How do cash-back credit cards work?

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    StellarFi
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    #32910
    StellarFi
    Keymaster

    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.

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StellarFinance, Inc. and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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