Having a cash back credit card can be a great way to get rewards for your purchases. However, not all credit cards are created equal, so you need to know what features to look for when choosing your next credit card.
Well, we are here to help you understand what a cash back credit card is and how to choose the one that would support your finances.
What is a cash back credit card?
Whether you’re looking to make your next big purchase or just saving some money, a cash back credit card could be the solution. These cards offer a fixed percentage of purchases as cash back, which can be redeemed for statement credits or deposited directly into a bank account.
The best way to find the right credit card is to consider your spending habits. Some of these cards come with great welcome bonuses, while others require you to meet a minimum level of spending to receive rewards.
The most common way to redeem a cash back reward is through direct deposit to a bank account. However, some cards also offer the ability to mail your rewards as personal checks. This means you can earn cash back while avoiding interest charges and fees.
Types of cash back credit card rewards
Almost every major credit card issuer offers a cash back reward program. The key is to find the suitable one for your lifestyle. Some credit cards offer higher rewards than others, so you may need to shop around to find a card that suits your needs.
There are also credit cards that offer a sign-up bonus, a way to earn cash back fast. But, it’s important to note that finance management experts usually advise you to avoid this type of bonus to pay for your purchases. Instead, you can use your points for travel or other purchases.
Other than this, certain credit cards allow you to redeem your points on an online marketplace operated by the card issuer. Alternatively, you may be able to transfer your points to miles. The more redemption options you have, the more value you will get from your points.
Rewards offered by cash back credit card
Cash back credit cards offer a variety of rewards, including:
1. Flat-Rate Cash Back
This type of reward offers a set percentage, usually around 1% to 2%, on all purchases made with the card. It is one of the most popular cash back rewards because it is simple and easy to understand – no matter what or where you buy, you always get the same percentage back in rewards.
2. Bonus Category Cash Back
Here you get a higher cash back rate – usually around 3-5% – on certain categories such as groceries, gas, travel, or dining out. The bonus category varies by card and is often subject to change. So, it is important to stay on top of what categories are currently eligible for bonus rewards.
3. Sign-Up Bonus Cash Back
Many cash back credit cards offer a one-time bonus as an incentive to encourage new customers to sign up. These bonuses usually offer a large amount of cash back points or miles, typically after spending a certain amount in a specific timeframe.
4. Tiered Cash Back
Here you get a different percentage depending on the amount you spend each calendar year. The more you spend, the higher your cash back rate will be. For example, you may earn 1% on purchases up to $2,000 annually, 2% from $2,001 to $5,000 annually, and 3% on purchases over $5,001 yearly.
With so many different cash back credit cards available today, it can be overwhelming to decide which one is right for you. Thus, it’s important to take a close look at the various rewards offered by each card to see which type best fits your spending habits. That way, you can maximize the amount of cash back rewards you receive.
How to choose the best cash back credit card?
Choosing the best credit card involves a lot of thought. You want to look for features that will fit your lifestyle and spending habits. You also need to consider perks such as roadside assistance, travel insurance, and extended warranty coverage.
While there are a lot of different types of cash back credit cards, they are all designed to give you a return on your spending. They can range from flat-rate cards to tiered cards that reward you differently for your spending in different categories. There are even some that offer extra cash back for referring new cardholders to their list.
You can also go for the ones that offer a sign-up bonus. It is a good way to start collecting rewards quickly. Furthermore, many cards offer a welcome bonus or offer a free credit score monitoring service. So, at the end of the day, the choice is completely yours based on your necessity.
Who should get a cash back credit card?
Getting a credit card that pays you back for your purchases can be a win-win situation. You can use your cash back as a statement credit or deposit it into your bank account to earn some interest. The best part is that there are a ton of credit cards out there.
The top cash back credit cards are the one that fits your spending habits. For instance, if you’re only buying stuff you can’t afford to repay, then you should probably keep your cash in the bank.
Similarly, if you don’t have a large balance, you should stick to a card with a low annual fee. You can always ask your issuer for a no-annual-fee option.
Some of the most recommendable cash back credit cards are the one that offers the best sign-up bonus. For example, the Citi Double Cash Card lets you earn 1% cash back on paid purchases. It’s also got the aforementioned perks, including an extended warranty and travel accident insurance.
How to Get a Cash Back Credit Card?
Are you looking to make some extra money? Or, Are you just trying to save on everyday expenses? No matter what the situation is, a credit card can be a great way to go.
In fact, there are a number of cards on the market today that offer great deals and rewards, as well as some that offer free perks, including travel, hotel stays, and more.
Let’s get hold of the 5 cash back credit card available today:
Chase Freedom Unlimited®
Whether you’re shopping at the supermarket or traveling, the Chase Freedom Unlimited card is a great way to earn cash back. With no annual fee, a statement credit, and purchase protection, this rewards card has all the bases covered.
