What is cashback? | Barclaycard (2024)

FAQs

How do you explain cash back? ›

Most commonly, it's a credit card benefit that refunds the cardholder a small percentage of the amount spent on each purchase above a certain dollar threshold. Cash back also describes a debit card transaction in which cardholders receive cash when they make a purchase—generally, a small amount above the item cost.

Cash-back rates typically range from 1% to 5%, so you will still be paying for the majority of your purchase out of pocket. For example, if your card pays a flat cash-back rate of 1.5% and you spend $100, you'll earn just $1.50 in cash back, meaning your total out of pocket expense for the purchase will be $98.50.

Many card issuers will allow you to redeem your cash back with a statement credit, a direct deposit to your bank account or a check payable to you. Some issuers also offer redemption options like gift cards, tickets to concerts and sporting events or even charitable donations.

Some credit cards allow cash-back redemptions once you've earned a certain amount — typically $25. Other credit cards don't impose a restriction. Once you're ready to redeem rewards, cash back can be used to fund a bank account, pad an emergency fund, cover a purchase or shave a few dollars off of the credit card bill.

Bank deposit: The cashback is deposited directly to your checking or savings account. Credit on statement: The cashback directly offsets your current credit card balance. For example, if your credit card balance is $100 and the cashback is $2, the applicable payment amount on your statement would be $98.

Flat-rate cash back cards

A more common flat-rate amount is 1.5 percent on your purchases, which is what the Capital One Quicksilver Cash Rewards Credit Card offers, for example. Earn a flat 1.5 percent cash back rate on all purchases, which works out to $15 in cash back for every $1,000 spent.

For every purchase a customer makes with their card, the retailer has to pay a certain percentage back to the card company. The credit card company then passes some of this payment back to the customer in the form of cashback. Debit card cashback is generally cashback paid directly from the bank to the customer.

How 3% Cash Back Works. The way 3% cash back works is simple: You make purchases on your card, and then rewards equaling 3% of those purchases appear in your account, which can sometimes take one to two billing periods. For example, if you spend $1,000 on purchases eligible for 3% cash back, you get $30 in rewards.

The cashback deals are not always the best deals available. Sometimes coupons or exclusive deals can offer savings better than the cashback rewards. Some cashback sites take an annual fee from your earnings. If you're spreading your use between several sites, you may be hit with multiple fees.

If you don't need to spend the money right away, you could consider putting the cash-back reward into a savings account and earmarking it toward a big purchase. Bucket your saved money and put it toward a medium-term savings goal.

How do I use my cashback balance? ›

If your cash back rewards have an expiration date, it's best to redeem those cash rewards as soon as you can; otherwise, you may lose the bonus cash accumulated through each eligible purchase. If you don't want to forfeit your active cash rewards, consider applying them as a statement credit if the card issuer allows.

Generally speaking, the cash back rewards you earn from most credit card issuers remain valid for as long as your card is open and in default, which means you've been making at least the minimum payment on time each month.

Once you've found an ATM, take your cash to the ATM, fill out a deposit slip with your account information, and put the money into the deposit envelope. Then use your ATM card to make your deposit. You'll receive a receipt when you deposit cash into an ATM. Keep the receipt until your money shows up in your account.

Earning 2% cash back simply means that for every $100 you spend on your credit card, you'll get $2 back. So if you were to spend $1,000, that's $20 back in your pocket — though you'll then have to redeem that cash back in order to make the rewards usable.

Cash back credit card rewards are either paid out in dollars or points. Dollars: Cash rewards are delivered in the form of a check, a prepaid debit card or a credit on your monthly statement, depending on what your card issuer allows.

When a credit card gives you 5% cash back, it means that you will earn 5 cents in rewards for every dollar you spend on qualifying purchases. You can usually redeem cash back rewards for a statement credit, a check in the mail, or a deposit into an eligible bank account.