What is "cash back"?

"Cash back" is an incentive credit card providers offer to customers who use their cards regularly for purchases. Under a cash-back program, the card provider issues a certain amount of cash or equivalent gifts based on the amount of purchasing financed with the card.

A company might offer a 1 percent cash-back program, for example, which means a cardholder gets $1 for every $100 in purchases. In some cases, people mistakenly assume that the rewards in a cash-back program are always cash. In fact, some so-called cash-back programs pay rewards in the form of gift cards or other tangible items.