Cash-back credit cards are fairly popular with consumers, and it’s easy to see why. After all, who doesn’t want to get paid to shop?
However, it’s easy to get in over your head if you don’t understand how cash-back credit cards work. We’ve got the scoop on everything from the application process to redemption methods, so keep scrolling for important information from our trusted team of experts!
General Questions About Cash-Back Credit Cards
What is a cash-back credit card?
A cash-back credit card is a credit card that offers cardholders cash incentives. Some cards offer these rewards for every purchase, while others require that cardholders purchase goods or services from specific categories or locations. The details are outlined in your cardholder agreement so there are no surprises.
Does a cash-back card actually give me cash back?
A cash-back credit card lets you earn cash-back rewards, but we don’t know of any cards that actually mail out wads of cash. Expect to receive a paper check or digital disbursement of your cash-back rewards. You might also have the option to buy gift cards or merchandise from the credit card company, or an approved third party, using your cash-back rewards.
Do I need good credit to get a cash-back credit card?
Yes, you typically need good credit - sometimes even excellent credit - to get a cash-back credit card. Credit card companies often save their best perks for cards geared toward people with excellent credit.
However, there are some cash-back credit cards you can get without perfect credit. We discuss those in detail below.
What are some cash-back credit cards I can get with bad credit?
Your options are limited, but people with bad credit often have good luck scoring an approval for the Credit One Cash Back Rewards Visa. This card offers 1% cash back on qualifying purchases. Yes, that figure is low compared to other credit cards, but keep in mind that your options are limited with bad credit.
You can also apply for the Capital One Quicksilver One Rewards Card if you have less-than-stellar credit. The company’s website classifies the Quicksilver One as a card for “average credit” but doesn’t specify what average means. We’ve heard reports of folks getting approved immediately after a discharged bankruptcy, and there are numerous cardholders with scores in the mid-to-high 500s.
What is the best cash-back credit card?
We consider the Chase Freedom Unlimited Card to be the Best Overall Cash Back Credit Card. You can get the detailed scoop on this awesome card in the review above, but here’s some basic info:
- Earn unlimited 1.5% cash back on qualifying purchases
- No annual fee
- No redemption minimums for rewards
- Bonus offers for new cardholders
We’ve also got some other cash-back credit cards we recommend. Here our are favorites:
- Citi Double Cash Card
- Capital One Quicksilver One (we mentioned this card in the question above)
- American Express Blue Cash Preferred Card
- BankAmericard Cash Rewards Credit Card
- Discover it Cashback Match Credit Card
With the exception of the Capital One Quicksilver One, these cards generally require good or excellent credit.
The Application Process for Cash-Back Credit Cards
How do I get a cash-back credit card?
It’s sooooo easy to get a cash-back credit card (assuming you qualify)! Here are some ways you can get one:
- Apply online
- Apply over the phone
- Apply in person at a retail store or bank
- Mail in a paper application
- Have a current cash-back cardholder add you as a qualifying user or joint account holder
During your application process, you’ll provide basic information about your income and rental history. The application might also ask about military involvement, lawsuits, and bankruptcies, as well as request information about a coapplicant if applicable.
Some applicants receive an instant decision regarding their application. If you don’t, you should receive a response within a couple weeks.
What should I know before I apply for a cash-back credit card?
Let’s start with the basics. A cash-back credit card is not a gift card; you can’t just buy what you want and continue on with your life. When you pay for things with your credit card, you’re responsible for the full balance plus interest.
You can pay your balance in full each month or make payments. If you make payments, interest accrues. Cardholders typically don’t determine their monthly payments; the credit card company decides how much you should pay and when you should pay it.
It’s important to remember that most cash-back credit cards have annual fees. If you max out your credit card, you’ll end up going over your limit when you get hit with an annual fee. This can damage your credit.
Who can get a cash-back credit card?
