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Cash-back cards can help you save hundreds each year—here's how to get the most out of yours

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Cash-back credit cards are one of the most popular types of rewards cards. Cardholders earn a percentage of their spending back, which can be used to offset your balance. If a card offers 2% cash back and you spend $100, you'll receive $2 back.

Cash-back cards offer a minimum of 1% cash back on all purchases, with some cards offering up to 6% cash back in select categories. In some cases, there are even limited-time offers where cardholders can earn even more cash back. For instance, Capital One® Savor® Cash Rewards Credit Card offers 8% cash back on tickets purchased through Vivid Seats through May 2020.

These cards are a great choice for people who don't want to deal with the sometimes confusing points or miles rewards cards.

Below, CNBC Select breaks down the different types of cash-back cards and how you can redeem cash back.

Types of cash-back cards

Cash-back cards can be broken up into three main categories: flat-rate, bonus category and rotating category. Here's how each type works.

1. Flat-rate

Some cash-back cards offer the same amount of cash back on every purchase. The best flat-rate cash-back cards earn you at least 2% cash back on all purchases, with some cards offering up to 2.5%, such as the Alliant Cashback Visa® Signature Credit Card.

These cards are great for consumers looking for a simple cash-back program that requires minimal effort to reap great rewards. The Citi® Double Cash Card, which offers 2% cash back on every purchase (1% cash back when you buy, plus an additional 1% as you pay for those purchases) and charges no annual fee, makes CNBC Select's list of the best cash-back cards.

2. Bonus categories

Many cash-back cards offer bonus cash back in certain categories, such as grocery stores, travel, gas stations and entertainment. Sometimes cash back in the bonus categories is limited to a certain amount of spending each year, but it can also be unlimited.

The Blue Cash Preferred® Card from American Express gives cardholders 6% cash back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%), 6% cash back on select U.S. streaming subscriptions, 3% cash back on transit and at U.S. gas stations, and 1% cash back on all other purchases.

3. Rotating categories

Other cash-back cards offer 5% cash back in select categories that rotate throughout the year (typically changing each quarter). Common categories include restaurants, gas stations and grocery stores. These cards are popular among consumers looking to maximize rewards.

The Discover it® Cash Back and Chase Freedom® both offer 5% cash back in rotating categories on up to $1,500 in combined purchases after you activate the bonus every quarter. After you reach the limit, it's 1% on all purchases.

How to redeem cash back

Cash-back cards usually only provide a few redemption options. Some cards allow you to redeem cash back at any amount, while others require you to reach a minimum amount, typically $25. Here are the most common ways you can redeem cash back.

  • Statement credit: Apply cash back as a credit to your account balance. This helps offset the cost of your bill. However, you still need to make the minimum payment toward your balance.
  • Direct deposit or check: You can often transfer cash back to a linked bank account or request a paper check.
  • Gift cards: Some cash-back cards may allow you to redeem cash back for various gift cards.

Information about the Capital One® Savor® Cash Rewards Credit Card, Alliant Cashback Visa® Signature Card, and Chase Freedom® has been collected independently by CNBC and has not been reviewed or provided by the issuer of the cards prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.