• Check
  Yourcard issuer can mail you a paper check.
• Bank Deposit
  Some issuers will simply deposit your cash reward directly into your bank account and this can give you added perks with some cards. For example, BankAmericard Cash Rewards gives you a 10% bonus each time you redeem your cash back into your Bank of America savings or checking account.
• Gift Cards
  You can use your cash back to purchase gift cards via your Issuer’s online shopping portal. Frequently, you can attain more purchasing power with this method.
• Amazon.com
  Discover cards let you to shop at Amazon.com with the cash back you have earned by paying at check out with Cash back Bonus.
• Statement Credits
  Apply your cash back rewards earnings to your credit card bill each month or as frequently as your card issuer allows.
• Contributions to Charity
  Some cash back card issuers support the donation of your rewards to select charities. This is tax deductible when the donation is via cash back. This is not the case with points or miles.

With some cash back rewards credit card programs you are limited to only one or two methods of redeeming your cash. As an example, US Bank Cash+ Visaredeems your cash back rewards as either a deposit into your U.S. Bank savings, checking or money market account or as a statement credit. It does not impose a minimum threshold.

Cash Back Rewards Thresholds

To redeem your cash back, you may need to earn a minimum amount. Discover sets various limits ranging from $20 to $50 to purchase a partner gift card. Other cards place no such limits. Capital One Quicksilver Cash Rewards Credit Card is one of several credit cards with cash back that set no minimum thresholds, and instead lets users redeem their cash back whenever they want

There may be caps on the amount of cash back you can earn. Citi Dividend Platinum Select Visa Card caps your cash back at $300 per calendar year. This amount excludes their $100 introductory signing bonus.

Don’t Lose Your Rewards – Cash In Frequently

If you can cash in, you should – frequently. By holding onto these rewards or waiting to cash in until you’ve attained a large sum, you run the risk of losing your cash back earnings. There are a few ways this may occur.

• Expiring Cash Back Rewards or Card Inactivity.
  Though rewards expiration are becoming less and less frequent, there are issuers that still implement a “use it or lose it” policy. Citi Dividend Platinum Select Visa Card has some pretty detailed rules. You get 5 “Dividend Dollars” for every individual $1,500 balance transfer transaction. These typically do not expire unless you fail to make a qualifying purchase at least once a year.
• Delinquency or Account Closure.
  If you fall behind on your account, many issuers impose a forfeiture of any rewards you have earned. If this is not the case, but your delinquency leads to the closure of your card account, your rewards will be gone too.
• Business Closure.
  If your card issuer goes out of business, your rewards go with it.

Ease of Redemption

How hard is it to redeem your cash back rewards? Some cash back cards offer “automatic redemption” meaning you need do nothing more than earn the rewards and your card issuer automatically credits the cash back to your account. In other instances, you will need to request a rebate, enroll or sign up for special rotating purchasing categories or fulfill some other requirement to get your rewards.

Be sure to look at all of these features when you select your cash back rewards. How many ways can your cash be redeemed? Does the cash back rewards program set thresholds and/or incremental amounts in order to redeem your cash back? What happens to your rewards if you’re late on your payments or if your account closes? How easy is it to access your cash back rewards? Get the facts before you apply.

Starting Out Right – Rewards Cards with the Highest Introductory Cash Back Rewards Bonuses

1. Blue Cash Preferred Card from American ExpressBlue Cash Preferred gives you $150 cash back for spending $1,000 on purchases within the first three months of opening your account. The reward will be received as a statement credit.

   Continuing cash back can be earned at a rate of 6% for grocery purchases and 3% for gas and department store purchases in the U.S. Once you have spent $6,000 within a year on these categories, the earn rate drops to 1% on these and all other purchases.

2. BankAmericard Cash Rewards Credit CardThis cash back credit card offers you $100 cash back rewards after you have spent $500 in qualifying purchases. To earn this reward, you must apply online and spend $500 on purchases within the first 90 days of opening your account.

