Cash Back Rewards Cards, How Do They Work

Have you been thinking about getting a Cash Back Rewards Credit Card? If you are, you may able to earn rewards each time you tap or swipe to pay for a purchase with your cash back rewards credit card. Cash back credit cards can be quite beneficial and offer substantial rewards over time. If you’re tired of just paying your credit card bill and want your credit card to pay you, a cash back credit card might be the card for you.

What Is a Cash Back Credit Card?

A cash back credit card is a type of rewards card that you can use to earn cash on purchases. When you buy something, you get a percentage of the amount it cost paid back to you. This means cashback is a way of getting money off things you buy. Cashback could be offered on specific purchases but many providers now offer cash back on anything you buy. For example, if a credit card offers 1 percent cash back on every purchase you’ll earn 1 cents in cash back rewards for every dollar you spend. You might think earning a few pennies of cash back per dollar might not seem like much, your cash back rewards can quickly add up, especially if you use your card on everyday spends. When you earn cash back rewards, your rewards are stored on your credit card account until you choose to redeem them. Many people like to redeem their cash back rewards for statement credits, which give you the opportunity to reduce the amount you owe on your credit card statement.

How to earn cash back

Most cash back cards offer the same cash back rate on every purchase while others offer higher percentages of cash back for certain types of purchases, such as travel, dining, groceries, gas or purchases from a specific store like Amazon. A select number of cash back cards rotate their cash back categories every quarter or allow you to choose and change your bonus category.

If you want to know how to earn cash back on a particular credit card, start by understanding the card’s cash back rewards system.

Flat-rate cash back cards: offer the same cash back percentage on every qualifying purchase. You earn the exact same percentage of cash back per dollar spent.

Bonus category cash back cards: offer higher cash back percentages on certain types of purchases. These cards are called “bonus category cash back cards” because you get a higher rate of cash back, usually 2-3 percent, on purchases in certain categories, like travel or groceries. All other purchases generally earn 1 percent cash back.

Rotating category cash back cards: Like bonus category cash back cards, rotating category cards offer higher cash back percentages on certain types of purchases—but these purchase categories rotate every quarter, and cardholders must activate their rotating bonus categories before they can earn rewards.

Choose-your-own-category cash back cards: offer the option to select your own bonus cash back category. Like regular bonus category cash back cards, you’ll typically earn a boosted rate in a few select categories and 1 percent cash back on general purchases. However, instead of having a fixed category or having to keep track of rotating bonus categories, you can select your bonus category from a list of options.

How to use cash back rewards

There are many ways to use cash back rewards once you’ve accumulated them. Some of the most popular ways to redeem your cash back are for statement credits, online shopping and gift cards.

Certain cards also allow you to deposit your cash back directly into a bank account or use it to make a charitable donation. Some cards even offer the option to use your cash back to book travel through the issuer’s own online portal.

Some credit card issuers also let you connect your cash back rewards to PayPal or, enabling you to use your cash back rewards to cover part or all of your purchase.

Make sure you understand all the ways your credit card allows you to redeem your cash back rewards so that you can conveniently us all the rewards you accumulated by making purchases on your rewards card

When cashback credit cards are a good idea

If you pay your credit card bill off in full every month, then cashback credit cards can be a great idea. This is because you’re getting rewarded for spending money you would have spent anyway. If you don’t always pay off your credit card bill in full, then cashback credit cards are not a good choice. Although you’ll earn cashback on your spending, this will usually be less than the interest charged on your outstanding debt.

You may be surprised at just how much 1 percent or more cash back adds up to at the end of each month. Just be sure to take a close look at your spending habits and each issuer’s terms to be sure the cash back card you’re considering is a good fit for your Patriot offers a Cash Back Rewards VISA® Credit Card that earns earn unlimited 1.5% cash back rewards on qualifying purchases.*  Click or stop in today for more information.


* Earn 1.5% reward on the amount of qualifying net purchase transactions. The term ‘purchases’ does not mean every transaction you make with your credit card. Ineligible transactions include, but are not limited to: interest charges, fees, balance transfers, cash advances, ATM transactions, convenience checks, disputed or unauthorized charges, fraudulent transactions, purchase of gift cards or Traveler’s Cheques, overdraft transfers, and other charges assessed to your account. Returns, refunds, or other credits are deducted from your purchases resulting in cash back rewards on your net purchases. Cash back rewards will be deposited to a prime share account only when the card account is open and current. Click here for Reward Program details.


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