A cashback card pays you back a percentage of what you spend — 1% to 6% depending on the card and the category. Here is how they work and which type fits you. This is a general-education guide, not financial advice.

How cashback works

Cashback returns 1%–6% of your spending, redeemable as statement credit, a bank deposit, or a check. Card issuers fund the rewards mainly from merchant processing fees of about 1.5%–3.5% per transaction.

The three types

  • Flat-rate: typically 1.5%–2% on everything. Leaders in 2026: Citi Double Cash — 2% (1% when you buy + 1% when you pay), $0 annual fee; Wells Fargo Active Cash — flat 2%, $0 annual fee.
  • Fixed-category: higher rates on groceries, gas, or dining. Amex Blue Cash Preferred — 6% at US supermarkets (up to $6,000 a year), 3% on gas and transit, $95 annual fee.
  • Rotating-category: 5% in quarterly categories, usually with activation required. Discover it Cash Back — 5% rotating (up to $1,500 a quarter), 1% elsewhere, and Cashback Match doubles your first-year earnings.

The hard rule

Cashback only wins if you pay the balance in full every month. Carrying a balance at 20%+ APR wipes out a 2% reward many times over — a card that pays you 2% back while charging 22% interest is a bad deal.

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