   Ongoing rewards earnings aren’t too shabby. You receive 2% cash back on groceries and 3% at gas stations. Eligible purchases in these categories are capped at $1,500 each quarter. Other purchases earn at a 1% rate.If you are a Bank of America banking account customer, you can earn additional rewards by redeeming your cash back into your BOA savings or checking account. This gets you 10% on your deposit.

3. Capital One Quicksilver Cash Rewards Credit Card
4. Quicksilver is another cash back rewards card offering a $100 sign up bonus once you purchase $500 on your card in your first 3 months.

   After your 3 months have passed, you continue earning cash back on purchases at a slightly higher than average earn rate of 1.5%. However, there are no additional incentives or special high cash back rates for any purchasing categories.

5. Chase Freedom
6. This Chase card offers a $100 introductory cash back bonus as well. Like its competitors, you must spend $500 on purchases during the first three months to qualify for your sign on bonus. Chase Freedom gives you the opportunity to earn an additional $25 when you add an authorized user and make a purchase within your first 3 months.

Ongoing cash back rewards are 5% cash back on qualifying purchase categories that change every 3 months. They max out after you spend $1,500 on these select categories during each quarter. You will continue earning 1% on additional purchases in all categories.

On occasion, Chase Freedom offers a time-limited $200 sign-up bonus. Qualifying purchases remain the same – $500 in purchases within the first three months you have your account. You should take advantage of this rarity when you see it, especially with the high ongoing earn rates available to you through the cards rotating categories and the absences of an annual fee. Moreover, you don’t need excellent credit to qualify for this card, so it’s well suited if you’re just building a credit history. Most recently, the doubled signing bonus ran during the month of June 2014.

A Brief Comparison with Some Points/Miles Credit Cards Offering High Introductory Bonuses

Points/Miles rewards cards typically offer far more impressive introductory signing bonuses than cash back cards. Travel cards offer the highest introductory cash back bonuses. As you can see below, with some of these cards, you can also redeem points for cash back, though the points are devalued when you choose this option. Still, if you’re not a traveler, the cash back amounts are very respectable and higher than those normally offered by top cash back rewards cards.
The following are just a few points/miles cards that give you a better than average introductory bonus.

1. Chase Sapphire Preferred Credit Card – 40,000 points worth $500 in travel. You must spend $3,000 in the first three months. Card holders also have the option of redeeming these points for cash, but the value drops to $400 cash back.
2. Barclaycard Arrival Plus World Elite MasterCard – 40,000 points worth $400 for travel expenses after spending $3,000 in the first three months. Like the Sapphire, Barclaycard can also be redeemed for cash back, but the value is cut in half, coming in at $200 cash back.
3. Citi ThankYou Preferred Card – 20,000 points worth $200 in gift cards and other rewards. You need to spend $1,500 within the first three months.
4. Wells Fargo Propel 365 Credit Card American Express – 20,000 points worth $200. You must spend $3,000 in the first three months.

Cashing In

Cash rewards credit cards don’t offer very impressive introductory bonuses. Most are in the $25 range, and a few offer $100 to $150. If you’re lucky, and your timing is right, you may be able to cash in with a higher time-limited offer, like Chase Freedom’s $200 deal. However, normally your cash back rewards are going to be more dependent upon your ongoing spending. In contrast, rewards cards offering points/miles often give you quite notable sign on bonuses for heavy card use in the first three months. And as you can see above, some of these even allow you to redeem your points/miles for cash at a lower valuation. If you are set on a cash back card, consider also applying for a good points/miles rewards card to use in tandem with your cash back card, thus earning the maximize amount of rewards for all of your normal spending, especially if you travel.

