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* Suggested credit score ranges for credit cards are supplied by QuinStreet, not from the issuers, and are guidelines, not a guarantee of approval.
* Suggested credit score ranges for credit cards are supplied by QuinStreet, not from the issuers, and are guidelines, not a guarantee of approval.
If you are a points and miles enthusiast, you might not pay much attention to cash back credit cards. However, these can help fill in some major gaps in your overall rewards strategy and allow you to earn valuable rewards on your purchases. But how do they work?
In the simplest terms, when you make a purchase using your cash back credit card, you’ll earn a percentage of that purchase back. So, if you are buying $200 worth of groceries with a card that earns 3% back on grocery purchases, you’ll earn $6.
The cash back you earn can usually be redeemed in a variety of ways — a statement credit to your credit card account, a direct deposit into your bank account, or used to purchase gift cards. However, some cards offer greater flexibility in how you use your cash back, potentially giving you the opportunity to get outsized value from your rewards.
Here’s everything you need to know about cash back credit cards and how they work.
What Purchases Earn Cash Back?
You should earn cash back on almost every purchase you make with your card. However, some purchases are restricted from earning rewards, including cash advances, fees charged to your account, any cash-like transactions, and gambling purchases. As a good rule of thumb, if you’re able to use your credit card for a transaction without getting charged fees, you should earn cash back rewards.
The Types of Cash Back Credit Cards
Not all cash back credit cards are built the same. Benefits, earning rates, and redemption methods vary substantially across each of the major issuers. However, we can categorize cash back credit cards into four main types: flat-rate cards, cards with tiered earnings, cards with customizable earnings, and cards with rotating bonus categories.
Flat Rate
Flat-rate cash back cards are the easiest cards to utilize. These cards typically earn 1.5% to 2% cash back on all purchases, every day. These cards might also have a bonus category for booking travel through the issuer’s travel portal, but you’ll earn a flat rate when using your card anywhere else.
One of the most popular flat rate cash back credit cards is the Citi Double Cash® Card, which allows you to earn 1% cash back when you make a purchase and another 1% back when you pay that purchase off.
The Capital One Quicksilver Cash Rewards Credit Card is another solid option, with a flat 1.5% cash back on all purchases. Neither of these cards charges an annual fee, making them an affordable and rewarding addition to your wallet. If you pair these cards with a points and miles earning card, you could use the points card for bonus category spending and the cash back card for your other purchases.
Tiered
Cash back cards with tiered earning structures can be a little more complicated but even more rewarding than those that earn a flat rate on all purchases. These cards allow you to earn bonus cash back in select categories, like groceries, travel, dining, or entertainment. All other purchases earn a base rate, which is typically 1%.
One of the most popular cash back cards with a tiered earning structure is the Capital One Savor Cash Rewards Credit Card, which earns:
- Unlimited 5% cash back on hotels, vacation rentals, and rental cars booked through Capital One Travel
- Unlimited 3% cash back at grocery stores, on dining, entertainment, and popular streaming services
- Unlimited 1% cash back on all other purchases
Apart from the excellent earning potential, the Savor Rewards card is so popular because it doesn’t charge any annual or foreign transaction fees.
Capital One Savor Cash Rewards Credit Card
(4.13) Our Review
- No annual fee
- Earn 3% cash rewards on popular categories
- No foreign transaction fee
- No annual fee
- Earn 3% cash rewards on popular categories
- No foreign transaction fee
Pros
- No annual fee
- Earns 3% back on dining and at grocery stores
- Excellent Intro 0% APR offers
Cons
- Only earns 1% cash back on non-bonus categories
- Does not come with any fancy benefits like airport lounge access
- Must book via Capital One Travel to get 5% cash back on hotels, vacation rentals, and rental cars
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3x
Dining Out / Food Delivery
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3x
Streaming Services
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3x
Entertainment (Concerts / Shows / Movies)
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3x
Supermarkets
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1x-5x
Car Rentals
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1x-5x
Hotels
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1x
Everything Else
If you want some of the highest earning rates on the market, consider the Blue Cash Preferred® Card from American Express. You’ll earn the following:
- 6% cash back on groceries, up to $6,000 spent per year at U.S. supermarkets
- 6% cash back on select streaming services
- 3% cash back on transit and gas at U.S. gas stations
- 1% cash back on all other purchases
As you can see, it’s pretty different from the Savor Rewards — it has higher earning rates, but also implements spending caps on bonus cash back for grocery purchases. If you’re a high spender, this is frustrating.
Also, after a $0 introductory annual fee, you’ll pay $95 per year as a cardholder. This can quickly eat into your cash back earnings. However, you can earn up to $120 in statement credits for Disney streaming services. If you already subscribe to Disney, you can cover that monthly bill with your card.
Or, if you’d rather earn casn back without paying an annual fee, you can opt for the Blue Cash Everyday® Card from American Express. As a cardholder, you’ll earn the following:
- 3% at U.S. supermarkets, up to $6,000 spent per year
- 3% on U.S. online retail purchases, up to $6,000 spent per year
- 3% at U.S. gas stations, up to $6,000 spent per year
- 1% on all other purchases
As you can see, these bonus categories are slightly different. If you’re not a heavy spender, it might be worth forgoing the annual fee.
The Chase Freedom Unlimited® is also a popular tiered-earning cash back card, since it earns a base rate of 1.5%:
- 5% on travel purchased through Chase Travel
- 3% on drugstore and dining purchases
- 1.5% on all other purchases
The Freedom Unlimited gives you the best of both worlds between a tiered earning structure and a flat rate cash back card — you’ll earn more than 1% on day-to-day purchases, but select purchases also earn more.
Pick Your Own Category
For ultimate flexibility, consider a cash back card with customizable earnings. Essentially, you can pick your own bonus category to earn maximum cash back, and other purchases will earn a base rate of cash back.
