Cash back is the most popular type of credit card reward, and for good reason. You can spend that cash on just about anything you want.
Of course, in what form you can redeem your cash back depends on your credit card.
Here’s everything you need to know about how to cash in your cash back credit card rewards.
How to Redeem Your Cash Back Rewards
Between credit unions and banks, consumers can choose from hundreds of cash back credit cards. Each card provides different ways to redeem your cash back rewards. You can opt to receive your reward in forms such as a:
Paper check. If you’re old school, some cash back credit cards allow you to redeem your cash back as a paper check sent by mail. Once you cash that check or deposit it into your bank account, you can use the money however you want.
Direct deposit. For quicker access to your cash, many cash back credit cards also let you send your money directly to your checking or savings account.
Note that some banks require you to have a checking or savings account with them to choose this option. At the very least, you may need to deposit your cash into the checking account you use to make your monthly credit card payments.
Statement credit. Many cash back cards allow you to use your rewards as a statement credit toward a purchase. This option can also be helpful if you have a large balance and want to chip away at it.
Some cash back cards let you redeem your rewards for noncash options, such as gift cards, merchandise, travel and more.
Gift cards. If your cash back credit card offers this choice, you can redeem your rewards for gift cards to popular restaurants and retailers. Your credit card could give you a little more value with this pick, such as an extra $5 when you redeem $20 in rewards.
Travel. Your credit card might allow you to use your cash back to book travel through the card issuer’s website. This can be a great way to use your rewards if you have an upcoming trip.
Before you book, though, compare prices with other travel websites to make sure you’re getting the best deal.
Also, note that you may get less value if you redeem your rewards for travel with a cash back credit card instead of a travel rewards card.
“You may be able to earn more rewards value with other types of rewards cards,” says John Ganotis, founder of Credit Card Insider, “like the ability to transfer points to frequent flyer programs.”
Merchandise. You might be able to redeem your cash back rewards for electronics, household items, sporting goods and more.
Just be sure to comparison shop online before you click “buy” because you could find a better deal elsewhere.
Online shopping. A handful of credit cards permits you to use your cash back to shop on Amazon.com. All you need to do is add your card as a payment method on the retail website and choose how much you want to redeem.
Charitable donations. Some cash back credit cards let you donate to charities, but you may be limited to certain groups.
Certain credit cards are designed just for charitable donations. With the Charity Charge World Mastercard, for instance, you can support up to three organizations at a time with your cash back rewards.
Investing. If you get cash back as a check or direct deposit, some credit cards can make that money a little easier.
The Fidelity Rewards Visa Signature Credit Card, for instance, lets you redeem your cash into an eligible Fidelity account, including individual retirement accounts. Depending on your returns, this option could be a great way to maximize the value of your cash back credit card.
College savings. If you have children and want to help them with college costs, credit cards such as the Upromise Mastercard can help you do it. The card offers bonus cash back when you link an eligible 529 college savings plan. You can also round up your card purchases to the nearest dollar and save the difference.
Depending on where you live, those 529 contributions could also net you a state tax deduction or credit, giving you even more value.
Mortgage payments. A bank-issued credit card might allow you to use your cash back to pay down the principal on a mortgage with the bank.
Transfers. Some credit cards let you transfer your rewards to another rewards account with the issuing bank. This can be helpful if you have more than one credit card with the same issuer and want to pool your rewards.
Picking a Cash Back Rewards Credit Card
When choosing a cash back credit card, not only are ways to redeem rewards key but also card features.
“It’s important to know these and any other nuances because what you don’t know can cost you,” says Matt Schulz, chief industry analyst at CompareCards.
Read the credit card terms and conditions posted on the issuer’s website for more details about these features:
Redemption minimums. Some cash back credit cards require you to accumulate a certain amount of cash back rewards before you can redeem them. The typical amount is $25.
A redemption minimum may not be a problem if you use your card often and earn enough cash back rewards to meet the minimum. But if you rarely use your card, gaining access to your rewards can take a while.
Automatic redemptions. Some credit cards allow you to set up automatic redemptions once you reach a certain threshold, such as $25 or $50, or at a set time each year. With this feature, you don’t have to worry about checking your rewards balance or deciding how to redeem your cash back rewards. Just set it up once and forget about it.
Rewards expiration. In many cases, your cash back rewards won’t expire as long as your credit card account is open and in good standing. But with some credit cards, you could forfeit your rewards after a certain period, such as 12 months without earning cash back. Or you may forfeit your cash back balance if you close your account.
Other redemption options. “While cash back is naturally more flexible than points and miles,” Schulz says, “if a card issuer does give additional redemption options, it can make the card even more appealing.”
Special cases. Some credit cards have special terms and conditions for redeeming cash rewards. But this tends to be rare. The Costco Anywhere Visa Card by Citi, for instance, disburses your cash back only once a year, with your February statement.
Consider your card preferences before you apply. Certain terms could be deal breakers.
Or you may have to weigh other distinct factors. With the Amazon Rewards Visa Signature Card, you may be tempted to redeem your rewards for purchases on Amazon, Ganotis says. But when you do that, you lose out on the 3% cash back – 5% if you’re a Prime member – that you’d get if you were to use your card instead.
“Always use the card for Amazon purchases, and redeem all the rewards for statement credit or to a bank account,” he says. That way, you get the cash back on the purchase and can use your cash rewards to cover its cost.
Finally, choosing the right cash back credit card can be tough with so many considerations.
Schulz says, “When it comes to picking the right card, some really old advice is still the best: Know thyself. Before you apply, ask yourself how you will use the card and what you want to get from it. Once you know those two things, you’re on your way to finding a card that best fits your lifestyle.”