How to redeem cash back

Cash back credit cards are among the most popular because they offer substantial cash rewards over time. They come in a variety of flavors, but they all fundamentally work the same way: As you make purchases with your card, you earn cash rewards at a set rate. For individuals who are looking to maximize their return on everyday spending with flexible redemption options, cash back credit cards may be the best tool.

Here we take a look at some of the most common types of cash back redemptions and the restrictions you may encounter when redeeming your rewards.

How cash back redemption works

Depending on your card and issuer, you may have a variety of choices in how you redeem your cash back rewards. Some issuers 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 amount 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 usual ways to redeem cash back is as a statement credit. A statement credit 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% cash back on every purchase, you’d earn $15 in cash back rewards; and if you were to redeem this cash back as a statement credit, your balance would decrease by $15 to $985.

While many cards make redeeming as a statement credit painless, allowing you to decide when and how much you want to redeem, others require you to have earned 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.

And the Chase Freedom Unlimited® card 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

A slightly smaller number of credit card rewards programs 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 instead of having them “locked” into 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 across the board, 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 only as a direct deposit 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 at set times or after you’ve earned a certain amount.

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, like the Credit One Bank American Express® Card, allow automatic redemption as a statement credit, offering 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 also give you the option of redeeming your cash back through a rewards portal for online shopping or as gift cards to select department stores, restaurants, video streaming services and more.

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

The Amazon Prime Rewards Visa Signature card* 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 use points or allow you to choose between cash back and points.

Chase Freedom Unlimited is a great example. You can earn unlimited cash back at a rate of 1.5% cash back on every purchase, which translates to 1.5 points per dollar if redeemed for travel in the Chase Ultimate Rewards portal.

Similarly, the Citi Double Cash Card lets you transfer your cash back to Citi ThankYou Rewards and redeem it for rewards, as well as gift cards, merchandise and other purchases through the Pay with Points program.

Bottom line

Your redemption options are just one consideration when choosing a cash back credit card. The key point 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.

*All information about the Amazon Prime Rewards Visa Signature Card has been collected independently by CreditCards.com. The issuers did not provide the content, nor are they responsible for its accuracy.