Cash Back

Cash back is the simplest credit card reward: spend money, get a percentage back. No points, no miles, just straight cash.

How It Works:

• Flat-rate cards: 1.5-2% on everything (Citi Double Cash, Chase Freedom Unlimited)
• Category cards: 3-5% on specific categories (Discover It, Chase Freedom Flex)
• Rotating categories: 5% on changing categories each quarter (gas, groceries, etc.)

Cash Back Examples:

Flat-Rate (2% on everything):

• Annual spending: $30,000
• Cash back: $600/year

Optimized Category Strategy:

• 5% on groceries ($6,000/year): $300
• 3% on gas ($3,000/year): $90
• 2% on dining ($4,000/year): $80
• 1% on everything else ($17,000/year): $170
• Total: $640/year

The Math: Most people gain $300-700/year from cash back cards if they:

• Pay off balance monthly (avoid interest—wipes out rewards)
• Use the right card for each category
• Don't overspend to "earn rewards" (spending $100 to get $5 back is losing $95)

Cash Back vs. Points:

• Cash back: Simple, flexible, clear value (1% = 1 cent per dollar)
• Points: Complex, higher potential value (travel rewards worth 1.5-2× more), but requires strategy

The Bottom Line: Cash back is free money IF you avoid interest and fees. But credit card companies aren't charities—they make money because most people carry balances. The average interest charge ($1,500/year) destroys any rewards. Pay in full, every month, or skip rewards cards entirely.