I have a credit card that offers cash back (1%) on every purchase. Now there are some stores in Canada that have their own cash back (a.k.a...if you buy something for 5$ and charge 100$ to the card, they give you 95$ in cash).

Now question is...can I purchase something for 5$, charge 100$ to the card and get back 1% on the 100$ as opposed to the 5$? Is there a loophole in this theory?

It is not a get rich idea I understand, but can add up nicely if followed regularly.

5 Answers 5


Generally a "cash back" option at the time a purchase is made is only available to purchasers using a DEBIT card. Debit cards usually have no rewards.

Assuming you are able to have a retailer charge you $100 for a $5 purchase you should earn rewards on the total charged to the card, i.e. $100.

  • A recent thread here suggested some stores do this for credit cards as well. (I've never seen it, just trusting the members saying they've done it) Commented Aug 5, 2014 at 21:07

The networks distinguish between the "purchase" component of a transaction and the cash back component. Issuers won't count the cash back amount toward rewards. Merchants also don't pay regular interchange on the cash back amount.


In the UK, if the retailer offers point-of-sale cash back on a credit card, the credit card company usually charges it to the card as a cash transaction (i.e. the same as if you used an ATM with the card) and you usually pay interest on that from the time of the transaction, not the billing/interest accrual date. Additionally, a cash transaction is treated distinct from a purchase transaction, which is what attracts the 1% cashback (in this example).

In other words, you won't get the benefit of the 1% on that $95 and you'll end up paying a bunch more in cash transaction interest (which is usually higher than purchase interest too!).


Here in the US, Discover Card offers this as one of their card benefits, but only certain stores participate. It's called Discover Cash Over. Basically, at a participating store, when you purchase using a Discover Card, you'll have the option to also get some cash back (say, $20 or $40). There's a daily limit that Discover sets, and individual stores can also set their own more restrictive limits.

It doesn't count as a cash advance (so no special interest rate, and the interest has the same grace period as a regular purchase). So say you bought some shoes for $50, and did $20 cash over. The statement would show ($50 + $20) for that transaction. I'm not aware of another card that offers this service, but keep in mind it still can't be used to increase your rewards since Discover would only calculate your rewards for the actual purchase price, not the cash over.

One reason that this isn't very common is that merchants pay a percentage of the purchase price to the card network. Asking for $100 cash on top of the purchase price means the merchant would be paying a much more disproportionate transaction fee in relation to the actual price of the goods sold. For this reason, even if they did allow it, they would have to be getting the money somehow (such as higher priced goods).

I am guessing Discover handles these in a way that doesn't charge the merchant extra transaction fees for the cash over portion.

  • 1
    In this Discover program, the "cash over" amount also does not get counted towards the cash back bonus. I very much doubt it does in the questioner's case either.
    – jjanes
    Commented Aug 6, 2014 at 4:18

Stores which offer cash back hike their prices by that percentage. There's no free lunch.

  • 1
    Victor is not talking about the store card rebate, but about "cash back" offered at the time of purchase, as in "would you like some cash back," typically done at grocers, usually just for debit cards. Commented Aug 5, 2014 at 21:06

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