A cash back credit card is a type of credit card that offers rewards that you can use to earn cash on purchases.
The cash back credit card refunds the cardholder a small percentage of the amount that is spent on each purchase that is above a certain dollar threshold.
Cashback is the deal between a credit card company and retailers including online retailers.
For every purchase, the retailer has to pay a percentage of money back to the credit card company.
The bank then opts to share a portion of these earnings with the customer.
You can redeem the cash back rewards for statement credits, account deposits or purchases.
In some cases, you can convert the cash back rewards into points and use them for other types of redemption.
A downside of cash-back credit cards is that you can't strategize to get outsized value, like plotting to use airline miles for a first-class ticket that would otherwise cost thousands of dollars.
And they also come with fewer perks than you'll find on higher-end cards — no airport lounge access or free hotel nights.
The more that you use the cash-back rewards programs with your cash back credit card, the more money that you stand to earn.
There are a few drawbacks to a cash-back rewards credit card, including a higher-than-usual APR, having to wait to access your cash-back funds, and a cap on how much you can earn each year.
The best cashback credit card that I recommend is Robinhood's Gold Visa card, which gives 3% cashback on everything without limit.
Having a cash back card for everyday spending and a different rewards card for travel expenses may make the most sense for you.
It may help to consider a card's rewards, fees, and benefits before deciding if a cash back credit card is worth applying for.