 | Cash Back |
Using a credit card with cash back can be a great way to stretch your budget and be rewarded for your purchases. As long as you pay your balance in full each billing cycle, the card issuers are essentially paying you to use their card. Plus, cash back rewards are usually easier to understand than rewards programs involving points and miles.
Cash Back Rewards Benefits
Why Choose a Rewards Credit Card with Cash Back
Here are some of the advantages of having cash back rewards:
- Cash back is like getting a discount every time you shop. Getting 3% cash back at the gas station is like getting 3% off your total bill. In fact, it's like easy money - you are essentially being paid to use your credit card.
- Cash back is easy. Who wants to do math on reward points? With cash back, your return for spending is much easier to understand and the math is minimal (just pay attention to how you'll get the cash - through statement credit, gift card or an actual check).
Besides the credit cards we feature on CreditDonkey, you may also want to check with your local bank or credit union. Most big national banks like Bank of America, Chase, Citi and Wells Fargo have cashback credit cards too.
- Cash back makes more sense for some lifestyles than other rewards. Credit cards used to offer airline miles almost exclusively as rewards. Travel rewards and other travel perks are still available on some cards today, but for people who don’t travel much, a cash back reward structure is more useful, convenient, and practical.
What to Watch Out For
Consider these factors before and after you decide on a cash back rewards credit card:
- Interest rates: Credit cards with cash back rewards tend to have higher than average interest rates, so make sure you pay the balance in full each month. If you plan to carry a balance, look for a credit card with low interest instead.
- Introductory offers: Credit card companies offer a variety of incentives to get you to choose their card, but many of them don’t last long. These range from 0% APR balance transfers for an introductory period, to bonus cash offers for signing up, to 5% cash back on categories that change.
- Overspending: Since you’re earning cash back as a percentage of your spending, your rewards increase as you spend more. This can make overspending very tempting. Don’t spend more than you can afford, and always purchase wisely.
Calculate the rewards you could earn with several cards, based on your normal spending habits, to figure out which card will earn you the most rewards. No matter which card you choose, always remember the importance of paying your bill in full each month – or else you will lose out on the reason you chose a cash back card in the first place.
