What Is Cash Back?

Cash back often refers to two types of financial transactions related to credit and debit cards that have grown increasingly popular in the last two decades. 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.

Key Takeaways

  • Cash back refers to a credit card benefit that refunds the cardholder's account a small percentage of the sum spent on purchases.
  • Cash back rewards are actual cash that can be applied to a credit card bill or received as a check or bank account deposit.
  • Cash back apps and websites can offer consumers a way to earn money back on purchases.
  • Some cash back rewards programs come with annual fees or a high APR, but not all.
  • Cash back can also refer to the practice of charging an amount above the purchase price on a card and receiving the extra money in cash then and there.

How Cash Back Works

An outgrowth of credit card issuers' general rewards programs, cash back programs date back to the1990s. But they have become ubiquitous in the 21st century; nearly every major card issuer now offers the feature on at least one of its products. It's an incentive for existing customers to use the card early and often and for new clients to sign up for the card or switch from a competitor's.

Unlike traditional rewards points, which can be only used to buy goods or services, like travel, or gift cards offered by the card issuer, cash back rewards are (as their name implies) cash. Often presented to the cardholder on the monthly credit card statement, they can be applied to purchases on that statement—to help pay the credit card bill, in other words. Consumers may receive the cash-back reward directly, either deposited directly into a linked checking account or the old-fashioned way, through the mail by check.


The year of the debut of the Discover card, which pioneered the cash back reward concept.

Cash Back Amounts

Cash reward percentages typically range from 1% to 3% of a transaction, but some can go up to 5%. Some transactions also offer double rewards through merchant partnerships: Purchases at that merchant earn you more than purchases elsewhere.

Credit cards often offer varying cash back levels, depending on the type of purchase or transaction level. For example, a cardholder might earn 3% back on gas purchases, 2% on groceries, and 1% on all other purchases. Often a special promotion where you can get cash back might be in effect for three months, during which spending in a specific category—restaurants or department stores—earns a higher refunded percentage for that period.

Typically, the cardholder must reach a particular transaction level to qualify for cash back or other benefits; usually, it's small, around $25, but it varies from card to card. Some card companies also let cash rewards be used toward specific purchases, including travel, electronics, or partnership incentive programs. In issuing a cash-back reward, the credit card company shares with the consumer a portion of the transaction fee it charges merchants.

What is Cash Back Day?

There is an actual retail event called "Cash Back Day," which debuted in 2019 and continues each November annually. RetailMeNot gives its customers cash back (up to 20%) if they enroll in its programs and shop at over 270+ featured stores to kick off holiday shopping.

The best cash back cards typically charge minimal fees and interest while offering a high rewards rate.

Cash Back Sites and Apps

Cash back apps and websites can also help you earn money for shopping while using their tools. Many cash back sites partner with various retailers like Amazon and Target to offer specific deals on items like toys or holiday gear. Cash-back sites usually operate like this: First, you download the app or extension and sign up for a free membership. Next, you sign into the cash back site, use a link for the store you want to shop in and shop easily.

The cash back site or app records your purchases, and you earn money after your transactions are approved and go through. The cash back (a percentage of your spending) usually lands in a PayPal or bank account. Cash back apps can be used to find money-saving deals while earning cash, in different categories, including restaurants and delivery services. Three popular cash back programs are Rakuten, Ibotta, and Shopkick, although there are others.


This cash back website was Ebates in another life. Rebranded as Rakuten in 2019, this site earns its money by getting commissions from the +2500 stores, like Lowes, Kohls, Walmart, and Target, for sending online bargain hunters their way. The commissions are shared with Rakuten customers, which is how you earn your cash back, up to 40%. If you have a PayPal account, your earnings can go there, or the company "mails you a check."

Rakuten has mixed reviews on the Better Business Bureau website, which gave it a "B" rating due to product and service issues, including customers saying they never received their cash back rewards.


