Discover How Cash Back Works for Credit Cards Today!
Who wouldn’t want to get money back after making a purchase? With so many monthly expenses to cover like food, gas, utilities, and internet / cable bills, it’d be nice to get a little bit of money just from paying some of these costs.
Fortunately, a cash back credit card can give you a percentage of the money you spend in the form of cash or points that rack up on your card. Depending on the credit card provider, you may have the option of getting cash back as a check, depositing the funds into your checking account, or applying them directly to your credit card bill. While most “cash back” programs don’t reward you for every purchase you make, there is a huge possibility of earning money when covering different living expenses, including gas stations, grocery stores, pharmacies, and public transportation. By making larger purchases with your credit card, like a mortgage payment, you can receive higher cash back amounts. However, that extra money might not be worth it because of the fees and interest involved with paying your mortgage with a credit card through a third party payment processor.
If you are new to cash back credit cards, you may wonder about the amount of money you’d get from using that card to make purchases throughout the month. Generally, the cash back rates are often between 1% to 5% of each transaction, but the percentage will vary depending on the card and provider. Some credit card companies, for example, will offer flat rates for every purchase, while others have set rates for different expense categories. If you take out a cash back tiered-rate credit card, you may receive higher rewards for specific items and a lower rate for every other purchase.
Similar to a tiered-rate card, a rotating-category credit card will reward you with high returns if you spend money on a particular class for a limited time. The categories these cards will reward you the most from will differ with each issuer, but they typically range from things like dining, groceries, travel, and even streaming services. If you reach the maximum amount in that type of cash back card, you may receive fewer rewards than when you had a larger total. However, some companies vary in terms of the restrictive period, with some imposing limited amounts quarterly or annually.
Now that you know how cash back works for credit cards, it is important to acknowledge some factors if you are considering this type of card. Cash back credit cards have various parks that can help you grow your account, but you must weigh all of their aspects before you take one out.
Continue reading for more information about cashback cards and whether you should apply for one in the near future.
What Should I Know About Cash Back Credit Cards?
As mentioned previously, cash back credit cards can differ in percentages and points, along with other factors. However, there are other characteristics to consider that can influence your decision to get this type of card, like the fact that you may need to wait to get your reward. For example, if you choose to receive your funds through a deposit to your bank account, the funds won’t appear automatically.
Keep in mind that some cash back cards offer sign-up bonuses for spending a specific amount of money during the first few months of getting your card. Many credit card providers put limits on how much cash back you can earn per year, but you can expect to have a beneficial amount if you are a frequent spender. Like with any credit card, a cash back card has some potential drawbacks to be aware of, such as annual fees or high annual percentage rates (APR). If you use a cash back credit card through a third-party platform, like mobile readers or digital wallets, you may not get money back through those purchases if their technology doesn’t offer sufficient transaction information.
In addition to those costs, there are other purchases a cash back credit card may not reward you with money, including cash advances, balance transfers, and any returns or refunds you receive with a transaction. You typically won’t be able to use your credit card to pay for title loans or car loans to earn cash back. However, most purchases made with this type of card can allow you to earn perks.
If you are a savvy spender, you may be curious to know some ways you can maximize cash back rewards through this sort of credit card. Thankfully, there are different things you can do to earn the most with a cash back credit card, like:
- Use the Card to Get Points and Miles for Airline Tickets Through an Online Shopping Portal
- Pay Your Card Balance in Full and Avoid Getting Interest Fees Every Month
- Cover Your Recurring Expenses with the Credit Card
- Reap the Benefits of Your Credit Issuer’s Offers
- Mix Your Cash Back Credit Card with Other Loyalty Programs to Earn Several Rewards
- Deposit the Cash Back into Your Account to Lower Your Balance
Cash back credit cards have multiple pros and cons to consider as a consumer. However, the decision to apply for this card ultimately relies on your needs and preferences. If you spend a lot of money on different expenses, a cash back card can give you a reward that can help you sustain your budget. Just make sure to pay your balance before the billing cycle is over!
Bottom Line ⎼ Review All of the Factors of Getting a Cash Back Credit Card Before Taking One Out
After reading the various details about cash back credit cards, you may still wonder if it is justifiable for you to apply for this credit card option. The answer to your question will depend on your lifestyle and if you want to earn money for covering multiple expenses. If you consider yourself a frequent shopper, a cash back credit card may be a suitable resource to get rewarded for your spending. However, you may not need to get a cash back credit card if you limit the number of times you use your funding.
Don’t hesitate to speak with a credit card issuer if you want to learn more about the perks of their respective credit cards. Or, talk to a financial advisor at LoanMart online now to get their opinion on you getting a cash back card based on your economic position.
