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How to Get the Most Cash Back Rewards

Published March 25, 2022
5 min read

Let’s Learn About: Maximizing Your Cash Back Rewards

  1. Cash back rewards cards let you earn rewards whenever you use them to make purchases.

  2. The amount of your cash back rewards you can earn will depend on the type of credit card and spending habits.

  3. Remember to track rewards expiration dates for your cash back card.

Cash back rewards cards help people earn rewards each time they  make purchases on the card. You can use rewards and benefits from cash back cards to help pay bills and to make your purchases more rewarding.

It’s important to understand the different types of cash back rewards credit cards, and how you can best use credit card rewards to meet your financial goals.

Benefits of a cash back credit card

Cash back rewards cards are credit cards that people can use to earn rewards on certain purchases. Commonly, cardholders earn a percentage of their eligible purchases back each time they spend. If a card has a 1% cash back rate, for example, and you spend $1,000, you’ll earn $10 back.

There are many reasons to consider a cash back credit card. The biggest benefits of these rewards cards are:

  • Ease of use. Cash back rewards credit cards are easy to use and understand. Since cash back rewards typically are earned in cash back dollar amounts, you don’t have to worry about tracking or redeeming other types of rewards, such as points or miles.
  • Welcome bonuses. Cash back rewards cards may offer sign-on bonuses for new cardholders. Discover gives you an unlimited match of all the cash back you’ve earned at the end of your first year.1 So if you earn $150 in cash back in your first 12 months, you’ll actually receive a total of $300 cash back.
  • No annual fees.  Some cash back cards don’t make you pay annual fees. This way, you can enjoy all of your cash back and keep your account open without incurring an annual fee.

Which credit card gives the most cash back?

It’s important to find the cash back rewards card that can help you earn the most from your purchases.

Cash back credit cards are commonly split into three different categories:

  • Flat-rate cash back cards. Get the same percentage of cash back on every purchase you make with your card, such as 1% or 1.5% cash back.
  • Static category cash back cards. Earn more cash back on purchases in certain spending categories, like travel, dining, or groceries. With this tiered rewards system, for instance, you might earn 2% cash back on travel purchases but 1% cash back on all other purchases.
  • Rotating category cash back cards. Earn more cash back in certain spending categories, but those categories rotate throughout the year, giving you more timely and relevant opportunities to earn cash back. With the Discover it® Cash Back Credit Card, for example, you can earn 5% cash back on everyday purchases at different places each quarter like grocery stores, restaurants, gas stations up to the quarterly maximum each time you activate. Plus, earn 1% cash back on all other purchases.

When choosing a cash back rewards credit card, you’ll also want to consider how the card issuer will provide your earnings, including:

  • Issuing a direct deposit into your bank account
  • Providing a statement credit
  • Sending a gift card for a certain retailer

How much cash back you could earn with your credit card

The amount of bonus cash you earn back will depend on which card you choose and how you use it.

The best way to earn the most cash back from your credit card is to use it—especially making purchases across spending categories with higher cash back rates. Because the more you charge, the more you earn cash back.

You can also earn more cash back by taking advantage of sign-up or welcome bonuses.

How to get the most from your cash back credit card

Here are some key strategies to consider for maximizing your cash back rewards and make the most of your cash back credit card.

Choose a card that matches your spending habits

Since cash back credit cards come in many forms, choose the one that best aligns with your spending habits. If you typically spend a lot on gas and food, for example, make sure your rewards card offers a high percentage of cash back in those categories.

Avoid common mistakes of using cash back credit cards

When using cash back credit cards, it’s important to know which common mistakes to avoid, including:

  • Building up too much interest. Some cash back cards can come with high annual percentage rates (APRs). So you’ll enjoy your bonus rewards, but you’ll be paying more in interest charges if you carry a balance each month.
  • Keeping a high credit utilization ratio. Your credit utilization ratio is your balance divided by your credit limit, and if it gets too high it could negatively impact your credit score.
  • Not checking expiration dates. Yes, cash back rewards can expire. Keep an eye on those expiration dates and be sure to redeem your cash back rewards before the cut-off date.
  • Forgetting about extra fees. Cash back rewards credit cards may come with added fees, such as annual fees, late payment fees, and foreign transaction fees. Discover has no annual fee on any of our cards.

Pay your balance in full each month

Pay your credit card balance in full and on time each month to establish healthy spending habits. If your credit card offers a grace period, you will not be charged interest on purchases if you pay your full statement balance on time and in full each month.

That’s why Discover offers cardmembers with the option to sign up for DirectPay to make recurring, automatic payments from their bank accounts. With DirectPay, you can stay on track with your bills, stick to your budget, and manage your account to make sure you’re getting the most from your cash back credit card.

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