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Cash-back cards offer ways to save money on regular expenses like groceries, gas, and dining

Cash-back credit cards return a percentage of your spending as a reward.

Some cards offer flat-rate cash-back while others reward specific categories.

Redemption is usually straightforward and flexible, unlike travel-focused cards.

They work best when you pay your balance in full to avoid interest.

A cash-back rewards card is a type of credit card designed to incentivize consumer spending by offering a portion of the purchase amount back to the user in the form of cash or equivalent rewards.

For example, a card offering 2% cash-back would return $2 for every $100 spent.

Despite the name, this doesn’t always mean the user gets cash in hand. The returns can be redeemed as:

Statement credits

Brand or store credits redeemable for future purchases

Deposits into a linked bank account

Gift cards

Charitable donations

Cash-back rewards cards are different from travel or points cards, which accumulate points or miles that can be redeemed for travel-related expenses such as flights, hotel stays, or car rentals. These can be highly rewarding for frequent travelers, but some might prefer the flexibility of cash-back rewards cards, as you can spend the cash-back however you like.

There are several types of cash-back cards, designed to suit a wide range of spending habits.

Flat-rate cards offer the same cash-back percentage on all purchases, regardless of category. So you might get 2% of the transaction amount, for example, irrespective of whether you make a small or expensive purchase, the brand you buy from, or the type of goods or service you’re getting.

Tiered cash-back cards provide higher rewards in specific categories and lower rewards on other purchases. For instance, a card might offer 3% cash-back on groceries, 2% on gas, and 1% on all other purchases.

These cards are suitable for users who spend heavily in select categories, like tech enthusiasts, a big family making frequent grocery runs, and fashionistas following the latest trends.

Rotating category cards offer higher cash-back rates on certain categories that change at specified times, like quarterly or annually. So, you might get 5% rewards on groceries this year and restaurants the next.

These cards benefit organized consumers who are willing to track and adapt to changing categories.

Cash-back rewards are typically easy to redeem, as the value is generally fixed with a “what you see is what you get” approach. This means $10 in rewards would be exactly $10 in value, unlike points or miles that can vary in worth depending on how they’re used.