest bonus-earning categories only on travel booked via Capital One Travel
- LIMITED-TIME OFFER: Enjoy $250 to use on Capital One Travel in your first cardholder year, plus earn 75,000 bonus miles once you spend $4,000 on purchases within the first 3 months from account opening - that’s equal to $1,000 in travel
- Earn unlimited 2X miles on every purchase, every day
- Earn 5X miles on hotels, vacation rentals and rental cars booked through Capital One Travel
- Miles won't expire for the life of the account and there's no limit to how many you can earn
- Receive up to a $120 credit for Global Entry or TSA PreCheck®
- Use your miles to get reimbursed for any travel purchase—or redeem by booking a trip through Capital One Travel
- Enjoy a $50 experience credit and other premium benefits with every hotel and vacation rental booked from the Lifestyle Collection
- Transfer your miles to your choice of 15+ travel loyalty programs
- Top rated mobile app
Rewards Rate
| 5X miles | Earn 5X miles on hotels, vacation rentals and rental cars booked through Capital One Travel |
| 2X miles | Earn unlimited 2X miles on every purchase, every day |
Intro Offer
LIMITED-TIME OFFER: Enjoy $250 to use on Capital One Travel in your first cardholder year, plus earn 75,000 bonus miles once you spend $4,000 on purchases within the first 3 months from account opening - that’s equal to $1,000 in travelEnjoy a $250 travel credit & earn 75K bonus milesAnnual Fee
$95Recommended Credit
Credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.670-850Excellent, Good
Why We Chose It
If you’re looking for a credit card that provides simple ways to earn rewards and plenty of ways to redeem them, look no further than the Capital One Venture Rewards card. Cardholders can transfer points to 15-plus transfer partners and use miles to pay for travel purchases. (Partner offer)Pros
- Stellar welcome offer of 75,000 miles after spending $4,000 on purchases in the first three months from account opening. Plus, a $250 Capital One Travel credit to use in your first cardholder year upon account opening.
- You'll earn 2 miles per dollar on every purchase, which means you won't have to worry about memorizing bonus categories
- Rewards are versatile and can be redeemed for a statement credit or transferred to Capital One’s transfer partners
Cons
- Highest bonus-earning categories only on travel booked via Capital One Travel
- LIMITED-TIME OFFER: Enjoy $250 to use on Capital One Travel in your first cardholder year, plus earn 75,000 bonus miles once you spend $4,000 on purchases within the first 3 months from account opening - that’s equal to $1,000 in travel
- Earn unlimited 2X miles on every purchase, every day
- Earn 5X miles on hotels, vacation rentals and rental cars booked through Capital One Travel
- Miles won't expire for the life of the account and there's no limit to how many you can earn
- Receive up to a $120 credit for Global Entry or TSA PreCheck®
- Use your miles to get reimbursed for any travel purchase—or redeem by booking a trip through Capital One Travel
- Enjoy a $50 experience credit and other premium benefits with every hotel and vacation rental booked from the Lifestyle Collection
- Transfer your miles to your choice of 15+ travel loyalty programs
- Top rated mobile app