Purchasing Power

Keep in mind that the financial institutions that offer you credit cards are motivated by profit.“ Something for nothing ” is a myth. Despite the hype, the commercials, and all the other advertising that touts the benefits and the rewards associated with credit card usage, the objective of your credit card issuer is to make a profit. Therefore, the only way you will earn cash with your cash back rewards credit card is to use it. Moreover, your issuer places constraints on the type of usage that will earn rewards. Basically, it comes down to purchases. Balance transfers, cash advances, late fees, credit charges and the like may put money in their pockets, but the ultimate goal is to encourage purchases of goods and services by their consumers. Therefore, these activities will not earn you cash back rewards.

The standard cash back rate is 1%. So if you purchase a flat screen TV for $1,500, your cash back amount will be $15. However, many cash rebate credit cards also offer higher cash back rates for specific purchasing categories. For example, Chase Freedom pays 5% cash back on up to $1,500 on eligible purchases in categories that rotate each quarter. So you can earn $75 cash back each quarter when you spend the $1,500 maximum in their approved categories. Any purchases above the max and all other purchases earn the standard 1% cash back rate.

Another popular method for earning cash with a cash back rewards credit card is through an initial signing bonus. More on that here.

Introductory Cash Back Bonuses – Oh Yeah!

Balance Transfers and Cash Advances

Transactions like cash advances and balance transfers most frequently come with a fee, typically about 3% of the amount being transferred or withdrawn. Most cards also charge a higher APR on these balances. It’s quite rare to find a cash back rewards credit card that pays out rewards on this type of card usage. One example is Citi Dividend Platinum Select Visa Card which offers 1% cash back on cash advances. However, the cash advance APR is 25.24% and your cash back is capped at $300 per year, so it’s hardly worth it.

Many cards do offer a lengthy introductory 0% APR period on balance transfers. If you carry a balance on a higher interest card, as a smart consumer you will transfer it to the new card and use this time to pay it down.

No Balance. No Balance. No Balance.

Seriously. This CANNOT be overstated. If your goal is to realize the most cash with your cash back rewards credit card, balances are OUT!

You may be thinking, “Well, if I am planning to use my credit card to purchase things on “time” that I simply cannot afford now, I may as well get a cash back rewards credit card to offset the interest rate payments I will inevitably be making. Here’s the thing. Remember when we told you that card issuers are motivated by profit? When they kick back a percentage of their profit – albeit a tiny one – this impacts their margin. Card issuers are well aware of this and they have put in place terms and conditions to minimize this problem. Rewards cards are more likely to carry annual fees and slightly higher interest rates to offset the rewards they must pay out.

If you want a credit card in order to buy things that you cannot pay for outright, a cash back rewards credit card option is usually not the best choice. You’d be much better off looking for cards that offer lower than industry standard APRs. They are out there. Card issuers who know you intend to carry a balance realize the value you provide. Don’t waste your time with a 1% or 2% cash back option that makes you jump through hoops to realize your rewards. Focus on cards with bigger savings offered through lower APRs, like theBankAmericard Visa and Discover it, which start at a 10.99% interest rate, or the Union Bank Platinum Edition Visa Card and Bremer Bank Signature and Platinum cards with a 9.99% minimum APR. None of these cards charges an annual fee, and they all offer a 0% introductory period ranging from 6 to 15 months. These rates are only available to consumers with excellent credit. Note that Discover It also offers cash back rewards.

A Little History

The extension of credit is a pretty old practice. In the early days, when our nation was being settled, credit accounts were quite prevalent. This was due largely to the exchange of essential goods for a monetary value that was necessary for the purchase of items that the farmer and his family needed but were unable to produce easily on their own. They brought the merchant eggs, produce, furs and meat. Essentially, farmers exchanged their goods for merchandise like fabric and tools that were more easily manufactured in the “big cities”. General stores extended credit to the farmer in a ledger which allowed them to purchase these elusive wares.

Eventually, as cities grew and the reliance on farming industries lessened, actual money and credit became more desirable tender. Fast forward to urbanization and the increased reliance on department stores to obtain your day to day necessities. Hey. “Don’t fix it if it ain’t broke”. This was the birth of the “charge account”. Consumers could run up open bills with very specific merchants that had to be paid monthly.

