How cash back credit cards work

How earn rates work

When you get a cash back card, you’ll earn a percentage of your purchases back in cash. How much you earn, and on which kind of purchases, depends on the card you have. Take a look at these cash back cards from CIBC:

As you can see, these cards offer different bonus categories for some purchases. This is fairly typical, although there are some credit cards that offer the same rate across the board. With the cards above, all four have bonus categories and base rewards. There are limitations and conditions to each of the categories; you can find full details at

Bonus earning categories

Spending in the top-tier categories will get you the highest cash back rates. For example, if you hold the CIBC Dividend Visa Infinite, your purchases on eligible gas and groceries will earn 4% cash back. Let’s say your household spends around $400 per month on groceries and $200 per month on gas. If you pay using this card, you could get $288 back annually on those purchases alone. Even with the lower grocery rate offered by the CIBC Dividend Visa card, you’d earn $96 in that category alone, assuming you spend $600 across those two bonus categories. (Note that with the CIBC Dividend Visa Infinite, you earn 4% on your first $20,000 in grocery purchases.)

One thing to keep in mind with any cash back card is that it pays to know exactly how purchases at different retailers are categorized. For example, for these cards, any spend at a supermarket or grocery store will get the 4% cash back. For example, you may know Metro is considered a grocery spend by Visa, but you collect big there with any of your purchases from there, too. That includes services, like food delivery and products from the pharmacy aisles, too.

Other earning categories

Credit card companies often offer a second-tier earn rate that’s slightly less than the bonus categories but more than the base, to make their cards more appealing and useful. This is also a way that cards can better fit people with different spending habits and income levels.

For example, take a look at the CIBC Dividend Visa credit card. It offers 1% back on eligible gas and 2% on eligible groceries. The point here is to be strategic about the types of purchases you make to maximize your cash back.  Even if your purchase doesn’t fall into a category with an accelerated earn rate, you’ll still get money back. With the CIBC Dividend Platinum Visa and the CIBC Dividend Visa Infinite, the base rate is 1%, while the CIBC Dividend Visa and the CIBC Dividend Visa for Students cards both offer 0.5%.

How to redeem to get your cash back

Credit card companies handle cash back redemption procedures differently. The least flexible cash back cards redeem automatically in fixed intervals, either once per year or once a month. Others, like these CIBC cash back cards, let you access your cash on-demand (once you reach a minimum of $25 in earnings) in addition to the annual payout in January.

How welcome offers can help you earn more

Welcome offers are one-time or temporary promotions designed to entice new applicants, and the bonuses can be very lucrative. Frequently, cards that have an annual fee like the CIBC Dividend Visa Infinite and the CIBC Dividend Platinum Visa will waive the first year, saving you $120 or $99 respectively. Accelerated rewards, in this case, incentivize you to spend by offering an outstanding return. With these two cards new cardholders will receive 10% back on all spend for the first four statements (up to $2,000 in purchases, worth $200). Even the CIBC Dividend Visa for Students returns $30 on the first purchase, no matter the purchase amount.

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