How to Maximize Cash Back From a Credit Card

Last year, Bank of America deposited $1,718.79 in my bank account — and I didn't have to do anything special to get it. This wasn't because banks hand out free money, though. It's because I earned cash back from spending a ridiculous amount of money on my credit card.

I've worked hard to maximize the free money that credit card companies send me. I'm a Preferred Rewards member, which gets me bonus cash back, and I also charge everything I buy. I do this because I like free money and love getting a discount on every purchase.

Fortunately, learning how to get cash back on a credit card isn't hard. You just need to do it the right way and keep a few best practices in mind so the cash back benefits you instead of costing you in the end. This guide can help you do just that.

What is a cash advance?

First things first. Getting cash back from a credit card and getting a cash advance from a credit card are not the same things.

A cash advance allows you to access cash from your credit line. Usually, you can do this by using a convenience check from your credit card company or sometimes pulling money out at an ATM. But unlike when you use your debit card to get money from an ATM, this time you're borrowing from your card company.

Unfortunately, getting a cash advance is reallllllly expensive. Like, we're talking 2016-Hamilton-tickets levels of expensive. Typically, you're going to get hit with an upfront charge of around 3% to 5% of the cash advance amount, and as if that wasn't painful enough, you'll also pay a higher APR than your card's standard rate.

Since credit card interest rates aren't exactly cheap to begin with, paying a higher-than-normal rate plus the upfront fee often means that a cash advance is not worth it. Unless your only other borrowing choices are even more expensive (like payday loans), steer clear of this option.

What are cashback rewards from a credit card?

So, a cash advance is a no-go, but cashback rewards are a whole different story. Cash back is earned when you use a credit card that offers it as a reward.

Whether you're impulse-ordering Andes mints for midnight delivery by a tired DoorDash driver (purely hypothetical example, of course) or paying your water bill on your credit card, you can get rewarded for the purchase if you pay with a cash back card. And, in fact, some cards offer you bonus cash back for specific kinds of purchases, like gas or groceries.

Say your card offers 1% cash back on all purchases and 5% cash back on gas and groceries. In that case, your $20 purchase of a guide to overcoming chocolate addiction would earn you $0.20, and your purchase of $45 worth of Russell Stover discounted Valentine's Day candy from the grocery store would net you $2.25 (so I think we can see which is the better buy!).

Depending on your spending habits, you may also opt out of a cash back card that offers bonus rewards for specific buys and just get one that offers a higher cash back rate on everything, such as 2% on all purchases. A third choice is a card that offers bonus cash back on rotating categories, like 5% on gas one month and 5% on groceries another month.

The right choice depends on your spending habits and whether you often spend more in some areas than others. It also depends on whether you want to use multiple cards with different bonus structures to get the most cash back possible or whether you'd rather keep your life simple.

Regardless of the specific way you earn cash back, most cash back cards deliver your money in the form of a check, statement credit, gift card, direct deposit to your bank account, or a sack of cash with a big $$ sign on it. (Just kidding on the last one, but wouldn't it be cool?!)

How do I earn more cash back from my credit card?

So, by now, you're probably thinking, "OK, free money. I'm on board; how do I get more of it?" Well, I'm glad you asked because there are lots of ways to maximize the cash back you earn. You can:

• Sign up for multiple cards: You could get a combination of a general-purpose cash back card offering a high percentage back and a few cards that offer rotating bonuses or bonus cash back in certain categories — then pick which one you pay with strategically depending on the transaction.
• Maximize your purchases in areas where you get the most cash back: Say, for example, your card gives you bonus rewards on restaurant gift cards. If you need to get a gift for someone, doesn't a gift card to that new restaurant around the corner sound like a great present that just happens to earn you bonus rewards?
• Charge everything: There are a few things you can't typically charge, at least without high fees. Rent and mortgage payments come to mind. But if it is possible to use your cash back card, you should do it. This includes things like streaming services and gym memberships. Always check if there's an extra fee to pay by credit card. If not, use your credit card to get cash back on things you already spend money on anyway.
• Take advantage of loyalty programs: I earn a really great cashback rate with my Bank of America account because I have money in a Merrill Lynch account. That qualifies me for Preferred Rewards and bonus cash back on all purchases. Other banks have similar programs, so research your options.
• Activate rotating categories: If you have cards that offer bonuses in rotating categories, you usually must activate the bonus rewards each quarter when the 5% bonus shifts. Make sure you keep up with the rotations.
• Shop through your card's portal: If your card offers a shopping portal, you can usually earn bonus cash back if you click through it to make your purchases.

Following these tips can help you make the most of the rewards that your card offers.

Is cash back actually free money?

It may surprise you to know that credit card companies are not just handing out free money for fun. OK, that probably doesn't surprise you. Even if you were born a little more recently than yesterday.

The reality is, there's a big catch to cash back. Card companies offer it (and other rewards) because they want you to spend so much that you can't pay off your balance and you have to pay interest charges.

Don't do that. If you do, the interest you will pay is going to be far, far higher than the value of any rewards you could ever earn.

You can outsmart the system and get the free cash as long as you use your card responsibly. Never charge more than you can pay back when the bill comes, and never pay late. And don't spend more than you otherwise would just to get a small percentage back. Use your card only for purchases you'd make anyway.

If you can do that, you can win the rewards game and the cash back will be free bonus money in your pocket.

FAQs

Bottom line

Now that you know the details about how cash back works, you can decide if a cash back card is right for you. If you think you can be responsible with your spending and want to get money back for everyday purchases, check out our guide to the best cash back cards to find one that's a good match to your spending so you can start earning.

2026 Award Winner Best Overall Cash Back Credit Card

Wells Fargo Active Cash^® Card

Benefits Card Details

• Low spend threshold for its welcome offer — $200 cash rewards bonus after spending $500 in purchases in the first 3 months
• Cell phone protection benefit (subject to a $25 deductible)
• Can redeem rewards at an ATM for literal cash
• Apply Now

• Apply Now to take advantage of this offer and learn more about product features, terms and conditions.
• Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.
• Earn unlimited 2% cash rewards on purchases.
• 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 18.49%, 24.49%, or 28.49% variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
• $0 annual fee.
• No categories to track or remember and cash rewards don’t expire as long as your account remains open.
• Find tickets to top sports and entertainment events, book travel, make dinner reservations and more with your complimentary 24/7 Visa Signature® Concierge.
• Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.

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FinanceBuzz writers and editors score cards based on a number of objective features as well as our expert editorial assessment. Our partners do not influence how we rate products.

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Rates and fees

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Intro Offer

$200 cash rewards bonus after spending $500 in purchases in the first 3 months

Annual Fee

$0

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Why we like it

• If you love earning cash rewards but prefer to avoid the hassle of tracking spending categories, the Wells Fargo Active Cash^® Card could be a good option for you. Card members can earn unlimited 2% cash rewards on purchases.

• This card also offers a 0% intro APR on qualifying balance transfers and purchases for 12 months from account opening, then 18.49%, 24.49%, or 28.49% Variable. Those looking for straightforward rewards and an introductory APR will likely find value in this card.

• Apply Now