How to redeem cash back

When it comes to rewards cards, cash back credit cards are a popular option because they offer cold, hard cash rewards on the purchases cardholders make. There are different types of cash back credit cards and rewards programs, but all work similarly when it comes to earning cash rewards. As you make purchases with your cash back credit card, you earn cash rewards at a rate set by your card issuer.

If you’re trying to maximize the returns on your regular spending and want a rewards card that offers flexible options for redemption, a cash back credit card may be the best option. But before you start applying for this type of credit card, it can be helpful to understand the most common types of cash back redemption options and the restrictions that may be in place for redeeming your rewards. Here’s what you should know about how to redeem the cash back earned with a rewards credit card.

How cash back redemption works

Depending on your card and issuer, you may have a number of choices for how you redeem your cash back rewards. Some issuers will even allow you to set up automatic redemptions, meaning your redemption would automatically initiate after a set number of days or after you earn a certain number in rewards.

The most common ways to redeem cash back are:

• A statement credit
• A direct deposit to a bank account
• A check
• Gift cards
• Merchandise

One of the most common ways to redeem cash back is as a statement credit, which is money credited to your account that reduces your credit card balance. For example, if you were to spend $1,000 with a card that offers 1.5 percent cash back on every purchase, you’d earn $15 in cash back rewards. If you were to redeem this cash back as a statement credit, your balance would decrease by $15 to $985.

It’s important to understand, though, that statement credits are not usually considered payments. You’ll still typically need to make a minimum payment out of your own pocket to avoid fees.

And while many cards make redeeming as a statement credit painless by allowing you to decide how much and when you want to redeem, others require you to earn a minimum amount of cash back before you can claim your rewards.

For example, the Blue Cash Preferred® Card from American Express requires you to have earned $25 in cash back before you can redeem it as a statement credit. The Chase Freedom Unlimited* card, on the other hand, allows you to redeem rewards as a statement credit in any amount, at any time.

Once you’ve met your card’s redemption requirements, you can simply choose a statement credit as your preferred cash back redemption.

Redeeming cash back as a check or direct deposit

Some credit card rewards programs will let you redeem your rewards for “true” cash back in the form of a check or direct deposit to your bank account. Claiming your cash back in this way gives you a bit more leeway since you can save or spend your rewards however you like rather than having them “locked” in a particular card account.

As with statement credits, the requirements for requesting a check vary from card to card, with some issuers requiring you to have earned a minimum amount of cash back before you can request a check and others imposing relatively few restrictions.

Direct deposits tend to be a bit trickier, especially if you don’t already have a banking relationship with your credit card issuer. For example, the Bank of America® Customized Cash Rewards credit card allows you to redeem cash back as a direct deposit, but only if you have a Bank of America checking or savings account.

Automatic cash back redemption

Along with manually requesting a statement credit, check or direct deposit, a number of cards allow you to set up automatic cash back redemption. If your card allows automatic redemption, your cash back is generally distributed either at set times or after you’ve earned a certain amount of cash back.

The Capital One Quicksilver Cash Rewards Credit Card, for example, allows you to schedule automatic cash back redemptions via statement credit or check at a set time once per year or once you’ve reached a cash back earnings threshold ($25, $50, $100, $200, $500 or $1,500).

Even some cards designed for credit-builders, such as the Credit One Bank American Express® Card, will allow automatic redemption as a statement credit. This offers those looking to improve their financial habits a “set-it-and-forget-it” cash back savings tool that will periodically knock off a chunk of their credit card balance.

Travel, gift cards and merchandise on an issuer’s online portal

Most credit card issuers will also give you the option of redeeming your cash back through a rewards portal for online shopping or for gift cards to select department stores, restaurants, video streaming services and more.

The Discover it® Cash Back, for example, allows you to redeem your cash back for gift cards from shopping partners once you’ve earned $5 in cash back. The gift card options range from $5 to $200, in increments of $5.

The Prime Visa lets you redeem your points for purchases on Amazon.com, as a statement credit or deposit, or for gift cards and travel — all at a rate of 1 cent per point.

The option to use your rewards for travel is common among cash back cards that fulfill its rewards as points. The Chase Freedom Unlimited is a great example of such a card. With this card, you can earn unlimited cash back at a rate of 1.5 percent cash back on all other purchases, which translates to 1.5 points per dollar if redeemed for travel in the Chase Ultimate Rewards portal.

Similarly, the Citi Double Cash® Card is marketed as a cash back card. However, it earns Citi ThankYou points, which you can redeem for rewards, as well as gift cards, merchandise and other purchases through the issuer’s Pay with Points program.

Bottom line

Your redemption options are just one consideration when choosing a cash back credit card. The key factor to consider is whether your rewards lose any value when you redeem them in a certain way. You want to make sure you are getting the most value back because you want to find a card that will work the hardest for you, not the other way around.

From redemption options to bonus categories, each cash back card is designed for a different type of consumer. If you haven’t found your perfect match yet, try our CardMatch™ tool, which can deliver personalized credit card offers in seconds with no impact on your credit score.

*Information about the Chase Freedom Unlimited has been collected independently by CreditCards.com. The issuer did not provide the details, nor is it responsible for their accuracy.