How Do I Redeem Cash Back Rewards From My Credit Card?

How Do Cash Back Credit Cards Work?

Cash back credit cards are a type of rewards card that refund a portion of your purchases. Rewards will build up in your account, and you can redeem them in several ways, including by transferring the cash you've earned to a bank account or applying it to your credit card balance.

Purchases made with a cash back credit card will typically qualify for rewards, but some types of transactions and charges may be excluded. These can include interest charges, cash advances and balance transfers from another card.

Some credit cards offer a flat rate of cash back, such as 1.5% cash back on all eligible purchases. Other cards have tiered rewards with, for example, 6% cash back at supermarkets, 3% back at gas stations and 1% back on everything else. Still others have rotating bonus categories that change quarterly and that you must activate in order to earn higher rates of cash back.

Learn more: How Do Cash Back Credit Cards Work?

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How to Redeem Cash Back Rewards

Depending on your cash back card and the program, you may have several options to redeem your cash back rewards.

Statement Credit

One of the most powerful redemption options is applying cash back to your credit card's balance, which means you'll have a lower amount to pay off. Cash back generally can't be used to make the minimum payment on a credit card—you can only use a statement credit to cover whatever is left after paying the minimum.

Learn more: What Happens if You Only Pay the Minimum on Your Credit Card?

Direct Deposit or Check

It's also possible to receive cash back in the form of a direct deposit to a bank account or a check mailed to your home. Credit card issuers may allow cash rewards to be deposited into a checking or savings account.

Check your card's details to see if there's a minimum threshold for redeeming your rewards. This could vary depending on the redemption option. For example, you may be able to request a check once you have $25 in rewards, or make a transfer to a bank account if you have $20 or more in rewards. Some issuers have no minimum redemption amount at all.

Rewards Points

Some cash back cards are linked to their issuer's rewards program, allowing you to use them like rewards points to book travel, buy gift cards or pay for merchandise at partner retailers. But the value of cash back is often lower when you make purchases with rewards compared with getting a statement credit, bank transfer or check.

Confirm whether there's a deadline by which you must use your rewards or lose them. The card's terms and conditions will state when you can start redeeming cash back; it may be possible anytime, once you've hit a certain minimum cash back amount, or at certain periods only, such as annually.

How to Get a Cash Back Credit Card

Many credit card issuers offer cash back credit cards, and there are options available to those with poor credit and those who are new to credit. Here are the steps to get a cash back credit card:

1. Check your credit score. Since your credit score is a major determining factor in the types of credit cards you'll qualify for, check your score to narrow down which cards to apply for. You'll qualify for the most generous cash back rewards programs with a good or excellent credit score. But if you have poor credit, you may still be eligible for a secured credit card with cash back—you'll just receive a lower cash back rewards rate.
2. Get prequalified for multiple cards. You can go directly to a card issuer's website or use a marketplace like Experian's card comparison tool to get prequalified and see multiple offers at once. Prequalification doesn't result in a final approval, but it can give you an overview of cash back cards you may be eligible for, plus their interest rates and fees.
3. Compare rewards programs. Consider how you plan to use the card, and choose the one with a rewards program that most closely aligns with your lifestyle. For example, if you spend a lot on groceries each month, go for a card with a high, fixed cash back rate on groceries. If you don't want to consider whether your purchases fit into bonus categories, pick a flat-rate rewards card instead.
4. Apply for the card. Once you've picked a cash back card you're happy with, submit an application to the card issuer. The company will conduct a hard credit inquiry to evaluate your creditworthiness, and either approve or reject your application. After approval, you'll typically receive the card in the mail within 10 days, though you may be given a virtual card number you can use to begin making online purchases right away.

Frequently Asked Questions

The Bottom Line

Earning cash back rewards on a credit card is one of the easiest ways to save money on everyday purchases. Redeeming rewards with a statement credit, bank transfer or check can result in either a lower credit card balance or cash in your bank account, all without much extra effort. Make sure you understand your issuer's rules regarding cash back redemption, and aim for the methods that have the highest value for you.

If you're considering a cash back card, or you want to track how your use of a cash back rewards card is impacting your credit, sign up for free credit monitoring from Experian. You'll get real-time alerts to changes to your credit profile so you can stay on top of your credit health.