A cash back credit card returns a percentage of your spending to you as a cash reward — typically 1%–5% depending on the purchase category. The rebate is credited to your statement or paid out as a deposit. No points conversion required.
A cash back credit card earns you a rebate — a small fraction of every dollar you charge — credited back to your account. The CFPB's credit card overview describes cash back as one of the most common card reward structures because the value is transparent: a 2% cash back rate means you effectively pay 98 cents for every dollar you spend (before interest).
Cards use one of two structures. Flat-rate cards pay the same percentage on all purchases — common rates are 1.5% or 2%. Tiered / category cards pay a higher rate in select categories (groceries, gas, dining) and a lower base rate elsewhere. The tiered approach rewards spending in specific areas but requires you to track categories. Some tiered programs rotate categories quarterly, which the FTC's credit card guidance flags as something consumers should read the fine print on carefully.
Cash back is only economical if you pay your balance in full each month. If you carry a balance, the interest charges — often 20%+ APR — will exceed any rebate you earned. The Federal Reserve's consumer credit data (G.19) tracks credit card rates, which have averaged well above 20% in recent years. A 2% cash back rate disappears quickly against a 22% APR.
Most issuers require you to actively redeem cash back — it doesn't automatically reduce your balance. Common redemption options include statement credits (applied to your next bill), direct bank deposit, or a mailed check. Some programs impose minimum redemption thresholds ($25 is common) or expiration dates on accumulated rewards. Read the rewards terms before applying.