Last Updated on 09/23/2017 by GS Staff
[otw_shortcode_dropcap label=”A:” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap] There are various ways to define cash back when you are referring to a credit card. Cash back could mean getting cash back after you make a purchase at a cash register. It could also be defined as getting cash back as a reward for using your credit card for purchases. Additionally, it could potential mean going to an ATM or bank and taking cash out using your credit card. Below we will explore the different methods of cash back and determine if you are generally able to complete these transactions with your credit card.
Store Cash Back
People are familiar with going to a place like the grocery store and being able to get cash back from their debit card. For example, they may purchase groceries with their debit card for $20 and request cash back of $10. The total charged to the debit card would be $30 with $10 being handed to the customer as cash back.
It is a different story when it comes to cash back at stores using a credit card. Credit card companies do not allow this option at the register. One exception is Discover who allows cash over your purchase at select stores. When you make a purchase with your Discover Card, you pick how much cash over your purchase you would like as cash back. This is the same concept as using a debit card for cash back as discussed in the above paragraph. Discover charges your regular purchase APR with no additional fees, which is a nice perk of this card. You can see a list of stores where you can receive cash back on Discover.com.
Cash Back Rewards
A cash back rewards credit card provides the cardholder an incentive of cash back for purchases made with their card. For example, a credit card may offer 2 percent cash back on a purchase. If you make a $1,000 purchase with this card, you would receive $20 in cash back from the credit card company in a check, statement credit, or other form of payment.
There are numerous cash back credit cards out there. A common cash back credit card is one that offers 1 percent cash back on all purchases and a higher percentage back, for example 5 percent, on rotating categories. With this type of card, you might receive 5 percent at grocery stores and restaurants for one quarter, and wholesale clubs and gas stations the next quarter.
If you are thinking of getting a cash back credit card, be sure to fully read the details of the card before applying. Try to find the credit card that offers the most rewards based on where you shop. If you make a lot of expensive purchases, you will want to look into if the cash back is phased out after you reach a certain level of spending. Of course, you also want to evaluate the fees and interest to make sure they are reasonable before applying.
Many credit cards offer the ability to obtain cash from your credit card through a cash advance. The common way to do this is to get a personal identification number (PIN) from your credit card company. Once you have a PIN, you can visit an ATM and withdraw cash from your credit card through the machine. As an alternative, you can visit a bank teller who can commonly complete the transaction. Additionally, your credit card company may issue you convenience checks which you can use to make purchases, but will be treated as a cash advance.
We strongly advise against taking a cash advance unless you need the money for an emergency. A cash advance often results in fees, a higher APR than your regular purchase APR, and other unfavorable terms. You can read our article on cash advances for an in-depth look at the disadvantages of these transactions.