Anyone who qualifies! To qualify, you typically must meet the following requirements:
- Good or excellent credit (there are some exceptions)
- A steady source of income from a job, self-employment, disability, or alimony
- 18 years or older
- A history of paying previous credit cards and loans on time
- No undischarged bankruptcies or active lawsuits against you
You should also have a Social Security number and reside in the United States (unless you’re temporarily overseas for work, school, or the military).
Why didn’t I get an instant approval when I applied online?
Many people receive an instant approval when they apply online. If you didn’t, it’s because something in your application triggered a manual review. That means a real human has to look at your application because the computer couldn’t decide whether to approve or deny you.
Here are some common factors that trigger a manual review:
- Typos in your address, name, or Social Security Number
- A recent move (credit card companies often like to see 2+ years at the same address)
- Bankruptcy, even if it has been discharged
- Unusual information, such as an excessively high annual income
- Average credit (the company has to review your debts and payment history in detail to decide if you’re worth the risk)
You probably received a generic message that said you’ll get an answer in 7 to 10 days, right? You can get an answer sooner by calling the credit card company a few days after you apply.
Why was my credit card application denied?
Unfortunately, we have no idea since we don’t personally know you or have any idea which card you tried to get. However, we can offer some guesses based on factors that often lead to rejections:
- Low income
- High debt
- Recent collections
- Bankruptcy or court judgments
- Prior history with the credit card company (maybe you defaulted on another card with them or listed a card in your bankruptcy)
- No Social Security Number
The good news is that most of these issues won’t permanently keep you from getting a card. Pay off some debts, dispute inaccurate information on your credit report, and work hard to boost your FICO score.
Information About Cash Rewards
Are cash-back credit card rewards better than other credit card rewards?
That’s subjective. If you like cash more than gift cards, airline miles, or free stays at hotels, then yes, cash-back credit card rewards are better than other credit card rewards.
If you want the best of both worlds, look for a cash-back card that lets you trade points for gift cards or vacation-related expenses.
How do I earn cash back from a credit card?
By doing the things you’re probably already doing! Most cash-back credit cards tally your total automatically, so all you have to worry about is paying for the goods and services you want.
Some cards have restrictions (no gambling or lottery tickets are common ones), but there are many cards that let you earn rewards for everyday purchases. We’ve seen some cards with rotating reward categories (we’re looking at you, Discover it Credit Card), so make sure you opt in each quarter to avoid missing out on cash rewards.
How do I redeem the cash I earn?
Depends on the card, but many offer digital disbursements. You can also request a paper check in the mail or ask for a gift card.
Once you’ve got your reward, you’re free to spend it however you like. Keep in mind that some credit cards make you wait until you’ve reached a minimum balance (usually $20 or $25) before you can redeem your rewards. You also have to keep your account in good standing.
Do my cash rewards expire?
They might, but you should have plenty of time to use them. Most credit cards give you 1 to 2 years to redeem cash-back rewards, and some of them offer rewards that never expire.
Sometimes you can transfer rewards, but it depends on the policies of the credit card company.
Can I earn cash rewards and other rewards from the same card?
Possibly. Many cards offer multiple reward options, so you can choose cash one time and airline miles or hotel rooms next time.
Rates and Fees
How much interest will I pay for my purchases?
Most credit cards charge a variable interest rate that’s determined by your credit history. People with excellent credit typically have low APRs, while people with low FICO scores end up paying hefty interest fees. That’s because you’re more of a risk when you’ve got bad credit, so credit card companies charge extra to protect themselves if you bail on payments.
The credit cards on our list of the best cash-back credit cards have APRs ranging from 11.74% to 24.99%. If you don’t want to pay interest, look for a card with an interest-free promotional period for new cardholders. We’ve seen these grace periods run anywhere from a few months to more than one year.
Is there an annual fee for cash-back credit cards?
Yeah, some cash-back credit cards have annual fees. If you choose a card with a fee, you’ll probably pay between $39 and $99 per year. This fee is added directly to your billing statement, so you don’t have to worry about keeping track of it yourself.
