ELI5 What is “cash back” in regards to credit cards?

A credit card company makes money by charging stores to take credit cards, and by charging people to use credit cards. If you're a good customer, the credit card company might give you back a bit of of the money that they've collected. The amount, depends on how much you …

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Eli5 What Is Meant By Cashback On Credit Cards? : R ... - Reddit

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For example, say you're buying a $100 video game (round numbers) and you're using your credit card that has a 1% cash back program. That means that you spend $100 but at some point in …

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ELI5: What Is Cashback And How Does It Work? : R/explainlikeimfive

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When you buy $100 worth of groceries with a credit card, you pay the credit card company $100, and the credit card company sends the store $97 and keeps $3. If your credit card offers …

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How Does 5% Cash Back Work On Credit Cards? - WalletHub

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Jan 2, 2025 · 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 …

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How Do Cash Back Credit Cards Work? - Credit Karma

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Oct 12, 2023 · For example, most cash back rewards cards pay somewhere around 1% to 2% of your purchase in cash back, with some paying as much as 5% cash back. If you have a flat …

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ELI5: How The Credit Card Competition Act Works And Why It

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ELI5: How the Credit Card Competition Act works and why it could mean no more credit card rewards programs . ... If you walked into a store and they offered a 1% discount, people would …

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ELI5: How Do Credit Cards Work? : R/explainlikeimfive - Reddit

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One side of credit cards that many people don't realize is that they charge every merchant a fee for every transaction (usually around $0.25 and/or ~1% of the total; Visa's full merchant fee …

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FAQs about ELI5 What is “cash back” in regards to credit cards? Coupon?

What is cash back & how does it work?

Cash back is basically exactly what it sounds like: the bank pays you for using the card. For credit cards, this will typically be applied against the balance you owe on the credit card; for debit cards, it will typically be a deposit made to your linked account. ...

How do cash back credit cards work?

When you have a cash back credit card, you get a percentage of each purchase back in the form of cash back rewards. Cash back credit cards can be one of the simplest types of rewards cards to manage because you’ll always know the value of your rewards. What you’ll learn: How the three common rewards structures for cash back credit cards work. ...

What is a cash back rewards credit card?

A cash back rewards credit card allows you to earn cash back from the credit card company for any eligible purchase. You typically earn cash back for a certain percentage of the purchase amount, based on the spending category. ...

What are the main types of cash back credit cards?

There are two main types of cash back credit cards: Flat-rate and Tiered (or Bonus-Category). With flat-rate cards, you earn the same percentage on every purchase, while tiered cards offer different rewards based on the type of purchase. ...

How much cash back does a credit card offer?

Cash back credit cards offer a standard percentage of cash back on all purchases, typically ranging between 1% and 5%. Some cards also provide different ranges of cash back for specific purchases like gas, restaurant, and travel. ...

What can you use cash back for?

Cash back is a reward for making purchases on expenses like gas, groceries, restaurant meals or even streaming services. Understanding how cash back works and what to look for in your next card can help you maximize rewards and earn more money back on everyday purchases. ...