What is Credit Card Cash Back?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 28 August 2019
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Credit card cash back is a type of program that allows credit card users to receive a small cash back bonus on qualified transactions that are executed using the card. In most cases, the program identifies a specific percentage that is used to determine the amount of the bonus. This approach is only one of several different types of credit card reward programs, with some other examples using a points system that allows the cardholder to either use the points to purchase a limited line of goods or convert the points to cash from time to time.

While the exact structure of a credit card cash back program will vary from one example to the next, just about all the best programs share a few common traits. Most will provide the bonus on purchases that are defined as qualified. The terms and conditions that must be met in order for a transaction to qualify are provided in the contract that governs the use of the credit card. For example, the terms may qualify that the cash back bonus is assessed on any retail purchases such as groceries, electronic equipment, or even restaurant meals, but would not apply to cash advances. When a qualified purchase is made, the total of that purchase is multiplied by the bonus percentage named in the contract to arrive at the amount of the actual bonus for that particular transaction.


The schedule for tendering the credit card cash back bonus will also vary from one card plan to the next. In some cases, the bonus is tendered on a monthly basis, appearing as a line item in the credit card statement detail. Other plans call for tendering the accumulated bonuses every six months or even annually. Typically, the total amount of the accumulated bonus generated by the credit card cash back program is deducted from the outstanding balance, although some plans do allow the cardholder to receive a check for the total amount of the bonus.

Savvy consumers can make excellent use of a credit card cash back program by making sure to retire credit card balances on a monthly basis while using the card for any qualified purchases during each month. This approach makes it possible to avoid incurring finance charges while enjoying small savings off each of those qualifying purchases. For example, by using a credit card with a cash back program to buy groceries each month, then paying off the balance of that card when the monthly statement arrives effectively shaves a small percentage off the grocery bill over time, while also generating positive feedback that eventually finds its way to the credit reporting agencies.


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