What Is Cash Back On A Credit Card?

You’re already spending money on everyday things like groceries, gas, and dining, but did you know you can get rewarded for it? With cash back credit cards, you can earn rewards in the form of cash rebates on the purchases you’re already making. Each time you use your cash back card on a qualifying purchase, you’ll earn rewards that can add up over time and make a real difference! 

A cash back credit card can be a great way to save money by using rewards toward your account balance or to help save up for something you want, like a dream vacation. The best part is you get these rewards on the money you’re already spending anyway, so you don’t have to change your spending habits or spend more to get the rewards. 

In this article, we’ll explain what a cash back rewards credit card is, how cash back on a credit card works, and how to take advantage of cash back credit cards.

Want to start earning rewards? Open your cash back credit card with AFCU today. Apply online or make an appointment at your local branch to get started.

What Is Cash Back On A Credit Card? 

Cash back for credit cards is a credit card reward that gives you a portion of what you spend on qualifying purchases as cash back. For example, if your card gives you 2% cash back and you spend $100 on qualifying purchases, you would earn $2 in cash back rewards. 

The rewards you earn and what counts as a qualifying purchase will vary by credit card. However, most cash back cards include gas, groceries, dining, and travel as qualifying purchases and exclude things like fees and balance transfers.

Because every card is different, it’s important to check the terms before opening a cash back credit card to make sure the categories you spend the most in are considered qualifying purchases, so you can make the most of your rewards.

Once you understand what cash back is, the next step is understanding how different cash back credit cards work. While they all reward qualifying purchases, they don’t all earn rewards the same way. 

How Do Cash Back Credit Cards Work? 

All cash back credit cards provide rewards on qualifying purchases, but not every card is structured the same way. If you want to learn how to take advantage of cash back credit cards, it starts with understanding the different options available, so you can choose the one that will help you get the most rewards.

Flat-Rate Cash Back Cards

With flat-rate cash back cards, you get one rewards rate for all qualifying purchases. For example, with Arkansas Federal’s cash back credit card, you earn 2% cash back2% Cash Back: Earn 2 points for every $1 spent on purchases, which may be redeemed for cash back equal to 2.00% on the uChoose Rewards site. on qualifying purchases. This means that no matter what you spend money on, as long as it qualifies, you’ll earn the same 2% back. 

Flat-rate credit cards can be a great option if you want to keep things simple and know you are rewarded equally on all your qualifying purchases.

Fixed-Category Cash Back Cards

Fixed-category cash back credit cards offer higher rewards on specific spending categories and lower rewards on everything else. For example, a card may offer 3% cash back on travel purchases and 1% cash back on all other qualifying purchases, like gas and groceries.

Fixed-category cards can be a good option if you do the majority of your spending in the categories that are heavily rewarded, so the higher cash back you earn in those categories outweighs the lower rewards you receive on others. 

Rotating Category Cash Back Cards

Rotating category cards offer higher rewards on specific categories, but unlike fixed category cards, the higher-reward categories change throughout the year (typically every quarter). For example, a card may offer extra cash back on travel purchases for a few months before switching to groceries or restaurants. 

Rotating category cards can help you earn higher rewards, but you’ll need to keep track of which categories are currently earning bonus cash back and time your spending to maximize your rewards. 

Now that you understand the different types of cash back credit cards, let’s look at why so many people choose them over other rewards cards. 

The Benefits Of Cash Back Credit Cards

There are many benefits of cash back credit cards, but the main one is that you can earn rewards and get cash back on purchases you were already planning to make. Many cash back credit cards, including Arkansas Federal’s 2% cash back card2% Cash Back: Earn 2 points for every $1 spent on purchases, which may be redeemed for cash back equal to 2.00% on the uChoose Rewards site. , have no annual fee, so you don’t have to pay extra to earn rewards. 

Another benefit of cash back credit cards is their flexibility. Because your rewards are earned as cash back, you can use them however you’d like. Whether you want to put the money toward everyday expenses, pay down your credit card balance, or save up for something bigger like a dream vacation, the choice is yours. 

For many people, the combination of simple rewards, flexible redemption options, and no annual fee makes a cash back credit card an easy choice for everyday spending. 

How Do I Get Cash Back From My Credit Card?

How you redeem cash back from your credit card will vary depending on the card you have, but common redemption options include a statement credit applied to your account balance, a direct deposit, a check, or rewards for things like gift cards or travel purchases. Most cash back rewards do not expire as long as your account is open and in good standing, but it’s important to review your card’s terms to be sure.

At Arkansas Federal, you earn 2 points for every $1 spent on qualifying purchases2% Cash Back: Earn 2 points for every $1 spent on purchases, which may be redeemed for cash back equal to 2.00% on the uChoose Rewards site. . Those points can be redeemed on the uChoose Rewards site for cash back, and your points do not expire as long as your account is open. This means you have the flexibility to use your rewards as you earn them or save them for larger purchases without worrying about losing them.

Does Redeeming Cash Back Affect Credit Score? 

A common question people have is, “Does cash back affect credit score?” The answer is no. Cash back is simply a reward for using your credit card and does not directly affect your credit score. Because your credit score is tied to how you use your credit card, it’s understandable why people ask. 

Your credit score is determined by your payment history, credit utilization, credit history, credit mix, and credit activity. So, if you used your cash back credit card to pay for something and don’t pay on time, your credit score could be affected. However, that’s because of your payment history changing, not because of your cash back rewards.

In fact, if you use your cash back as a statement credit or to help cover other expenses, it may free up money in your budget and make it easier to pay your credit card bill on time. 

Ultimately, cash back itself has no impact on your credit score. What matters is how responsibly you use your credit card and whether you make your payments on time. 

Open A Cash Back Rewards Card With Arkansas Federal Today

If you regularly use a credit card for everyday purchases, a cash back credit card is an easy way to earn rewards without changing your spending habits. You can use those rewards however you like, whether that’s paying down your balance or saving for something special. 

With Arkansas Federal’s 2% Cash Back Credit Card, you’ll earn 2% cash back2% Cash Back: Earn 2 points for every $1 spent on purchases, which may be redeemed for cash back equal to 2.00% on the uChoose Rewards site. on every qualifying purchase, with no rotating categories or spending limits. There’s also no annual fee, so you don’t have to pay extra just to earn rewards. 

Ready to start earning free rewards? Open your cash back credit card with Arkansas Federal Credit Union today. Apply online or make an appointment at your local branch to get started.