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What exactly is a cash back credit card? Could it really save me money?

By , CardRatings contributor
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    American Express is a CardRatings.com advertiser.

    Yes, cash back credit cards can help you save a few pennies on every dollar you spend. Some cash back rewards cards don't charge an annual fee, while others let you pay a higher fee in exchange for larger rebates. The way you shop and spend can help you choose the best card for your lifestyle:

    • Category-specific cash back cards. Most of the rewards cards you'll see promoted on television and online offer bonus rebates when your purchase falls into a featured category. Chase and Discover both tout no annual fee cards that can earn a higher percentage of cash back when you opt in to quarterly promotions. Your other purchases will earn between 0.25 and 1 percent cash back, depending on your card and how much you spend each year.
    • Flat-rate cash back cards. If tracking all those categories and caps sounds like a big hassle, you may prefer a card that offers a consistent rebate on most purchases. For instance, the Capital One Cash card provides a 1 percent rebate throughout the year, followed by a bonus worth half your annual rebate amount when you make 12 monthly payments on time.
    • Affinity cash back cards. Your relationship with a particular broker, store, or website can earn you even more rewards. If you keep a retirement or brokerage account with Fidelity Investments, your Fidelity Investment Rewards American Express Card can automatically deposit your 2% cash rebate.

    A note of caution: avoid using cash back credit cards to carry a balance. If you do, the finance charges you'll pay will quickly eclipse any of the rebates and rewards you'll earn during a typical year. On the other hand, if you use your cash back card like it's a debit card and pay it off every month, you can potentially save hundreds of dollars every year.  To learn more about the details, check out these cash back credit card offers from major issuers and banks.

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