Not all credit cards are created equal. While all credit cards allow you to make purchases without cash, some offer additional benefits that may be worth a second look. Although many people equate credit cards with debt, you can save money or earn rewards if you go through the right company.
Cashback credit cards let customers earn rebates after they make purchases on their accounts. For example, if your credit card offers 1% cashback for grocery purchases, you would “earn” $3 back on a $300 purchase. While the amount may seem small, the rewards can add up, especially if the card offers multiple reward options.
If you’re in the market for a new credit card, visit Credible to find the right credit card for your financial situation.
It’s important to note that some cards have annual fees. Make sure to read the fine print before applying for a card and decide if the rewards you earn will offset the cost of the card. Some cards operate on a point system. You earn cash rewards or other perks when you trade in a set number of points.
Benefits of using a cashback credit card
Cashback cards have various benefits, including:
1. You earn money on everyday spending
Individual credit card companies have set cash rewards for specific actions. Typically, a credit card company will offer a certain percentage of your total amount spent at particular locations. Some credit cards offer various rates based on whether you purchase airfare, big-ticket items, groceries, or dinner at a restaurant.
Some cards rotate through rewards categories each quarter, so keep an eye on your statements for the most up-to-date information. You may be able to maximize your cashback rewards by using your rewards credit card to pay your bills. If you opt to do this, make sure you’re able to pay off your balance every month to save on interest fees and avoid getting into too much debt.
Credible breaks down some of the best credit card options available, specifically if you're interested in cashback programs. Check them out here.
2. Sign-up bonuses
When you apply for a cashback card, look for the sign-up bonuses. Some cards offer credit statements of several hundred dollars or thousands in points or travel miles. Most sign-up bonuses require that you spend a certain amount of money within the first few months of opening the card before the reward is credited to your account. Read over the terms and conditions when you’re signing up for your cashback credit card so you know how much you need to spend to earn your bonus.
If you’re ready to check out a cashback rewards card, visit Credible to see multiple credit card options in one place.
3. Purchase protection plans
One major perk of these cards is that many offer purchase protections. The card may offer extended warranties on certain items, guaranteed refunds if a store refuses to refund your purchase or price-matching. Some credit cards even provide rental car insurance, so you won’t have to pay the extra fee when you rent your car. You’ll want to check with your specific rewards card to see what specific protection perks they offer.
4. Low introductory rates
Keep an eye out for cashback cards that offer 0% rates. Some lenders will entice new cardholders by offering 0% APR on balance transfers or initial purchases for a set amount of time.
Before you open up a new line of credit, it’s important to compare cards so you can see which one will be the best fit for you. You can visit an online marketplace like Credible to compare different zero percent credit cards and find your perfect match.
5. You have options
Cashback credit cards come in different shapes and sizes. If you want something simple, a flat-rate card typically offers the lowest cashback bonuses, but they often offer cashback on all your purchases. If you’re interested in earning the most rewards possible, opt for a card that offers bonus categories (higher cashback on individual purchases).
Is it worth getting a cashback credit card?
Using cashback credit cards to earn rewards is a common strategy for people who want to maximize their purchases. Some people use these cards to help save up for vacations or other expenses.
If you want to maximize your return on your cashback cards, consider utilizing more than one cashback card (to avoid maxing out your rewards). You could also deposit all the cashback rewards into a high-yield savings account or apply your cashback earnings towards the balance on your card.
As a bonus tip: Consider shopping online more often with your cashback rewards card. You can earn double cashback by making purchases through cashback websites, too.
No matter how you use your rewards card, make sure to compare your options by using an online tool like Credible to compare rates and companies.