Just discovered my credit card's "Cash Back" program. Is it really just free money? I find it too good to be true.

[u/cop-disliker69]

I was paying my credit card bill online and I found a link on the Bank of America website said I had unredeemed cash rewards, several hundred dollars. I had never noticed this before. It gave me a few options for how to redeem it, it said they could send me a personal check in the mail or I could deposit this money directly into my savings account with the bank. It says I get 1% cash back for every purchase I make, and 2-3% for certain purchases.

Is this really how it works? I get paid a small bonus every time I spend money using my credit card? And it's just free money no strings attached?

I was always taught if it sounds too good to be true, it is too good to be true. I suppose it's not that much money, because I think these hundreds of dollars were earned over like five years since I first got this credit card. Still, what's the angle here?

EDIT: Disclaimer. This is not native advertising. Bank of America is a racist, redlining, predatory-lending, family-evicting pack of jackals. This was a genuine question I asked in good faith and did not expect to get huge like this.

[u/[deleted]]

Bingo. At the end of that first year, just buy whatever you've got left over in Amazon gift cards or whatever. This is why I don't worry about an Amazon card. We spend around $1000 a year on Amazon, which can usually be covered by the 6% Amex through gift cards.

[u/beholder95 → u/[deleted]]

I used to do this too but then got the Amazon Prime card which is 5% cash back all the time.

I now use the remaining 6k/yr limit on the Amex to buy gift cards to other stores I frequent such as the grocery store I’m at or the nearby gas station.

[u/tajjet → u/beholder95]

Is it 5% off everything?

[u/IssuedID → u/tajjet]

It's 5% off everything on amazon, 3% (iirc) from Whole Foods, 2% on gas, pharmacy, and restaurants (sit down), 1% on everything else.

I think depending on your credit score the 5 and 3% may change.

[u/the_bronze_burger → u/IssuedID]

To get 5% you have to be an active Prime member. Without active Prime membership, if you buy anything off Amazon with the Amazon card, you get 3%.

[u/IssuedID → u/the_bronze_burger]

To add onto this, if you're a member of a "prime household" but you specifically don't pay for prime, you still get the 5% because you're considered a prime member even though you don't pay for it

Source: the reason why I forgot 5% was linked to prime lol. I don't pay for it (you don't have to have the same address as the person who pays for prime)

[u/Rottimer → u/tajjet]

It’s not really 5% off. You get 5 points for every dollar spent on Amazon (or at Whole Foods). You can redeem those points (100 points = $1.00) on any purchases on Amazon’s website.

If you’re wise with your money and already make regular purchases off of Amazon, you can use the points to reduce the cost of items you normally purchase. But, I’m not and I will generally save up the points and use them for a purchase I wouldn’t make if I had to pay for it with actual earnings.

A couple of years ago I used them for a pair of Bose noise canceling ear buds, and this year I used them for a gaming mouse that costs way too much.

[u/beholder95 → u/[deleted]]

This - you can redeem the amazon points for cash.. always do that.

[u/Rottimer → u/[deleted]]

I don’t know why I didn’t know this was an option. TIL.

Thank you!

[u/iiiears → u/Rottimer]

Is there a yearly/monthly fee for the card?

[u/lichsadvocate → u/iiiears]

Nope, just the regular prime cost

[u/Richy_T → u/[deleted]]

I've got the chase one and except when there's a special offer on a particular gift card, they aren't really good deals and it's $ for $ the same as putting the money on a card payment which is effectively cash and doesn't lock you into one store.