One of the best cards in this category is the Citi Custom Cash℠ Card, which earns 5% cash back on your top eligible spending category each month, and 1% cash back on all other purchases. Eligible categories include restaurants, gas stations, grocery stores, select travel, select transit, select streaming services, drugstores, home improvement stores, fitness clubs, and live entertainment.
This content is not provided by the issuer. Any opinions expressed are those of Your Best Credit Cards alone, and have not been reviewed, approved or otherwise endorsed by the issuer.
Citi Custom Cash℠ Card
(3.93) Our Review
- The Citi Custom Cash rewards you with 5% cash back on your top spending category each month, on up to $500, from a broad range of selected categories.
- The only credit card to offer 5% on home improvement stores.
- The Citi Custom Cash card pairs well with a Citi Double Cash card, Citi Premier, or both!
- The Citi Custom Cash rewards you with 5% cash back on your top spending category each month, on up to $500, from a broad range of selected categories.
- The only credit card to offer 5% on home improvement stores.
- The Citi Custom Cash card pairs well with a Citi Double Cash card, Citi Premier, or both!
Pros
- 5% is the highest possible reward for many of the Custom Cash Card's bonus categories
- No annual fee
- Includes very rare bonus categories, like home improvement stores
Cons
- With the Citi Custom Cash, your 5X earnings are capped at $500 per statement cycle on your top spend category each billing period
- Has a fairly low bonus offer, although not too bad for a no-annual fee credit card
- Charges a foreign transaction fee
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5x
Airfare
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5x
Transit
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5x
Car Rentals
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5x
Gas Stations
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5x
Dining Out / Food Delivery
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5x
Hotels
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5x
Gym Memberships
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5x
Streaming Services
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5x
Drugstores
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5x
Entertainment (Concerts / Shows / Movies)
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5x
Supermarkets
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1x
Everything Else
Rotating Categories
The final type of cash back card has rotating bonus categories. You’ll earn bonus cash back on purchases in the rotating category, up to a certain amount spent.
For instance, the Discover it® Cash Back earns 5% on up to $1,500 spent in the quarterly bonus category after activation. In 2025, the quarterly categories were:
- January to March: Restaurants, home improvement stores, and select streaming services
- April to June: Grocery stores and wholesale clubs
- July to September: Gas stations and EV charging stations, public transit, and utilities
- October to December: Amazon.com and drug stores
The downside to cards with rotating categories is that you have to activate your bonus cash back each quarter. It’s quick, but if you forget, you’ll only earn the base rate, which is typically 1%. Also, if there happens to be a category where you don’t spend much money, you’re missing out on bonus cash back.
All information about the Chase Freedom Flex has been collected independently by Your Best Credit Cards.
Chase Freedom Flex
(4) Our Review
- 0% Intro APR offers for both new purchases and balance transfers
- 5% cash back on rotating bonus categories each quarter (on up to $1,500 in combined purchases per quarter)
- Comes with great shopping benefits like Purchase Protection and Extended Warranty
- 0% Intro APR offers for both new purchases and balance transfers
- 5% cash back on rotating bonus categories each quarter (on up to $1,500 in combined purchases per quarter)
- Comes with great shopping benefits like Purchase Protection and Extended Warranty
Pros
- No annual fee
- 0% Intro APR offers on both purchases and balance transfers
- Points earned can be combined with other cards that earn Chase Ultimate Rewards
Cons
- Cannot transfer points to airline or hotel partners unless you also have a Chase Sapphire Preferred, Sapphire Reserve, or Ink Business Preferred
- Carries a foreign transaction fee of 3%
- Limited trip protections and no bonus points on travel purchases
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3x
Dining Out / Food Delivery
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3x
Drugstores
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1x-5x
Airfare
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1x-5x
Hotels
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1x-5x
Car Rentals
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1x
Everything Else
Another popular option is the Chase Freedom Flex℠, which earns 5% back on up to $1,500 on combined purchases in bonus categories each quarter you activate, as well as 3% on dining and drug store purchases, and 1% on all other purchases. In 2025, the quarterly categories were:
- January to March: Grocery stores, Norwegian Cruise Line®, fitness clubs and gym memberships, and hair, nails, and spa services
- April to June: Amazon and select streaming services
- July to September: Instacart, gas stations, EV charging, and select Live Entertainment
- October to December: Old Navy, Chase Travel, and department stores
As you can see, the cash back calendars for Chase and Discover are wildly different.
How To Redeem Cash Back Rewards
Although “cash back” sounds like a straightforward term, there are actually several ways you can redeem your cash back, depending on your credit card. Keep in mind that there can sometimes be restrictions on when you can redeem your cash back. You may not be able to redeem until you’ve earned a certain amount, or your redemption options may be limited.
Cash back typically means that you can redeem your rewards as a statement credit to your account, deposit into your bank account, a check by mail, a gift card, or to cover purchases at checkout with retailers.
However, some credit cards actually earn cash back in the form of points, which can then be transferred to travel partners. For instance, the Citi Custom Cash and Citi Double Cash are both cash back credit cards, but they actually earn Citi ThankYou® Points. These can be transferred directly to Citi’s transfer partners or combined with a points-earning card, such as the Citi Strata℠ Premier Credit Card or Citi Strata Elite℠ Card, to transfer to partners at a better ratio.
Bottom Line
Cash back cards can be a great addition to your overall credit card strategy. Now that you understand how cash back cards work, you’re ready to evaluate which one is best for you. As you can see, there are tons of cash back cards on the market. If you are interseted in a new card, head to our Smart Search. You can find a precise recommendation based on your spending habits and goals. We also offer bonus offer alerts so you know when it’s the best time to appy for a new card.
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