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How to get cash back from a credit card

What we'll cover

  •  How you can get cash back from a credit card

  • Difference between cash back and cash advance

  • How you can redeem cash back rewards

Can you get cash from credit cards?

Yes! It's the ultimate freebie. Many credit cards offer rewards for simply spending money. Who doesn't like getting money back for spending money you were planning to spend anyway? You'll also get to build credit throughout the process as well.

Let's take a look at how to get cash back from a card, how to get cash back with a welcome bonus, the differences between cash back and cash advance and how to redeem cash back rewards.

Cash back from a credit card

Getting cash back from a credit card allows you to earn cash by giving you rewards, typically in the form of cash or points. As you spend money, your credit card provider will offer you a percentage back based on the amount you spend.

For example, if you have a 1% cash back rewards card and you spend $1,000, you would be entitled to receive $10 from your credit card company in return for the amount you've spent.

Note that there are two types of rewards credit cards — those that directly offer cash back and those that offer rewards points. Rewards points programs offer cash back redemption options as well, but they also offer redemption options like travel, gift cards, etc.

Flat-rate rewards structure

A flat-rate rewards structure offers ongoing benefits and also offers the same rate of rewards on every purchase you make. In other words, you don't have to keep track of "spending categories" or "bonus rewards" that change or high cash back on items that you don't use regularly.

Rotating rewards structure

Rotating rewards structure credit cards offer bonus rewards on various shopping categories and often rotate them instead of giving you rewards equally to every purchase you make. For example, rotating bonus categories might include bonus rewards for gas stations, car rentals, movie theaters and might also rotate common spending categories, such as grocery stores, gas stations and restaurants.

Which one is best for you — a flat-rate rewards structure or a rotating rewards structure? There's no right answer here. Some individuals reason that they would rather apply their cash back rewards to everything they purchase, while others like the idea of being able to maximize opportunities at different times with a rotating rewards structure. No matter what, the cash back should align with your everyday spending habits.

How to get cash back with a welcome bonus

Many credit cards offer a welcome bonus, which means that when you become a new cardholder, you may get offered special rewards just for signing up, such as cash back, points or miles. It usually happens automatically, but it's a good idea to read the fine print, especially because you may have to achieve a certain spending amount within the first few months after you open your account.

Difference between cash back and cash advance

If you need cash quickly, you can often use credit cards to take out a cash advance. This involves visiting an ATM and getting cash out using a PIN (if you don't know your PIN, you will need to ask your card issuer for the number), requesting a cash transfer from your credit card to your bank account or writing a convenience check to yourself and cashing it at your bank.

However, it's important to note that cash advances typically have higher interest rates than regular purchases and they begin accruing interest immediately. Some ATMs only allow you to take a certain amount of money out (and you may have to pay ATM fees and cash advance fees as well).

How to redeem cash back rewards

Now that you know the answer to, "Can I get cashback with a credit card?" you may wonder how to actually redeem your cash back rewards. In most cases, redeeming cash back rewards is a snap. You have several options available to you, including receiving a statement credit (where your cash back goes toward your credit card balance), requesting a check, transferring rewards to a bank account or using your rewards as points (once you collect enough points, you can redeem them for gift cards, merchandise, air miles and more). Most of the time, you can do all of this online.

However, make sure you check your minimum threshold for redeeming your rewards. For example, you may not be able to access your rewards until you've worked up to $25.

It’s important to remember to only spend money on the credit card that you were planning to spend and not spend extra money just to get cash back rewards. You’re not getting money back at a dollar-for-dollar rate and shouldn't lose money while you're trying to earn. You should also be aware of the fees that the cards may have, which could offset the benefits you can earn.

It’s also important to note that rewards cards are typically more readily available to users with good to excellent credit scores. If your credit score isn’t as high as you would like it to be, you may want to consider boosting your score.

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