Welcome back to Discover’s “Common Credit Card Questions” series. Here, we dive into your most pressing questions about credit and get you the answers you need. This week: Rewards, cash back, and credits! In the first installment of the Common Credit Card Questions series, we delved into the ins and outs of getting a credit card. This time, we’re diving into some of the perks of being a cardholder: rewards, cash back and statement credit.

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What Is Cash Back?

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Cash back is a rebate of a percentage of the purchases you make on your credit card each month. Different programs offer different redemption options, and you may be able to use it as a credit toward your current statement balance, shop online, purchase gift cards or simply have it deposited back into a connected bank account. For example, with the Discover It® Cash Back Card, cardholders can earn 5 percent cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com or wholesale clubs up to the quarterly maximum amount permitted each time you activate, plus unlimited 1 percent cash back on all other purchases.

What Is a Statement Credit?

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A statement credit is a positive amount on your credit card bill. This usually comes into play if you accidentally overpay. If you do, you can typically apply a statement credit toward future purchases. Sometimes it pays to pay early.

When Should I Redeem Rewards on a Credit Card?

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First things first: Make sure to read your Credit Card Agreement to understand if and when your rewards expire. Some programs don’t have expiration dates, while others have annual programs with “use it or lose it” clauses. When you make sure to read the fine print, you know exactly what’s happening with your rewards. After you figure that out, you can decide when (and where!) to use those rewards.

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