If you tend to stay at home a lot and you funnel most of your purchases onto a credit card that you pay off every month, then a cash back credit card is the perfect solution for you. Instead of having to worry about rewards miles or a rotating point system, you get cold, hard cash back as a credit on your account at a predetermined time. Other rewards credit cards might offer great bonuses, but a bonus is only great if you’re actually going to use it.
The more you spend, the more you earn. The sales pitches good, but the details of the cash back program can be a little tricky. You want to make sure that you know exactly what to do to get your earnings and not have your rewards canceled out. Choose a cash back credit card that has simple terms and doesn’t place limits on how much cash you can actually earn on purchases.
Get the best credit card possible for your current financial situation. Getting an application for a new line of credit in the mail can be very appealing. The problem is that the offer you received there might not be the best offer possible. It is important to look at the all of your cash back credit card options before applying for a new account. That way you will always know that you’re getting the most cash back possible.
Watch out for the fine print. Credit card lenders are required to put all of the terms and conditions up front, but that doesn’t change the fact that there is fine print. Many cash back programs are tiered and you could earn as little as 0.25% cash back until you meet certain spending thresholds. Even with the thresholds in place, there are lenders that will also put caps on the amount of cash that you can earn. It sounds good to earn 3% cash back, right? If you look at all of your spending habits, it is very possible that what you’re actually earning is less than 1% cash back when all the tiers and capped spending are put together.
Do the rotating bonus promotions work for you? Instead of a static cash back program, most lenders have instituted a reward system that allows you to earn cash back rewards on specific purchases in specific categories every three months. Make sure that these rotating bonus promotions work for you and your spending habits. If you get 5% cash back, but only at stores you don’t shop at, then you’re not really getting a reward at all.
Take a look at the APR. This only applies to those who are planning on having a revolving balance of debt. The interest rates that are charged can vary a lot on the modern cash back credit card. Some have very low APR’s that hover around 10%. Others might be as high as 30% depending on your jurisdiction and credit score. Ignore the teaser rates and compare what the ongoing account APR is going to be. Choose the lowest out of your options.
There are going to be fees. From foreign transaction costs to annual fees, a cash back credit card can still hit your budget in surprising ways. Take a look at all of the fees on the accompanying fee schedule for each lender before finalizing an application to make sure you won’t cancel out your cash back rewards and get them.
Not all cash back credit card options are the same. Crunch down the numbers of your budget, see what credit cards provide you with the most savings, and then apply for the card that has the friendliest terms.
Categories: Credit Card Applications