I am new to the US. Whenever I make a payment at a grocery store like sunucks, or walmart, etc. on payment terminal, they offer me cash back.

I usually decline.

I just wanted to know what are the benefits and disadvantages of getting cash back while paying with a credit or debit card.

  • it is for your convenience. some credit card companies like discover allow you to do that. some companies consider it as "cash advance" and charge you their cash advance rate so read your card agreement before you start clicking on "Yes" :) – Asdfg Jun 8 '15 at 19:44
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    @Asdfg Discover treats it like a regular purchase, not a cash advance, but definitely agree on 'read your agreement'. – Joe Jun 8 '15 at 19:54
  • @Asdfg : got required info at the link investopedia.com/terms/c/cash-back.asp – made_in_india Jun 8 '15 at 21:58
  • @Joe I never meant to say discover treats it as "Cash Advance". I just gave it as an example as i use discover and have used their "cash back" option many times. – Asdfg Jun 8 '15 at 22:50
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    @Joe I learned something today! I had always declined because I assumed it was just an "opportunity" for a cash advance with fees and interest. – stannius Jun 9 '15 at 16:26

Benefits might come if you normally withdraw cash from an ATM, and can avoid spending time, gas, and fees to use an ATM.

Disadvantages would include the normal disadvantages that come from carrying and spending cash: You have less of a record of where you spend your money, cash can be lost or stolen, and when it happens you have less recourse than if you had lost a credit card.

A better option would be to get a credit card with 1-2% cash back, so that over time you build up a rewards balance as you conduct normal transactions. As long as you keep track of your expenses, and fully pay your bill each month, this has even more benefits than using a debit card.

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