Personal Finance

What are the different types of cash back cards for 2025 and how do they each work?

David Beren

Published: January 11, 2025 2:47 pm

When you think about cash-back credit cards, it’s safe to assume that you might think all cards are created equal. The reality is quite different, as there are several different card types, including those that offer a flat rate or prioritize rotating categories. 

It won’t come as a surprise to learn that most people, including those in this Quora thread, were unfamiliar with the multiple options for cash-back credit cards. The good news is that they are pretty straightforward and have various benefits to help you choose. 

Flat-Rate Cash Back 

Arguably, the most common cash-back credit card is the flat-rate card. This card type includes the same percentage reward value across all purchases. The most common card types under this format include the Capital One Quick Silver Cash Rewards or the Wells Fargo Active Cash card, which offers a flat 1.5% or 2% reward on all purchases. 

This card type is recommended for those who don’t want to mess with keeping track of rotating categories or who are new to cash-back credit cards. These cards may or may not have an annual fee, but likely not. 

Tiered Cash Back 

Anyone who chooses a tiered cash-back credit card, like the Blue Cash Preferred Card from American Express, is looking to receive extra rewards in various categories. This could include additional rewards on things like gas or groceries while a flat rate of likely 1% is available for all other purchases. 

This is an excellent card type for individuals or families that spend heavily on predictable categories like grocery shopping or gas station fill-ups. These cards are wildly popular with shoppers who want to maximize in one or two categories, which gives you a bonus rewards lift over flat-rate cards. 

Rotating Category Cash Back

You can easily argue that rotating category cash-back cards are the second most popular format. With these cards, like the Chase Freedom Flex or Discover it, you will receive a high cash-back percentage, likely 5%, on categories that rotate every quarter. 

This could result in one quarter showing restaurant benefits while another quarter offers additional bonus points on gas. This is a strong card choice for anyone who is okay managing multiple cards and planning around the various category benefits. 

Bonus Category Cash Back 

When you use a bonus category cash back card, you will see cards that offer elevated reward benefits, likely between 3% and 5%, on specific categories you can use year-round. These cards focus on bonus rewards like dining or travel, focusing on those who spend heavily in this area yearly. Those who choose this card format are likely doing so based on a predictable spending pattern they have already established. 

Customizable Cash Back

If you opt for a credit card with customizable cash back, you can choose which bonus category you want to receive extra points. The Citi Custom Cash Card is a prime example of this format and allows you to receive 5% cash back on your top eligible spend category in each billing cycle up to $500. 

This could mean online shopping, streaming services, dining, or other popular categories. This is a great card choice for individuals who know their spending habits well and have one specific category in which they charge more than others. 

Business Cash Back 

Like consumer credit cards, a business cash-back card offers similar reward benefits, generally between 2% and 5% cash back, depending on the card. The biggest highlight of these cards is that the intro offers can be considerably higher than what consumers are offered. However, you also have to spend far more in the first 90 days than a consumer would, but the reward is a bonus of as much as $2,000, as is the case with the Capital One Spark Cash Plus. 

Student Cash Back 

If you want the best student cash back credit card, the Capital One Savor Student Cash Rewards credit card includes up to 8% cashback. The best part is that none of these cards offer an annual fee, and they help you build up credit so you can eventually apply for and receive a credit card with a higher limit and more significant bonus reward opportunities.