You know what they say: Cash is king. Whatever you want—be it travel, merchandise, services or anything else—you know you can get it with cash. That’s why cash back credit cards are so popular. They let you earn back money just by using the credit card for your everyday purchases (with some exclusions). Whether you’re after a premium card loaded with perks or a simple student card, there are so many types out there that you’re sure to find one that meets your needs. If you’ve ever wondered how cash back works, you’ve come to the right place.

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:



Top-tier rewards Second-tier rewards Base rewards Annual fee
CIBC Dividend Visa Infinite 4% on eligible gas and groceries 2% on eligible transportation, dining and recurring payments 1% on all other purchases $120
CIBC Dividend Platinum Visa 3% on eligible on gas and groceries 2% on eligible transportation, dining and recurring payments 1% on all other purchases $99
CIBC Dividend Visa 2% on eligible on groceries 1% on eligible transportation, dining and recurring payments 0.5% on all other purchases $0
CIBC Dividend Visa for Students 2% on eligible on groceries 1% on eligible transportation, dining and recurring payments 0.5% on all other purchases $0

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 cibc.com.

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



Rewards First-year rebate
CIBC Dividend Visa Infinite 10% cash back for the first four statements (up to $2,000 in total purchases) Yes, worth $120
CIBC Dividend Platinum Visa 10% cash back for the first four statements (up to $2,000 in total purchases) Yes, worth $99
CIBC Dividend Visa n/a n/a
CIBC Dividend Visa for Students Get $30 cash back after you make your first purchase within the first 4 months n/a

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.

Are cash back rewards worth it?

Cash back cards can be a simplest and straight-forward way to make your everyday spending do double-time. A flat, across-the-board rate can be easy to understand, but sometimes those bonus categories can help you earn more. If your shopping habits mirror the shopping categories on a cash back card, it’s a definite win. But  it is worth knowing the tiered earning rates of your credit, as well as the caps. Also, some cash back categories aren’t as intuitive as they might seem. Just because a big box store sells groceries, it might not be on the credit card list for that bonus category. You may want to check to see if it’s worth changing retailers and your bottom line. You also may be surprised by the retailers on the lists, too! With a little bit of strategy, you can earn back your annual fees and more.

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