Chase Freedom Unlimited has some of the highest cash back rates available. The introductory offer includes a 5% cash back reward on travel booked through the Ultimate Rewards program. You can also earn 3% back at drugstores and dining.
Another bonus you’ll find with this card is a three-month subscription service called DashPass. It includes free shipping and delivery on eligible orders. It will save you money when you spend $50 or more in the first nine months of opening your account.
However, this might not be a good choice for you if you’re looking for additional rewards for your grocery purchases.
Blue Cash Preferred® Card from American Express
Are you shopping at the supermarket or gas station? The Blue Cash Preferred® Card from American Express can provide you with a lot of value. It offers generous cash back rewards and several purchase protections.
The card is available only to those with a credit score of 700 or higher. If you don’t have an excellent credit score, you’re probably better off looking elsewhere for a credit card. The card offers high rewards rates for grocery, gas, and transit spending.
The card also offers extra perks, including travel protections and purchase protection that reimburses you up to $1,000 per purchase. The rewards you earn are in the form of statement credits, which have the same buying power as gift cards.
However, if you avail this card, then you might have to pay a $95 annual fee.
Discover it® Cash Back
Getting a Discover it(r) Cash Back credit card can be an excellent way to earn rewards. In fact, the card has a very generous sign-up offer. For the first year, the card offers 2% cash back on everything, along with 1% back on all other purchases. It also offers balance transfers.
The cash back you’ll earn is not limited, and you can redeem it for a statement credit or a gift card. In addition, the card comes with free security alerts for your Social Security number and credit cards. Moreover, you can also keep an eye on your FICO score for free.
The Discover it(r) Cash Back is a great option for users who have decent credit and want to earn some extra cash. Although the card has a fairly high credit limit, it’s worth checking your credit score before committing to this card.
Only the ones with high credit should avail this credit card to get all the benefits.
Citi Custom Cash℠ Card
Unlike most cashback credit cards, Citi Custom CashSM Card offers a customized cash-back rewards program. It delivers cash back rewards to the spending categories you use most. You can earn 5% cash back on the highest spending category each month and 1% thereafter. It also gives you a generous welcome bonus.
With the Citi Custom CashSM Card, you can get a $200 bonus after spending $1,500 in the first six months of opening your account. You can redeem these points for cash, statement credits, pay down loans, or even travel. These rewards are in the form of Citibank ThankYou points. They do not expire and can be transferred to travel partners such as JetBlue Airways.
The Citi Custom CashSM Card comes with a 0% intro APR on purchases for the first 15 months. This makes it a great choice for those with a good credit score.
The card is not favorable for large purchases.
U.S. Bank Cash+® Visa Signature® Card
Unlike other credit cards that only offer a flat rewards rate, the U.S. Bank Cash+ Visa Signature card allows cardholders to choose bonus categories that they can customize. For example, you can choose to earn 2% cash back on everyday purchases such as gas stations, restaurants, and grocery stores. Moreover, you can also earn 5% cash back on up to $2,000 in purchases each quarter.
The Cash+ Visa Signature card provides users with a $200 sign-up bonus. You can earn this bonus by making at least $1,000 in purchases within the first 120 days of account opening. This is a decent perk for those who are looking for a card that can help them earn extra cash.
The Cash+ card offers a 1% base reward rate and an additional 5% cash back on purchases made at Rewards Travel Centers. Moreover, the cash back is redeemed as statement credits and is subject to a minimum redemption requirement of $25.
The redemption policy does not apply to foreign cash transactions, lottery tickets, and ATM disbursements.
Benefits and Drawbacks
Using credit cards can provide you with an extra amount of spending money. However, you may want to look for other benefits before committing to a card. Some cards have additional protections, such as rental car insurance. You should also review your fees and APR.
Some of the most seeked cash back credit cards offer 0% APR offers, which can help you to save money on interest charges. Moreover, they may also come with other perks, such as travel protection.
If you have a large family, a credit card that rewards you for your grocery purchases can be a great choice. You may even be able to earn hundreds of dollars in cash back.
However, if you don’t have a lot of money to spend, a flat-rate card might be a good choice. Yes, it is true that some cards offer higher rewards than others, but you should choose a card that fits your spending habits.
At the end of the day, cash back credit cards are a great tool to get rewarded for purchases you make anyway. By comparing different types of rewards and choosing the one that suits your lifestyle best, you can start earning more money on the things you buy.
So, what are you waiting for? Start shopping around, and make sure to take advantage of the cash back rewards that are out there! With a little bit of research, you can start earning more money on the purchases you already make. Happy saving!