Cash back credit cards offer a percentage of cash back on every qualifying purchase. If a credit card offers 1.5 percent cash back on every purchase, for example, you’ll earn 1.5 cents in cash back rewards for every dollar you spend. Some credit cards offer a flat percentage back on all purchases, while others offer higher cash back percentages on popular spending categories like gas or groceries.

Unlike travel credit cards, which often reward cardholders with points or miles that have different values depending on how they are redeemed, cash back rewards have a fixed cash value. (You may want to compare the two before you choose.) Cardholders can redeem that cash back in the form of statement credits, online purchases and more.

Let’s take a closer look at the different types of cash back cards and see what you need to know before choosing a cash back credit card.

Earning cash back

Cash back rewards programs vary by credit card. Some cards offer the same cash back rate on every purchase. Others offer higher percentages of cash back for certain types of purchases, like travel, dining, groceries or gas. A few cards rotate their highest-earning cash back categories every quarter or allow you to choose and change your bonus category.

Flat-rate cash back cards

Flat-rate cash back credit cards offer the same cash back percentage on every qualifying purchase. It doesn’t matter whether you’re buying groceries at Costco or shopping online at Amazon.com—you earn the exact same percentage of cash back per dollar spent. It’s tough to find a rate higher than 2 percent cash back on all purchases.

The Capital One Quicksilver Cash Rewards Credit Card, for example, offers a flat 1.5 percent cash back on all purchases. That’s a pretty standard cash back percentage for a flat-rate cash back credit card and it works out to $15 in cash back for every $1,000 spent.

Bonus category cash back cards

Some credit cards offer higher cash back percentages on certain types of purchases. These cards are called bonus category cash back cards because you get a higher rate of cash back, usually 2-3 percent, on purchases in certain categories, like travel or groceries. All other purchases generally earn 1 percent cash back.

The Blue Cash Everyday® Card from American Express, for example, lets you earn 3 percent cash back at U.S. supermarkets, U.S. gas stations and U.S. online retail purchases on up to $6,000 per calendar year in purchases in each category (then 1 percent), and 1 percent cash back on other purchases.

If you spent $6,000 at U.S. supermarkets in a single year (which breaks down to $500 per month), you could earn $180 in cash back rewards from grocery shopping.

And that’s before you factor in the rewards you might earn from gas station and U.S. online retail purchases, as well as the 1 percent cash back you’ll earn on the rest of your purchases.

Rotating category cash back cards

Rotating category cash back cards are a little more complicated.

Like bonus category cash back cards, rotating category cards offer higher cash back percentages on certain types of purchases. These purchase categories rotate every quarter and cardholders must activate their rotating bonus categories before earning rewards.

The Chase Freedom Flex and Discover it® Cash Back cards offer rotating category cash back rewards. Both cards offer 5 percent cash back on categories that rotate every quarter (activation required) for up to $1,500 in purchases per quarter (then 1 percent). That’s $75 cash back per quarter or $300 per year if you max out your rotating category purchases.

These elevated cash back categories include everything from grocery stores to streaming services and often feature popular online businesses like Amazon.com and Walmart.

The Chase Freedom Flex also offers 5 percent cash back on Chase Ultimate Rewards travel purchases, 3 percent cash back on drugstores and dining (including restaurants, takeout and eligible delivery services) and at least 1 percent cash back on other purchases.

Aside from its rotating bonus categories, the Discover it Cash Back card offers only 1 percent cash back on general purchases. However, new cardholders can take advantage of Discover’s Cashback Match, which will automatically match all the cash back you’ve earned at the end of your first year.

Choose-your-own-category cash back cards

Lastly, some cards offer the option to select your own bonus cash back category. Like regular bonus category cash back cards, you’ll typically earn a boosted rate in a few select categories and 1 percent cash back on general purchases. However, instead of having a fixed category or keeping track of rotating bonus categories, you can select your bonus category from a list of options.

For example, the Bank of America® Customized Cash Rewards credit card lets you choose one of six rewards categories to earn 3 percent cash back with: gas, online shopping, dining, travel, drugstores or home improvement and furnishing purchases, plus 2 percent at grocery stores and wholesale clubs (up to $2,500 of combined 3 percent and 2 percent category purchases each quarter, then 1 percent). You can change your selection once per calendar month.

The Citi Custom Cash℠ Card takes the manual selection process out of the equation with an automatically optimized rewards system. You’ll earn 5 percent cash back (on up to $500 each billing cycle, then 1 percent) on your top spending category each billing cycle. The 10 categories eligible for 5 percent cash back include restaurants, gas stations, grocery stores, select travel, select transit, select streaming services, drugstores, home improvement stores, fitness clubs and live entertainment.

Using cash back

When you earn cash back rewards, they are stored on your credit card account until you choose to redeem them. There are many ways to use cash back. Some of the most popular redemption methods include statement credits, online shopping and gift cards.

Certain cards also allow you to deposit your cash back directly into a bank account or use it to make a charitable donation. Some cards even offer the option to use your cash back to book travel through the issuer’s online portal.

Some credit card issuers let you connect your cash back rewards to PayPal or Amazon.com, enabling you to use your cash back rewards to cover part or all of your purchase.

Make sure you understand all the ways your credit card allows you to redeem your cash back rewards. That way, you can put every dollar of cash back to good use.

The bottom line

Cash back credit cards reward cardholders with percentages of cash back on every qualifying purchase. Some cash back cards offer a flat cash back percentage, while other cards offer higher cash back rewards for certain categories of purchases. Cash back rewards can be redeemed for statement credits, converted into online shopping credits or deposited directly into bank accounts — it’s up to you to decide what to do with your cash back once you’ve earned it.

Ready to choose a cash back credit card? Read our guide to make the comparison easier and start earning rewards as soon as possible.