Some financial smart cookies soon realized that this practice could be capitalized upon by the extension of credit by several merchants simultaneously via a single card. This evolved into the formation of franchises that eventually developed into credit card companies like Visa and MasterCard.

After a great deal of infighting and the resulting legislation, the credit cards we are familiar with today started to evolve. In the late 1980’s, rewards cards started to appear. In these early days, airline cards were the big draw. Frequent Flyer miles tied to credit card accounts became more and more prevalent. Competition grew, and financial institutions developed new methods of attracting consumers. This eventually resulted in the cash back reward credit card offerings that we are familiar with today.

Who Benefits with a Cash Back Rewards Credit Card

If you travel frequently, especially via air, you might be better off with a Rewards card that offers miles for your purchases. However, if you never fly, take cruises, or stay in hotels, credit cards with cash back make much more sense. To qualify for the best cash back offers, you will need a good to excellent FICO credit score, typically between 690 and 850. It’s also essential that you don’t carry a balance if you wish to maximize your rewards.

Important Features to Consider in Cash Back Reward Credit Cards

There are a number of important features to review when making comparisons between Rewards Cards.
When selecting a credit card with cash back, the following information is very important.

• How do you earn your cash back?
  How You Earn Cash Back with a Rewards Credit Card. Learn the ins and outs of earning cash back rewards through sign on bonuses, purchases and other reward offerings.
• How can your redeem your earnings and how easy is the process?
  Redeeming Your Cash Back Rewards. Review the ways you can access and spend your money once you have earned it.
• How much cash can you earn?
  How Much Cash Can You Get Back?. Get the truth about your potential earnings through cash rewards credit cards and the best ways to capitalize on these cash back options.
• Which cards offer the highest ongoing cash back earn rates?
  Identifying the Cards that Offer the Best Cash Back Options. Review the varying earn rates available and determine which approach is best for your particular spending habits.
• Which cards offer the highest cash back introductory rates?
  Introductory Bonuses – Oh Yeah!. Determine whether a cash back program is sufficient for your needs with a realistic review of the limitations on cash back introductory rates.

Once you have determined whether a cash back rewards card is a good option for you, take some time to review your everyday spending habits over the past year. Use this information to identify what you want and need from your cash back rewards credit card by identifying where you are already spending your money. Armed with this valuable information, you are then prepared to review the features above to select a cash back rewards program that is suited for your unique needs and spending patterns.

Best in Show – Rewards Cards with Top Cash Back Earning Rates

1. Chase Freedom

Chase Freedom gives you 5% cash back on specific categories that rotate every 3 months. This high earn rate endures on up to $1,500 worth of combined purchases on each quarter’s categories. Categories for 2014:

• Dec 15 – Mar 14: Gas Stations, Movie Theaters and Starbucks
• Mar 15 – Jun 14: Restaurants and Lowe’s Home Improvement Stores
• Jun 15 – Sept 14: Gas Stations and Kohl’s
• Sept 15 – Dec 14: Amazon.com, Zappos.com and Select Department Stores

Purchases that exceed the quarterly $1,500 limit and all other purchases outside of the select categories earn an unlimited 1% cash back. You must sign up each quarter. Chase charges no annual fee for this card.

Note that although this is a cash back card, the rewards are tracked as points. Each point is equal to 1 cent. You must have at least 2,000 points to redeem your cash, which is equal to $20. Your cash back points appear on your statement in a Rewards Summary section. Chase claims that your rewards typically appear on the same statement charging you for the purchases that earned the rewards.

2. Blue Cash Preferred Card from American Express

This top-rated card offers higher than average cash back rates on select purchasing categories without the quarterly restrictions. Earn 6% cash back on up to $6,000 on your U.S. supermarket purchases each year and 3% cash back on all of your annual U.S. department store and U.S. gas station purchases. Since groceries and gas are extremely common expenditures for most consumers, these rewards set this card apart. However, it does come with a price – a $75 annual fee.