The Credit One Cash Back Rewards Visa, Citi Double Cash Card, and Discover it Credit Card don’t have annual fees.
Can I use my credit card as a debit card at the ATM?
Sometimes, but it won’t be cheap! If you’ve got a credit card that works at ATMS, expect to pay a cash advance fee and additional interest. Cash advances usually carry an APR that falls between 25% and 30%, and that doesn’t even include the cash advance fee (typically around 5% of the advance total).
How do I reduce my credit card fees?
Pay your bill on time, every time! If you’re late, you run the risk of getting hit with a penalty APR.
If you have an issue with the regular APR rather than the penalty APR, contact your credit card company. Sometimes companies lower the APR for cardholders who demonstrate a lengthy history of paying their monthly bills (for everything, not just the credit card) on time.
How come my APR is higher than my friend’s APR?
APR is generally determined by creditworthiness, which basically refers to the state of your credit. Credit card companies love that term, so you can find it in the terms and conditions for pretty much every cash-back card.
Simply put, people with good credit get good APRs. People with bad credit have high APRs.
Your friend’s FICO score might be lower than yours, but you might have a recent history of collections or lawsuits. You might also have a high credit utilization rate or a lot of recent inquiries. These are all red flags to a credit card company, so they jack up your APR.
Common Concerns Regarding Cash-Back Credit Cards
Why didn’t I earn cash back for my purchase?
Yikes! You probably have a cash-back card because you want cash back, so it’s frustrating when you don’t get the rewards you deserve. Here are a few possible scenarios:
- You did earn cash back, but there’s a lengthy delay (30 to 60 days or so) before your credit hits your account
- You purchased goods or services from a forbidden category (the casino, X-rated adult entertainment, etc.)
- Your purchases are not in a qualifying category (sometimes categories rotate, so you might get paid for groceries this month and gasoline a few months later)
- Your account is not in good standing (you paid your bill late, you filed for bankruptcy, etc.)
- A merchant was miscategorized, so you didn’t get the rewards you expected
If you’re missing cash-back rewards, notify the credit card company immediately. They can explain what happened and then fix the error if it’s on their end.
Do I have to track my own purchases to earn rewards?
Nope, you shouldn’t have to do that! We recommend doing it anyway if you’re worried you might miss out on rewards, but most - if not all - credit card companies track rewards for you.
You can usually view the status of your cash-back rewards online or on a paper statement.
Is it safe to use my card for online purchases?
Online shopping always carries a slight risk, so take a few steps to protect yourself:
- Don’t use your card in public places or on shared connections
- Avoid sites that aren’t secure (you’ll usually get a popup or notice a warning in the corner of your browser)
- Make sure your credit card offers fraud protection in case someone gets their hands on your card info
Monitor your account regularly so you can make sure nobody is going on a shopping spree with your credit card number. If you notice something suspicious, report it immediately by contacting your credit card company. You may also want to contact the local police department.
What should I do if I lose my card?
Look for it quickly. If you don’t find it right away, contact your credit card company. You don’t want to waste any time when it comes to a lost or stolen card.
If someone else finds your card before you do, request a new one - even if you don’t see any suspicious charges on your account. The other party might just be saving your credit card information for future transactions, and you don’t want to take that chance.
Know your rights when your card disappears. Many cards offer fraud protection, which means you aren’t liable for purchases made by someone else.
What happens if I have a joint account and the other party files for bankruptcy?
We hate to tell you this, but you’re probably going to get stuck with the balance. It’s a bummer, but that’s what happens when you share an account.
The outcome depends on a lot of factors, though. Not all debts are dischargeable in a Chapter 7 bankruptcy, so the other account holder might still be liable for the debt. It doesn’t mean they’ll pay, but it means they are responsible for the debt.
If the joint account holder racks up a lot of credit card debt shortly before filing for bankruptcy, those debts won’t be excused. The other cardholder may also have to continue making payments if they file Chapter 13 bankruptcy or fail to complete the required paperwork for any type of bankruptcy in a timely manner.