I’m researching to open my first proper card and still confused about how cash back works.
Say you buy a burger and get 2% cash back. Does it apply a 2% discount to the burger? Or do I earn 2% of the burger’s price?
Where does the money for the cash back come from? Does the cash back affect credit score?
In: Economics
It’s paid as a reward on your credit card account/statement. You make a qualifying purchase, and then once it posts you see an increase in your Rewards balance on the rewards section of your credit card’s website/app. Different programs have different ways you can redeem your rewards… some can be applied to travel, some can be applied directly to balance, some can be used on sites like Amazon, some can be paid out as gift cards, etc.
the cash comes from the transaction fee charged to merchants. When you buy a pair of shoes, the retailer pays credit card processing fees of about 3%, then they pay 2% of that to you.
Why/in what way would you think cash back affects credit score? It does not.
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