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Are Cash Back Credit Cards Worth It? contents
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Are Cash Back Credit Cards Worth It?

7 min read
Last Updated: June 13, 2025
Credit card rewards

Table of contents

Key Takeaways

  1. Cash back rewards credit cards let you earn a percentage of each eligible purchase back.

  2. Different cash back cards offer different opportunities to earn and redeem rewards.

  3. A cash back card may not be the right fit if you’re looking for a travel rewards card or tend to carry a high credit card balance.

When you use a credit card to fill your tank, treat your friends to dinner, or book a vacation, you may earn cash rewards. Cash back is a type of credit card reward with cash value. As long as you use your card responsibly, you may easily earn credit card rewards while you shop at your favorite stores with your cash back card.

 

But a cash back rewards card may not be the best credit card for everyone. Before you take the leap, consider your credit history and spending habits.

What are cash back rewards?

Cash back rewards are a form of credit card rewards. With a cash back rewards credit card, you earn a percentage of each eligible purchase back as a reward with cash value, which you can redeem in several different ways:

  • Statement credits. You may be able to get a statement credit with your cash back rewards that may lower your credit card balance.
  • Direct deposit. Some credit card issuers let you deposit the cash value of your rewards directly into your bank account.
  • Purchases. Some rewards programs let you pay with your cash back rewards at select merchants.
  • Gift cards. You may have the option to redeem your rewards for gift cards.

Different cash back rewards credit cards may have different rules for how you earn rewards. Some cash back rewards cards earn rewards on every eligible purchase at a flat rate, usually with no limit.

 

Other rewards cards offer tiered rewards with a higher cash back rate on specific categories. Card issuers may limit bonus cash back earnings, but offer unlimited rewards at the lower rate.

 

Some cards offer even higher rates on spending categories that rotate throughout the year. But these cards may also include limits on your annual cash back earnings at the higher cash back rate.

 

For example, with the  Discover it® Cash Back Credit Card, you can earn 5% cash back on everyday purchases at different places you shop each quarter, up to the quarterly maximum when you activate.

 

To find the best cash back card for you, compare your options to determine what aligns most closely with your spending habits.

How to decide if rewards credit cards are worth it

A cash back credit card may be worthwhile if it earns rewards you’ll use that outweigh the fees. As you’re comparing the options, consider these factors:

Compare your normal spending to cash back categories

The best cash back card for you may help you earn rewards for your most frequent transactions.

 

To make the most of your credit card rewards, look for cards that offer the most cash back for the types of purchases you already make. For example, if you dine out often, a card that rewards restaurant purchases with bonus cash back may be better for you than bonus rewards for grocery store purchases.

With the Discover it® Chrome Gas and Restaurant Credit Card, you can earn cash back on your next road trip with 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter.1

How easy it is to redeem rewards

Earning cash back rewards is great, but rewards are only valuable if you can redeem them. Look out for limitations on rewards redemption. The best cash back credit card for you should offer rewards redemption options that are accessible to you.

 

Some credit card issuers won’t allow you to redeem your rewards until you’ve hit a minimum cash back threshold. If you think it may take you some time to accumulate rewards, then cash back cards with this requirement may not work well for you.

 

Before you apply for a cash rewards card, you may also want to check the cash back expiration date. With Discover, your cash back never expires.2 But other card issuers may enforce reward expiration dates, which may be tricky to keep track of for people with a busy lifestyle.

Consider expenses like interest and fees

It’s important to understand any potential costs associated with your cash back credit card that might offset your rewards. If you tend to carry a credit card balance from month to month, then a cash back card with a high interest rate may not actually yield many rewards for you, for example.

 

Fees may also cut into your cash back earnings. Some credit cards may charge an annual fee for keeping your account open. Other costs to keep in mind include fees for cash advances, balance transfers, and foreign transactions.

Did you know?

Cash back credit cards may offer bonus rewards for new cardmembers. For instance, with a Discover cash back card, you can get an unlimited dollar-for-dollar match of all the cash back you earn at the end of your first year, automatically. There is no limit to how much we’ll match.3

Learn More

Reasons you may not find a cash back credit card is worth it

A cash back credit card may be an excellent tool for many cardmembers, but that doesn’t mean it’s the best credit card option for everyone. If you have a low credit score or haven’t yet begun building credit, you may not qualify for a cash back card. Or, you may find that other types of rewards cards are a better option in the following circumstances:

You want travel rewards

A travel rewards credit card may appeal to you if you want more reward redemption options geared toward travel expenses.

 

Travel rewards credit cards may earn miles or points that you can redeem for travel expenses like flights, rental cars, or hotel stays. With Discover, you may turn Miles into cash. Or redeem as a statement credit for your travel purchases like airfare, hotels, rideshares, gas stations, restaurants, and more.4

 

Some credit card issuers offer co-branded travel rewards credit cards in partnership with certain airlines and hotel chains. Co-branded cards may let you earn extra rewards when you make purchases with that brand. You may be able to redeem your rewards for benefits like airline tickets or hotel rooms. They may also offer extra perks, like room upgrades or free checked bags.

You carry a high credit card balance month to month

Credit card rewards are appealing. But if you don’t repay your credit card balance in full each month, you may face interest charges that exceed your rewards. To get the most out of your cash back rewards card, try to pay down your balance so interest doesn’t offset your earnings.

Fees outweigh your rewards

Pay attention to credit card fees. Discover has no annual fee on any of our cards. But some credit card companies charge a yearly fee for maintaining your account. Before you opt for a credit card with an annual fee, make sure you can realistically earn enough rewards to balance out the cost.

 

Other fees to consider include balance transfer fees, cash advance fees, foreign transaction fees, and even late penalties. While these may seem like small expenses at first, they have the potential to add up and diminish the value of your card.

The bottom line

Consider a card’s rewards, fees, and benefits before deciding if a cash back credit card is worth applying for.

 

If you want to earn cash back but you’re also interested in travel perks, you may not have to choose. You don’t need to limit yourself to a single rewards card. Opening a cash back card for everyday spending and a different rewards card for travel expenses may make the most sense for you.

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