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Key takeaways
- Cash back credit cards reward you for everyday spending, but many people fail to redeem their rewards.
- Auto-redeeming your rewards or setting up automatic savings transfers can help you make the most of your cash back.
- Over time, your cash back could add up to hundreds – or even thousands – of dollars.
Cash back rewards from credit or debit cards give you money for spending on everyday essentials, like gas or groceries. With the right cash back strategy, you could earn hundreds of dollars a year – or more.
But when you’re busy with life, it’s easy to forget to redeem your cash back rewards, leaving free money on the table.
Here, we highlight why it’s so easy to ignore cash back and how to turn your rewards into real, tangible savings.
Why cash back often fizzles (and how to fix it)
Cash back is one of those perks that can be financially beneficial, yet many people fail to redeem their hard-earned rewards. A 2023 survey by CreditCards.com found that 23% of credit card holders failed to redeem their rewards within the past year. And households with incomes below $50,000 were the most likely to leave their rewards unused.
Essentially, these consumers are leaving free money on the table. But why?
Just over half of survey respondents (51%) said they were saving their rewards for a specific expense. And just under a quarter (23%) said their rewards weren’t worth redeeming due to their low value.
The Consumer Finance Protection Bureau (CFPB) finds that customers face various issues when they try to redeem their rewards or cash back. The top issues noted by the CFPB include:
- Customer service issues, such as long hold times.
- “Doom loops” where customers are bounced between credit card companies and third-party merchants to redeem their rewards.
- Technical issues, such as rewards portals being down for maintenance.
- Revocation, like expiration dates for rewards.
But it’s not all bad news, and you don’t have to become an expert at following up and pushing for a response to redeem your cash back.
The paths to transforming cash back into meaningful savings are automation and consistency.
The 3-rule system you’ll actually follow
By following these three rules, you can avoid the pitfalls of cash back and maximize your rewards.
Rule #1: Auto-redeem on a set cadence
See if your credit card issuer lets you redeem your cash back automatically. If it does, set up auto-redemption on a set cadence to ensure your rewards are credited to your account.
If your card issuer doesn’t offer auto-redemption, set up reminders to manually redeem your cash back at least once a month. This prevents your rewards from stacking up and lets you use them to cover your everyday purchases or a bonus meal out.
Rule #2: Autopilot transfers to savings or investing
Consider how you want to use your earnings. One of the best ways to use cash back is to supplement your savings or investment account. Taking your auto-redemption strategy one step further by setting up automatic transfers to your savings or investing accounts means your rewards can start working for you, without any extra effort.
Automatic transfers make savings easy – when money gets added to your account, it’ll quickly be deposited into your savings. This reduces the potential for overspending or buying things you don’t need.
Rule #3: Review monthly
Set a quick 10-minute check-in each month to make sure your system is doing its job. Look for:
- Redemptions posted: Confirm last month’s cash back actually hit your account.
- Auto-transfers running: Verify your automatic transfers to savings or investing went through.
- Expirations and promos: Catch any rewards nearing expiration and note new bonus categories or limited-time offers.
- Category fit: Make sure your highest-spend categories (groceries, gas, dining, etc.) still align with your card’s best earn rates.
- Progress check: Track how much your cash back has added to savings/investments year-to-date.
If something’s off, such as missing rewards, a transfer failure, or a portal outage, fix it right away. If needed, contact your card issuer. A quick monthly review keeps your rewards on track and maximizes every dollar.
How much cash can add up to
You might think that earning a few bucks in cash back each month won’t add up to much. But over time, you can earn quite a bit of money that you can use to pay down debt, save for a trip, or splurge on a fancy date night.
Here are some examples of how much you can earn in a year from your cash back:
| Monthly cash back earnings | Savings after 1 year (3.5% APY) | Investing after 1 year (assuming 10% rate of return) |
|---|---|---|
| $10 | $124.20 | $132 |
| $20 | $248.40 | $264 |
| $30 | $372.60 | $396 |
| $40 | $496.80 | $528 |
| $50 | $621 | $660 |
Bear in mind that these earnings are only from your cash back – whatever you save or invest on top of that will increase these numbers.
Make cash back work for you
Cash back programs can help you save more on your everyday purchases. Claim your rewards by setting them up to auto-redeem, transferring them automatically to your savings account, and tracking your monthly progress.
Frequently asked questions about cash back savings
Is cash back free money?
No, cash back is not free money – it’s a rebate on your everyday spending. Although you won’t get rich from cash back, it can help you pay down debt or boost your savings faster.
How much is 1.5% cash back on $1,000?
If you spend $1,000 on a credit card with 1.5% cash back, you’ll earn $15.
Is there a downside to cash back?
The main downside of cash back credit cards is the risk of racking up interest-bearing debt. If you use your credit card to pay for everyday expenses and fail to pay it off in full each month, you may be charged interest. The average credit card interest rate of 21.39% (as of August 2025) is much higher than the average cash back rate, so you’ll lose any savings if you have to pay interest.