What is a cash back credit card?
Cash back credit cards are basically the best way to make money by spending money. Every time you swipe, you’re earning rewards that you can eventually turn into extra money in your pocket.
How do they work?
When signing up, your credit card company will tell you what they consider an “approved purchase.” You will then receive a designated percentage of each approved purchase back at the end of your billing period. Easy as that.
What benefits will I receive?
The biggest benefit is simple: it’s going to save you money. It allows you to purchase all approved purchases at a discounted price in all places that card is accepted. The more often you choose to use this credit card, the more money you’re going to save. It’s also a good way to build credit, as long as you’re consistently making payments. Plus, the cash you get back is tax-free! And finally, if that isn’t enough, on some cards you can earn extra rewards for the categories you buy most in.
Are there any drawbacks?
Your credit card company may require an annual fee. In these cases, it is essential to do the math to see if the amount you’ll save is enough to make it worth the annual fee. You also want to ensure that you don’t end up with high interest fees. To really reap the benefits of these cards, you have to be sure to strategize with your card and purchases.
The Best Ways to Maximize the Benefits
Pick the right card.
Set yourself up for success from the start and spend some time researching your options. You’re looking for the highest percentage in cash back (1-2% is the norm) with the lowest amount of interest, and with preferably no annual fees.
Make large purchases on the card.
The larger the purchase, the more cash back you’ll get. Think appliances, tuition, down payments, and more. You’re going to see the biggest savings by doing this, especially if you’re paying items off quickly. Also, paying those larger bills are an excellent way to take advantage of that 1-2%. Use it for anything from water bills, electricity, car notes, to health insurance.
Make sure you know all the benefits of your card.
Keep a list in your phone so you’re always using the right card for the right purchase.
Look into some store specific cards.
If you’re visiting some of your local stores more often than you should be, consider getting a store credit cards with cash back.
Choosing the Best Card for You
Look for cards with extra benefits for your big spending categories.
If you do a lot of traveling, find a card that gives more cash back for travel related purchases. Do groceries take up a large part of your budget? Some cards offer up to 6% off at grocery stores. Beat your gas guzzler by getting extra cash back for gas purchases.
Look around for specials on cards.
Some will have offers for points and rewards just for signing up. Don’t give up the things you’re really looking for in a card for this, but if you’re stuck between 2, this may be a great way to make the choice.
Types of Cards
Flat Rate Reward Cards
These cards just take a certain amount percentage of each approved purchase, and then returns it to you at the end of the billing period. It will usually be around 1-2% cashback, so you want to look on the 1.5% side. This is a good choice for everyday purchases.
Bonus Reward Cards
There are those cards that are going to give you extra cash back in certain categories. If you’re looking for a bonus reward card, do your research and see if you can find one that best matches your expenses and purchases.
Rotating Bonus Reward Cards
These are interesting. Every few months, a few categories get bonus rewards. A few months later, they rotate, and new categories have the bonus rewards. There are good if you spend a lot of money in a lot of different categories.
Benefit from quarterly rotations and 5x the points for your category purchases for the first $1,500 of the quarter.
Is a Cash Back Reward Card Good for Me?
If you pay your monthly payments on time every month, then this is definitely a good card for you. You can strategize to get the most out of each of your cards and really save some big bucks. It’s also great if you make a lot of large purchases or have high expenses. There’s pretty much a cash back card for everyone. Be sure to do your research and compare benefits for each card. Figure out which one has the best value for you. Weigh the pros and cons, find the best one for you and your spending habits, and see the savings!
What is a Cash Back Credit Card and How Do They Work?
A cash back credit card is one where providers give you a percentage of the amount you spend back. Who doesn’t love the idea of being paid to do the shop? Depending on the card, you can earn from 1% to 6% back on the money you spend. There is no denying that cash back credit cards have a lot to offer. If you are considering getting a cash back card, read on to learn more about the benefits of cash back credit cards
How Do Cash Back Credit Cards Work?
Some lenders choose offer cash back to make their cards more attractive and more beneficial to the average consumer. Some of these credit cards promise a fixed amount back as long as you use a card during a specific time window. Other cards offer varying amounts depending on where your purchases are made.
Not all cash back credit cards are the same. For example, some cash back cards provide a higher rate back during the first few months that you have your card. Other cards operate on a tiered system. These systems generally allow you to access a higher percentage of cash back each time you hit a new tier of spending. Some providers even offer cash back percentage rates that are based on your purchases.
Now, before you start making a mental shopping list of everything that you are going to buy with your potential rewards, it is worth noting that your cash back earnings will be capped on either a monthly or annual basis. Because of this, it is crucial to do your research and finds one that lines up with your needs. It should also be noted that regardless of which cash back card you choose the money that you do receive back will be tax-free.
Incentives and Cash back Credit Cards
With terms and conditions that can include minimum monthly or yearly expenditures, introductory rates, and a tiered cash back system, it is essential that you take the time to do a thorough and accurate analysis when comparing cash back credit cards.
Benefits of Cash back Credit Cards
- Many options in terms of cash back opportunities (tier, percentage..etc…)
- With so many on the market, customers are able to choose from a wide array of options, including cards that pay more for specific stores and products.
Drawbacks of Cash back Credit Cards
- Often customers end up spending more than they usually would, therefore accumulating more debt, in order to get that cash back deal.
- Cash back rewards are only paid after you pay for your purchases
How to Choose the Right Cash back Card for You
Whenever you are looking for a new financial product, it is essential that you do your research – and that is definitely the case with a cash back credit card.
The main thing to look for is a cash back card that rewards the purchases you make the most. Cash back cards may offer different amounts for dining out, groceries or gas. Make sure you maximize your rewards by getting a card that matches your needs.
To find the most ideal cash back credit card, find the card that matches your financial goals. Are you seeking cash back to save for a rainy day? Or for free groceries? Would you rather have the opportunity to spend your cash any way you want? Whatever card you choose, cash back credit cards are a fantastic way to capitalize on day-to-day purchases. Unlike airline travel rewards credit cards, which are subject to specific blackout periods and restrictions, a cash back credit card is by far the easiest, and most direct way to capitalize on your spending.
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