How do cash-back credit cards work?

Imagine going to a store where every time you buy something, the cashier hands you a little bit of your money back as a thank you. That’s essentially how cash-back credit cards work.

1. How to earn cash back: Use the card for purchases, and you get a percentage back as a cash reward. This could be a flat rate on everything or higher rates for certain things like groceries.
2. How to redeem cashback: You can usually turn your cash back into statement credits, deposit it into a bank account, or get gift cards. Some cards might even allow you to use cashback to shop directly on websites like Amazon.
3. How to get cash-back bonus offers: Many cards have sign-up bonuses, offering extra cash back for spending a certain amount early on.
4. How interest affects your cash back: If you pay your bill in full every month, you won’t pay interest, making the cash back all profit. But, if you carry a balance, interest might offset your rewards.

In short, cash-back cards reward you for your regular spending, but the key to maximizing those rewards is paying off your balance each month to avoid interest.