This cash back app can be used in stores and for online shopping via your mobile device. Its specialty is groceries. The app is enabled in hundreds of markets and large-chain stores like Trader Joe's, Whole Foods, Wegmans, Costco, Hannafords, Walmart, Target, Aldi, Albertsons, plus convenience stores like 7-11, Wawa, and Stewarts. lbotta is in partnership with over 1500 retailers and brands in categories like health and wellness, travel, home and auto, kids and baby, pet supply, sports, and outdoors.

It also offers cash back on subscriptions, restaurants, and food delivery services. Ibotta doesn't list the percentage of how much you can earn using the app. Still, according to its website, lbotta had paid out over $860 million to more than 35 million users since 2012, when it was founded, and the company states the redemption will show up in your account within 24 hours or less.

Like, Rakuten, Ibotta earned a "B" rating from the BBB, and there are compliments and complaints from users, some who claim they haven't received their cash back on time and others who say they are earning money quickly, thanks to the app.


This mobile app lets shoppers earn gift cards in place of cash. So, while it is not exactly a cash back tool, users can earn reward points for using the Shopkick app and scanning products in participating retailers and then turn those points into gift cards, aka "kicks."

To get started, you download the app, and it will show you participating retailers and the products that can earn you kicks. You can even earn a kick for entering a store without making a purchase. The site does not specify the participating brick and mortar stores and online, but customers left reviews saying they earned gift cards for Starbucks, Amazon, and Target. The website also mentions that kicks can be redeemed for restaurant vouchers, movie tickets, and iTunes gift cards, plus that the app may offer users exclusive incentives and discounts, along with the reward points.

Shopkick earned an "A+" rating on the BBB's website, but as of April 15, 2021, there were only 26 reviews.

Cash Back in Hand

With debit cards and some credit cards, the customer may also get the opportunity to receive cash back immediately at a supermarket or other location. The customer can ask the merchant to add an extra amount to the purchase price and receive this additional cash. Providers of services often do this to let a customer leave a cash tip. However, unlike the cash back process described above, the practice isn't a refund: The customer's just charging more on the card.

Advantages and Disadvantages of Cash Back

The advantages of enrolling in cash back programs are apparent. You get cash back for spending your money, whether using your credit or debit card or even shopping online. On the downside, cash back credit cards may have high APRs or annual fees, and you do have to spend money to earn it back. Some programs may cancel your earned rewards if you don't pay your bills on time.

  • Cash back apps and websites may offer discounts on products along with cash back rewards

  • Some credit cards with cash back offer a sign-up bonus

  • An easy way to earn cash rewards while shopping

  • Cash back apps and websites don't always issue your cash back in a timely manner

  • Cash back credit cards may have a higher APR than cards without rewards

  • There may be a cap on how much cash you can earn back

Cashback FAQs

What Does Cashback Mean?

Cashback usually refers to a credit card rewards program that gives you a percentage of cash back on your expenditures.

Is Cash Back Free Money?

Not exactly. You have to spend money to earn money from cash back programs.

What Stores Give Free Cash Back?

Multiple stores offer cash back rewards. How much depends on their rewards program. Kohls, Dick's Sporting Goods, Ace Hardware, and CVS all offer their customers cash back rewards programs.

How Do You Make Money With Cashback?

You can earn money using a cash back rewards credit or debit card, or by signing up for in-store programs, and by using cash back apps and websites.

Where Can I Get $100 Cash Back?

If you sign up for a cash back card with a cash signing bonus, it could be worth up to $100 if you meet a minimum spending requirement. Otherwise, you'll have to wait until your cash back rewards add up to $100.

The Bottom Line

Signing up with a cash back rewards credit or debit card may is a way to earn some extra cash based on your purchases. You can use a cash back app or website to find potential deals on goods while making a percentage of your money back, too. The more you utilize your cash back rewards programs, the more money you stand to earn. There are few drawbacks to a cash back rewards card, other than potentially a higher than usual APR, you may have to wait to access your cash back funds, and many cards have a cap on how much you can earn each year.