Cash Back

Cash back refers to two types of financial transactions. First, it's a credit card benefit that pays the cardholder a small percentage in cash rewards for each purchase, or purchases above a certain dollar threshold. It also describes a debit card transaction in which the buyer receives cash at the time of purchase.

Cash back programs offer potential benefits for consumers using all kinds of debit and credit cards. Card companies offer cash back programs to encourage increased card use and induce customers to switch out of credit cards without reward programs. These reward programs have grown enormously popular in recent years.

Cash back reward programs offer an attractive benefit that prospective cardholders should consider when choosing a credit card. Cash rewards are a cardholder benefit offered by some companies that pay the cardholder a percentage of the purchase price in cash as a reward for using the card in a transaction. This incentive is offered as a means for attracting new customers and keeping old customers.

Cash reward percentages can range up to 5% of a transaction. Some transactions also offer double rewards through merchant partnerships. The cash back reward is often presented to the cardholder as a statement credit which can cover a portion of costs incurred through monthly purchases. Consumers may also receive the cash reward directly by deposit to a linked checking account or through the mail by check. Some card companies may offer cash rewards that can also be used toward specific purchases including travel, electronics or partnership incentive programs.

Typically, the cardholder must reach a certain transaction level to qualify for cash or other benefits. This is often around $25 but varies from card to card. Some credit cards offer varying levels of cash back, depending on type of purchase or transaction level. As an example, a cardholder might earn 5% back on gas purchases, 2% on groceries and 1% on all other purchases.

Retail consumers may also get the opportunity to receive cash back in a debit card transaction at a supermarket or other location. The customer can ask the merchant to add an extra amount to the purchase price and receive the added amount in cash. Cash back using debit cards provides customers with a convenient method of putting cash in their wallets when purchasing goods and services, without having to pay separate card fees or driving to an ATM machine or bank.