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Are Cash Back Credit Cards Worth It?

Last Updated: March 7, 2024
3 min read
Credit card rewards

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Key points about: the value of cash back rewards credit cards

  1. Cash back rewards credit cards let you earn cash back rewards for everyday spending.

  2. Cash back rewards cards offer different ways to earn rewards so you can find the card that best suits your spending habits.

  3. Cash back rewards cards offer a variety of ways to redeem your rewards.

Cash back rewards credit cards offer a way to earn rewards for purchases you’ll make anyway. However, you’ll want to consider how cash back rewards cards work, your personal preferences, and other card features when deciding if a cash back rewards credit card is worth it.

What are cash back rewards?

Cash back rewards are credit card rewards that offer cash savings when you redeem them. Redemption options can vary by card but may include:

  • Statement credits. You may be able to get a statement credit with your cash back rewards that may lower your credit card balance.
  • Direct deposit. A card issuer may let you deposit the cash value of your rewards directly to your bank account.
  • Donations. You may be able to donate to a charitable cause using your cash back rewards.
  • Purchases. Some rewards programs let you apply your cash back rewards when making a purchase at select merchants.
  • Gift cards. You may have the option to redeem your rewards for gift cards.

Cash back rewards credit cards have different rules for how you earn rewards. Some cash back rewards cards give you a flat percentage of cash back rewards for each purchase, usually with no limit to how much you can earn. Other rewards cards offer tiered rewards with a higher rate on specific categories with potential limits to what you can earn and an unlimited lower rate of rewards on all other purchases. And some cards offer even higher rates on spending categories that rotate throughout the year but may also include limits to how much you can earn.

For example, with the Discover it® Chrome Gas and Restaurant Credit Card,you can earn cash back on your next road trip with 2% cash back at gas stations and restaurants on up to $1,000 in combined purchases each quarter.1 Or, with the Discover it® Cash Back Credit Card, you can earn 5% cash back on everyday purchases at different places you shop each quarter, up to the quarterly maximum when you activate.

You can compare each rewards program to determine which aligns best with your spending.

How to decide if rewards credit cards are worth it

A cash back rewards card can be worth it if you earn more in rewards than you’ll spend on fees and interest. As you’re comparing the options, consider these questions:

  • Will you be tempted to overspend? Earning rewards can seem appealing but spending more than you can pay back each month will likely cost you interest. To get the most out of your cash back rewards card, the value of the rewards you earn would need to exceed what you pay in interest.
  • Does the card have an annual fee? Some credit card companies charge a yearly fee for using their card. You’ll want to be sure you can earn enough rewards to compensate for the extra cost of an annual fee. Discover has no annual fee on any of our cards.

Did you know?

Cash back credit cards can offer bonus rewards for new cardmembers. For instance, with a Discover cash back card, you can get an unlimited dollar-for-dollar match of all the cash back you earn at the end of your first year, automatically. There is no limit to how much we’ll match.2
Learn More About Cash Back Credit Cards

Reasons you may not find a cash back credit card is worth it

You may find that other types of rewards cards are a better option if:

  • You want to focus on travel reward redemptions. A travel rewards credit card may appeal to you if you want more reward redemption options geared toward travel expenses.
  • You spend regularly with a certain brand. Some branded credit cards, like airline and hotel cards, let you earn extra rewards when you make purchases with that brand, such as booking a flight through a specific airline. And you can redeem your rewards for things like free flights. They may also offer extra perks, including free checked bags. (Note that the Discover travel rewards card isn’t a branded airline credit card-you can redeem your rewards for cash to spend with the airline or hotel of your choosing, or on any other expense.)

You don’t need to limit yourself to a single rewards card. 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.

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  1. You earn a full 2% Cashback Bonus® on your first $1000 in combined purchases at Gas Stations (stand-alone), and Restaurants each calendar quarter. Calendar quarters begin January 1, April 1, July 1, and October 1. Purchases at Gas Stations and Restaurants over the quarterly cap, and all other purchases, earn 1% cash back. Gas Station purchases include those made at merchants classified as places that sell automotive gasoline that can be bought at the pump or inside the station, and some public electric vehicle charging stations. Gas Stations affiliated with supermarkets, supercenters, and wholesale clubs may not be eligible. Restaurant purchases include those made at merchants classified as full-service restaurants, cafes, cafeterias, fast-food locations, and restaurant delivery services. Purchases must be made with merchants in the U.S. To qualify for 2%, the purchase transaction date must be before or on the last day of the offer or promotion. For online purchases, the transaction date from the merchant may be the date when the item ships. Rewards are added to your account within two billing periods. Even if a purchase appears to fit in a 2% category, the merchant may not have a merchant category code (MCC) in that category. Merchants and payment processors are assigned an MCC based on their typical products and services. Discover Card does not assign MCCs to merchants. Certain third-party payment accounts and digital wallet transactions may not earn 2% if the technology does not provide sufficient transaction details or a qualifying MCC. Learn more at Discover.com/digitalwallets. See Cashback Bonus Program Terms and Conditions for more information.

  2. Cashback Match: We’ll match all the cash back you’ve earned on your credit card from the day your new account is approved through your first 12 consecutive billing periods or 365 days, whichever is longer, and add it to your rewards account within two billing periods. You earn cash back only when they’re processed, which may be after the transaction date. We will not match: rewards that are processed after your match period ends; statement credits; rewards transfers from Discover checking or other deposit accounts; or rewards for accounts that are closed. This offer may not be available in the future and is exclusively for new cardmembers. No purchase minimums.

  • Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.