With a max earning potential of $360 cash back on your grocery purchases and even more on your gas and department store spending, it’s still a very good deal for cash back. Bear in mind that max rewards on groceries only applies if you spend an average of $500 a month at U.S. supermarkets. You receive your cash back rewards as Rewards Dollars that can be redeemed as a statement credit. American Express also reserves the right to offer other redemption options at their discretion, such as merchandise or gift cards. You must have a minimum of $25 in Rewards Dollars in order to redeem your rewards, and can only redeem in $25 increments.

3. Discover Cards

Discover It offers 5% cash back rewards on rotating purchase categories. These purchases are capped at a combined total of $1,500 each quarter. If your purchases exceed this amount, you revert to a 1% rate for the duration on all additional purchases. You must enroll each quarter. This year’s categories:

• Jan – Mar: Restaurants and movies
• Apr – Jun: Home Improvement Stores, Furniture Stores and Bed, Bath & Beyond
• Jul – Sept: Gas Stations
• Oct – Dec: Online shopping and department stores

Discover It Chrome doesn’t offer rotating categories, but does set quarterly caps. This card pays 2% cash back on your purchases at gas stations and restaurants throughout the year, and sets a quarterly, $1,000 cap on these purchases. All other purchases, including those that exceed the $1,000 cap each quarter earn 1% cash back.

Discover Cards also offer great savings on purchases you make year round with select retailers through their online mall ShopDiscover, allowing you to earn between 5% and 20% cash back on eligible purchases. Neither card charges an annual fee. Bear in mind that Discover has limited acceptance with merchants. Though citing the February 2013 Nilson Report, Discover claims the cards are accepted at 9 million merchants nationwide. Additionally, you must sign up for their rotating categories each quarter or you will lose out on their 5% earnings bonanza.

Discover offers several redemption options for your Cashback Bonus and sets no minimum thresholds or increments for redemption. You can redeem as much or as little as you want, whenever you want. Choose from partner merchant gift card purchases, shopping on Amazon.com, Discover gift cards, charitable donations, statement credits or electronic deposit into your bank account.

4. Capital One Quicksilver Cash Rewards Credit Card

This card boasts no hassle cash back and bumps the earn rate up to 1.5%. There’s no special spending categories, no quarterly rotations, no sign-ups and no annual fee. Your cash back rewards are unlimited. Money Magazine awarded this cash back card as winner of a Best Rewards credit card in October 2013.

This is another card that lets you redeem your awards in any amount you choose. Redemption options include a statement credit, check or gift card.

5. Citi Dividend Platinum Select Visa Card

This is another rotating purchasing category card offering 5% cash back on specific quarterly categories. Enrollment is required. Categories for 2014:

• Jan – Mar: Zappos, Fitness Clubs, Drugstores
• Apr – Jun: Home Furnishings, and Home & Garden Stores
• Jul – Sept: Hilton, Car Rentals and Theme Parks
• Oct – Dec: Holiday Shopping TBA

Rather than limit the purchasing amount for which you can earn the max return rate, Citi caps all of your cash back rewards at $300 per calendar year. This includes the 1% cash back you earn on other purchases and cash advances. The card also offers $5 cash back on balance transfer transactions of at least $1,500. There is no annual fee.

You can increase the amount of rewards you earn for online purchases by shopping at the issuer’s Citi Bonus Cash Center, with the potential of earning between 1% and 25% cash back. The Dividend Dollars you earn through this online center are unlimited until you earn $300 through Non-Citi Bonus Cash Center purchases. Citi sets a minimum threshold of $50 in order to redeem your awards. Your sole redemption offer is $50 checks.

Further Research

This short list is just a sampling of some of the more popular cash back cards that offer a better than 1% cash back earning rate. There are many websites that allow you to search for cards based upon their most important features. You can use these tools to compare a wide selection of cash back cards to learn which ones best meet your needs.