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How Cash Back Credit Cards Work

A cash back credit card is a type of rewards card that puts a percentage of each purchase back in your pocket each time you spend with the card.  As credit card issuers often charge merchants for each credit card transaction they accept, cash back credit cards use a portion of that charge to provide their Cardmembers with cash back. 


Understanding how cash back credit cards work can help you choose the best product for your spending habits and finances.

July 24, 2020 in Learn

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What is cash back and how can you earn it?

Once you start making purchases with your cash back credit card, you can begin earning cash back. Some credit cards, such as the SimplyCash Preferred Card from American Express, let you earn cash back on all purchases. Other credit cards only provide cash back for certain types of purchases or stores. Some cards may also offer points not in the form of direct cash back.


How do cash back credit cards work?

There are multiple features of cash back credit cards, which can affect how much money you earn back and owe. Overall, cash back credit cards help customers save on every transaction they make with the card.

Cash back rates

A cash back rate is the percentage of each purchase you can earn back. Cash back rates can vary by each cash back credit card and card issuer and can also vary for different types of stores and spending categories.

Annual percentage rates (APR)

The APR is the annual interest rate of your cash credit back credit card. The APR will be set by the card issuer and can be influenced by your credit score and credit history. If you have a history of late payments, for example, the applicable rates for your account may be higher.


If you pay your balances on time each month, you can avoid paying interest charges on your cash back credit card. 

Annual fees

Some credit cards, such as the SimplyCash Card from American Express, come with no annual fee.


When choosing a cash back credit card, make sure the annual fees don’t exceed the amount of cash back you’re likely to receive. If the card offers high cash back rates on certain grocery store purchases, for example, and you frequently shop at applicable stores, the annual fee may be worth it.

How flat rate cash back cards work

Cash back credit cards vary based on their cash back rates and terms. It’s important to choose the cash back credit card that best matches your spending habits. 


Cash back credit cards with flat rates provide the same percentage of cash back for each purchase, making it simple to calculate your cash back, as you can look at a percentage of your spending. To see American Express cards that award cash back annually as a statement credit, compare our SimplyCash Cards.

Why get a cash back credit card?

Cash back credit cards offer many benefits to cardholders, putting money back into your pocket each time you spend, which can act as a discount on every purchase you make with the card. 


SimplyCash Cards from American Express provide additional benefits including Welcome Rates, no limits on the amount of cash back you can earn, and purchase protection, so you know you’re
covered each time you shop.


Explore American Express Cash Back Credit Cards to find the right option for you and start earning money back on your purchases.


Explore Our Cards

American Express Offers a range of Cards with different rewards and benefits tailored to your lifestyle and interests.