Tips for How to Earn Cash Back from Your Credit Card
5 Min Read | Last updated: August 15, 2023
This article contains general information and is not intended to provide information that is specific to American Express products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.
Cash back credit cards let you earn cash back in different ways for eligible purchases. Learn how you can earn the most cash with your cash back credit card.
At-A-Glance
- Cash back credit cards let you earn cash back on eligible purchases.
- Many flat-rate cash back cards offer 1 to 1.5% cash back for purchases, but some offer 2%, while bonus category cash back cards tend to offer more for specific purchases, like groceries, gasoline, or travel.1
- To maximize your cash back potential, consider using a cash back credit card that aligns with your regular expenditures.
There’s a reason cash back is the preferred rewards program for the majority of American credit card holders.2 Cash back cards can help you to save each month. It’s always a good feeling when you see that you have $100 in cash back ready to be redeemed – usually in the form of a statement credit. But how, exactly, do you earn cash back from your credit card?
Every cash back credit card is different, all with different ways to earn. Here are some key things to know about cash back credit cards and what you can do to get the most out of yours.
How Do Cash Back Credit Cards Work?
To figure out how to make a cash back credit card work best for you, it’s a good idea to first understand how they work. There are three main types of cash back credit cards, each with different ways to earn cash back:
- Flat-rate cards are the most straightforward, offering you a percentage of cash back on all eligible purchases.
- Tiered cards offer different levels of cash back depending on the spending category. For example, you might get 3% cash back at grocery stores, 2% cash back at gas stations, and 1% cash back on all other purchases.
- Rotating bonus category cards usually offer a higher level of cash back for certain spending categories, but the categories rotate every few months and you usually have to sign up – or “activate” each category – in order to earn rewards. For example, you might get 5% cash back on streaming services from January through March and 5% back at home improvement stores from April through June. All other eligible purchases typically get about 1% cash back, but it depends on the card.
Note that some cash back credit cards have point caps, meaning you’ll earn the maximum cash back on a certain dollars’ worth of purchases in a year – maybe $6,000 – before switching to a 1% flat rate for that spending category. It’s a good idea to read your card’s terms and conditions.
You can usually redeem cash back rewards in a statement credit. Some cards also make it possible from time to time to redeem cash back at the checkout of certain online retailers, for gift cards, or for charity.
How Do You Get Cash Back from Your Credit Card?
Put simply, if you use your cash back card for eligible purchases, you’ll earn cash back rewards. But there are ways to help max out your earning opportunities. Here are some tips that can help you to get the most out of your cash back credit card:
Use a credit card that matches your spending style: All cash back credit cards offer different opportunities to earn rewards, so it’s a good idea to use a cash back credit card that will reward you for the purchases you make regularly. For example, if you spend a lot on groceries and gas, look for a credit card that will reward you for those purchases. Strive to earn cash back for the purchases you would already be making and avoid changing your spending habits just to earn cash back.
Make sure the annual fee is worth it: The highest-earning cash back rewards credit cards often come with an annual fee. To see whether a card is a good fit for your spending habits, calculate how much you’re likely to spend in a given year and how much cash back you’ll get based on the credit card’s rewards structure. If you expect to earn more cash back than the cost of the annual fee, the card may make sense. Otherwise, you might get more out of a no-annual-fee credit card.
Take advantage of welcome offers: Some cards offer additional cash back bonuses for spending a certain amount in a set period of time. For example, you could earn an extra $100 cash back after making $1,000 in purchases in your first six months of card membership depending on your specific card.
Pay your statement in full: Don’t let interest outweigh the benefits of cash back. If you pay your balance in full each month you can avoid interest on your purchases.
Pay attention to special offers: Be on the lookout for special credit card offers provided by your card issuer. For example, the card may offer extra cash back for purchases at a specific retailer for a limited time. These offers might appear on your card’s website, in your account information, or in an email.
Don’t forget to sign up for rotating spending categories: If your cash back card has rotating bonus categories, don’t forget to sign up in advance – otherwise you might miss out on maxing out your cash back rewards opportunities.
Add an additional card member/authorized user: If you add family or friends as an authorized user, their purchases may earn cash back, too. This means you can boost your cash back earning opportunities. Just remember that you’ll be responsible for paying the charges that they make, so make sure you only add people that you trust.
The Takeaway
Cash back cards are the most popular type of rewards credit card, and for good reason. They’re typically straightforward, easy to use, and allow you to earn money by spending money on everyday purchases.. But in order to earn the most cash back from your card, it’s important to use the right card for your spending habits, understand how your card works, and pay your monthly balance in full.
1 “Flat-rate cash back cards vs. bonus category cash back cards,” Bankrate
2 “Poll: Consumers say cash back is king,” Bankrate
Megan Doyle is a business technology writer and researcher whose work focuses on financial services and cross-cultural diversity and inclusion.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
Related Articles
American Express Cash Back Cards: How Reward Dollars Work
American Express offers cash back credit cards. Explore each card’s unique benefits, from cash back percentages to benefits and more.
Earning Rewards and Cash Back While Shopping Online
Explore the world of online shopping rewards and cash back programs. Learn how to earn money, discounts, and rewards while shopping online
What Is Cash Back and How Does it Work?
Understand how cash back works and make informed choices when selecting a cash back credit card that suits your lifestyle.
The material made available for you on this website, Credit Intel, is for informational purposes only and intended for U.S. residents and is not intended to provide legal, tax or financial advice. If you have questions, please consult your own professional legal, tax and financial advisors.
Shop All American Express Credit Cards
