Key takeaways

  • Cash back cards typically offer cash rewards at a flat rate for all purchases or through bonus or rotating categories that offer higher rewards for certain purchase categories.
  • There are multiple ways to redeem cash back rewards, such as a statement credit, shopping discounts and gift cards.
  • If a card has an annual fee, make sure that the cash back rewards you will earn are worthwhile enough to justify the fee.

Life is expensive — there’s no getting around it. That’s why it feels like such a win when you get cash back for using a credit card to make purchases you were going to make anyway, such as buying gas or dining out.

Cash back credit cards typically offer cash rewards at a flat rate or as a bonus (or rotating) rewards structure. To get cash back from a credit card, all you have to do is spend money on an eligible purchase. Whenever you make an eligible purchase with your card, you’ll automatically earn a percentage back based on the rules of your card.

But a credit card also unlocks the ability to access cash from an ATM. This type of cash advance is like a loan against your credit limit, and it comes with hefty fees and high interest from the moment you complete your transaction.

Before you start swiping, here’s how to understand the difference between cash back and a cash advance, as well as how earning and redeeming cash back works with rewards cards, to get the most bang for your buck.

What’s the difference between cash back and a cash advance?

When we talk about how to get cash back by using a credit card, it’s important to understand that there’s a difference between getting cash back rewards and getting cash as a cash advance. While cash back rewards are small returns on the money you’ve already spent with your credit card, a cash advance is essentially a loan against the credit limit on your credit card.

For example, you can take out a cash advance on your credit card by using your credit card to get cash out of an ATM. In that case, you’re charged a cash advance fee. You’ll also be subject to a high interest rate that begins to accrue immediately from the day of withdrawal. In short, a cash advance will likely cost you a lot of money and is rarely a good option.

How to get cash from an ATM with your credit card

You can request a cash advance with your credit card from most ATMs. Simply insert your credit card into the ATM as you would any other card. Enter your PIN, and you should see an option for a cash withdrawal or cash advance.

Enter the amount of cash you’d like to withdraw and review and accept any acknowledgement of cash advance fees you’re likely to see. After you fully complete the transaction, you can collect your cash.

How to get cash back with a flat-rate rewards structure

Flat-rate credit cards offer consumers a hassle-free approach to cash back. With a flat-rate cash back credit card, every purchase earns the same rate of cash back. The best flat-rate cards give cardholders 1.5 percent to 2 percent cash back on every purchase.

The Citi Double Cash® Card provides up to 2 percent cash back on every purchase — 1 percent when you make purchases and another 1 percent when you pay off your purchases. That means for every $100 you spend on your card, you earn $2 back.

Flat-rate credit cards usually appeal to people who prefer flexible rewards and don’t want to juggle different types of credit cards for different spending categories. They’re also useful for purchases that aren’t typically covered by bonus or rotating category cards. For instance, consider the many recurring expenses you have every month, such as utility and internet bills. These categories aren’t typically covered by bonus rewards categories, so a flat-rate credit card could come in handy if you’re looking to get cash back on expenses you know you’re going to have every month.

How to get cash back with a bonus or rotating rewards structure

If you choose a credit card with a bonus or rotating cash back structure, you’ll earn more rewards for purchases within common bonus or rotating categories that include groceries, dining, gas or travel. Consider the biggest spending categories in your budget when choosing a bonus or rotating category cash back card.

For cash back credit cards with set bonus categories, categories generally remain the same over time. For cards with rotating bonus categories, categories can change quarterly. Some bonus cash back cards also offer the flexibility of choosing your own bonus categories or automatically offer bonus cash back on your biggest eligible spending category each month. And then there are cards that offer both fixed and rotating bonus categories.

For example, the Chase Freedom Flex℠* offers rotating cash back categories and tiered cash back categories. You’ll earn 5 percent cash back on activated, rotating categories each quarter (on up to $1,500 in purchases per quarter, then 1 percent back); 5 percent back on Chase Travel purchases; 5 percent back on Lyft rides (through March 2025); 3 percent back on dining at restaurants and drugstore purchases; and 1 percent cash back on all other purchases.

On the other hand, the Citi Custom Cash® Card offers 5 percent cash back on your top eligible spending category each billing cycle (up to $500 each billing cycle, then 1 percent).

Typically, rotating categories (and some bonus categories) are capped at a specific spending maximum, after which your cash back rate drops to 1 percent. And some cards require quarterly activations in order to earn a boosted rate on new bonus categories. If you don’t activate a bonus category, you won’t get the boosted rate.

How to get cash back with a welcome bonus

Most cash back credit cards also offer lucrative cash back sign-up bonuses, also called welcome bonuses, to new cardholders — something worth paying attention to when choosing a card. To receive a welcome bonus, you’ll typically have to meet a spending requirement within a specific timeframe. Before you sign up for a card, consider how much you’ll need to spend each month in order to hit that threshold. If a card requires spending more than you’re used to, the sign-up bonus may not be worth it.

Still, you can’t beat money as a welcome gift, and you can often earn a sizable sign-up bonus without spending a lot of money. For example, the Capital One Quicksilver Cash Rewards Credit Card offers new cardholders a $200 cash bonus after spending $500 in the first three months of card membership.

How to redeem cash back rewards

The actual process of redeeming your rewards depends on the rules of the individual cash back card you hold. Your cards may require you to accrue a minimum amount of cash back rewards before you can redeem them.

Usually, the most common ways to redeem cash back rewards are by requesting a statement credit to offset your current card balance or by having the funds deposited into a linked bank account. You may also be able to request your rewards in the form of a check. Otherwise, many issuers also allow you to redeem cash back for gift cards, merchandise or shopping with select retailers.

Some cash back cards actually earn points instead of cash back. In that case, cardholders can often redeem their rewards for travel through their issuer’s travel portal. This can often be one of the most lucrative ways to redeem cash back, as many issuers offer at least 1 cent per point when you redeem this way.

The bottom line

Credit cards are a convenient way to access cash and cash back rewards. Getting cash from an ATM with your credit card is easy, but you’ll want to weigh that ease with the hefty fees and high APRs that apply from the minute you withdraw that cash.

Redeeming earned rewards as cash depends on the type of card you’ve earned those rewards with. Flat-rate cards earn the same rewards across all purchases, while rotating rewards cards offer higher rewards on specific categories that can include gas, groceries and travel. You can then redeem those rewards for a range of options that include statement credits, gift cards and bonus checks.

*Issuer-required disclosure statement
Information about the Chase Freedom Flex℠ has been collected independently by Bankrate. Card details have not been reviewed or approved by the card issuer.