A cash-back credit card is a specific sort of rewards card that gives you actual cash back on purchases. The value of your benefits with a cash-back card is more obvious, making it slightly simpler to utilize than a travel rewards card. However, there can be significant variations between cash-back cards based on the rewards program and the card in question. Discover the ins and outs of cash-back cards with this helpful guide.
There are two main types of rewards cards: those that offer travel perks and those that offer cash back.
You can easily estimate your rewards with a cash-back credit card. If your cash-back card gives you 2% back on all purchases, for every $100 you put through it, you’ll get $2 back.
The benefits from any cash-back credit card can be cashed in for cold hard cash in the form of a check, statement credit, or wire transfer. Some travel credit cards offer as well, though the value of the points you earn may be diminished if you choose for cash back instead of utilizing them to fund an actual trip. If you’re curious to know more, be sure to check out kredittkortinfo.no/cashback and make the right choice!
How to make your credit card work for you and earn cash back rewards?
A card’s rewards system is one more way to differentiate cash-back rewards cards from other types of cards.
Flat-rate cards
You will earn the same percentage of cash back on each purchase with a flat-rate cash-back card, which is often between 1.5% and 2% of the purchase price. In most cases, the credit card that offers the highest rate of rewards will be the one that proves to be the most valuable. However, when you get the card, make sure you check to see if there’s an annual charge or any other expenses that will cancel out the incentives you get.
Folks who don’t want to spend a lot of time maintaining their credit card rewards program might find that flat-rate credit cards are a smart option for them. Flat-rate credit cards are simple to evaluate in comparison to other types of cards, and you will be aware of the exact amount of rewards you will accumulate for each purchase you make.
Bonus categories cards
Depending on the establishments at which you use your cash back card, certain credit cards will award you with a varying level of benefits.
The bonus categories that these cards fall into are occasionally used to differentiate them from one another. There are gas cards that offer bonuses at the pump and dining cards that reward you with cash back when you use them to buy takeout or eat in a restaurant.
Depending on the type of purchase made, some cash-back cards provide higher rewards than others. There might also be a cap on the total amount of bonus cash back you can accumulate over the course of a given year or quarter. You have the potential to earn an unlimited 1% cash back on any purchases that don’t fall inside the bonus category.
When you prefer to spend the majority of your money at certain stores, it may be beneficial to have a rewards card that has multiple tiers. They’re also useful if you have many reward cards and want to maximize your points on each purchase. You can find out more info here.
Rotating rewards cards
The bonus categories on a rotating cash-back rewards card, which is a sort of tiered rewards card, can change on a regular basis. In most cases, a new set of categories will be implemented every three months.
These cards have the potential to be tempting given that the limited-time bonus categories typically offer a high percentage of cash back, which is typically 5%. You may, however, only be eligible to receive extra rewards on purchases that total up to a particular threshold each quarter, which is typically between $1,500 and $2,000 in most cases. In addition, the issuer of certain cards decides which categories the card will be redeemable for.
Oh, and we want you to know that if you don’t particularly mind keeping track of the shifting categories and maybe activating them to receive the added rewards, a rotating rewards card could be an excellent addition to your wallet.
However, if this is the only credit card you have, you may not receive as many benefits as you would with a tiered or flat-rate card.
What about my credit score?
There are a number of credit cards that offer cash-back rewards, and most of them require a credit score of at least fair to good, with some of the better ones requiring a score of very high or even excellent. It’s possible that these cards will come with generous sign-up bonuses, competitive cash-back rewards rates, and other benefits for cardholders.
People with weak credit have options, one of which is secured credit cards that give cash-back benefits. But don’t sweat it because other solutions are also available. However, they could have higher fees, lesser reward rates, and fewer cardholder advantages than other cards.
How to get most out of these cards?
You may increase the amount of cash-back incentives you receive by following a few simple steps we’ll go over below:
First of all, make sure you pick the right card. Examine your typical expenses as well as the amount of time you’re willing to invest in the management of your credit card, and then select a cash-back card that corresponds to these factors. If your creditworthiness continues to improve over time and you become eligible for additional cards, you should periodically revisit your decision.
Next, you should keep in mind the bonus categories of your cards. Always remember which rewards card you wish to use for a given purchase if you have more than one or if the cards change frequently. It may be helpful to keep a reminder of the bonus categories on your phone or to affix stickers to the cards themselves.
Thirdly, make sure to read over the terms again and AGAIN. Review the terms and conditions of your credit card agreement to learn what kinds of costs don’t qualify as eligible purchases. For instance, if you use your credit card to purchase gift cards or lottery tickets, it’s possible that you won’t earn cash back on those purchases.
If you have the option of redeeming your points for cash back or for something other than cash, compare the two alternatives carefully to determine which one will provide you with the greatest value. So, good luck!
