What Does 1.5% Cash Back Mean on a Credit Card?
Unravel the meaning of 1.5% cash back on credit cards. Learn how this popular reward works, from earning to redemption.
Credit cards offering “cash back” provide a popular reward program where cardholders receive a percentage of their eligible spending back. Understanding what “1.5% cash back” specifically means helps cardholders maximize these rewards. This article will clarify the calculation, earning mechanisms, and redemption options associated with this common credit card feature.
Understanding the 1.5% Calculation
The phrase “1.5% cash back” directly translates to earning 1.5 cents for every dollar spent on qualifying purchases. This percentage is applied to the net purchase amount. For example, if a cardholder makes a $100 purchase, they would earn $1.50 in cash back. Similarly, a larger purchase of $1,000 would yield $15.00 in cash back rewards.
Simply multiply the total eligible spending by 0.015. For instance, spending $500 would result in $7.50 in cash back ($500 x 0.015). This flat rate provides a consistent return on most purchases, making it easy for cardholders to anticipate their earnings.
How Cash Back is Earned
Cash back is typically accumulated on eligible purchases made with the credit card. The process begins when a cardholder uses their card for transactions that qualify under the card’s terms and conditions. These rewards usually accrue over a billing cycle or a specific period, becoming available once processed by the card issuer.
It is important to note that not all transactions qualify for cash back. Common exclusions often include balance transfers, cash advances, fees, interest charges, and transactions related to gambling or lottery tickets. These types of transactions are generally considered non-purchase activities and do not generate rewards.
Accessing Your Cash Back
Once cash back has accumulated, cardholders have several options for accessing their earned rewards. The most common methods include receiving a statement credit, which reduces the outstanding balance on the credit card account. Another popular option is a direct deposit into a linked checking or savings account, providing actual funds that can be used as desired.
Some card issuers also allow redemption via a mailed check or through gift cards for various retailers. The specific redemption options and any minimum redemption amounts can vary significantly depending on the credit card issuer and the individual card’s terms. Cardholders can typically review their available cash back and redemption choices by logging into their online credit card account or contacting customer service.