What is Cash Back on Credit Cards and How Does it Work?

When it comes to credit cards, cash back is one of the most popular features that people want. It’s not always easy to understand what cash back is and how it works though.

What is Cash Back?

When you get cash back from a credit card, it means you receive a percentage of your purchases back as a credit to use towards further expenses. For example, if you spend $100 and get cash back at a rate of 5%, then you will be given $5 after paying for all your expenses with your card.

How Do Cash Back Credit Cards Work?

Cash back cards work like any other card, except you can get cash back on your purchases. The credit may take several days or weeks before it shows up in your account depending on which credit card company you use.

How Does Cash Back Redemption Work?

Depending on which credit card you’re using, your cash back redemption process can vary. Some credit card issuers require you to have a minimum amount of cash back and pay your credit card bill before automatically depositing the money into your account, applying it as a statement credit or receiving it in a specified form.

Statement Credits

After you receive your statement and pay your bill, there will be a designated area on it where you can redeem your cash back bonus. By clicking this, you can reduce the amount on your next statement balance.

Direct Deposits into Your Bank Account

Some companies allow you to transfer your cash back into a designated bank account. If this is the case, it’s sometimes an option that only appears after reaching a minimum threshold for redemption.

Paper Checks

In this case, you would need to wait for it to be mailed directly from the company and then deposit it into your bank account just like other checks. If you choose this option, make sure your mailing address is up to date.

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