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Pros and Cons of Cash-Back Credit Cards Cash-back credit cards are rewards cards that give you a small percentage of each purchase back as a reward. They can help you simplify your finances, earn rewards on spending, and take advantage of extra perks that debit cards don’t offer. Since cash-back rewards are typically easier to understand than travel rewards, a cash-back card is also a good option for a first rewards credit card. Cash-back credit cards have both benefits and drawbacks. Depending on your spending, another type of card might offer better rewards or save you more money over the long term. Before you sign up for a cash-back credit card, consider these pros and cons. Pros of Cash-Back Credit Cards Explained Cash rewards: Each cash-back credit card has its own earning scheme, but they all offer the same straightforward, easy-to-use benefit: cash back for each dollar you spend. Some cards offer rewards at a flat rate, such as 1.5% back on all purchases. Others, such as Chase Freedom, provide higher levels of cash back on certain categories of purchases, such as gas or groceries, that either stay the same or rotate each quarter. Most have no annual fee: Most of the top cash-back credit cards on the market don’t charge an annual fee. That means you won’t sacrifice some of your rewards to a fee, and you can keep the card open fee-free even if you decide to primarily use a different one in the future. That’s worthwhile, because a longer credit history can strengthen your credit score. Many offer sign-up bonuses: Like travel rewards credit cards, many cash-back credit cards offer a sign-up bonus if you meet a minimum spending requirement within the first few months. These bonuses can be worth hundreds of dollars. Shopping perks: Some cash-back credit cards (as well as many travel rewards credit cards) offer benefits that can safeguard your purchases or save you money. These perks include a lowest-advertised-price match, extended warranties, return guarantees (or a refund if a store won’t accept a return), cell phone protection, and more. Not all cards offer these features. Read your card’s benefits guide for a detailed breakdown.