You have a Cash Back Credit Card – but how do you get the most out of it?
First let’s take a look at how a Cash Back Credit Card works.
You use your Cash Back Credit Card to make purchases and you earn a certain percentage of cash that you can get back. This percentage is fixed by the Bank that issues the Cash Back Card. Once you earn this, you can redeem your earnings in several ways –
- A credit in your credit card account which reduces the balance in your account
- A statement credit
- A cheque or a cash coupon or voucher
- Gift cards, etc.
But how does one earn more cash back? Are there are pointers that can set me off in the right direction?
It might be a good idea to have more than one Cash Back Card – as different credit cards offer cash back against different categories. So using the card that earns you more cash back when spending on a particular category is a smart option. But keep an eye on annual charges and your budgets.
Find out what spending category earns you the most rewards and use your Card to pay for those purchases. If buying fuel gets you the most cash back, be sure to use your card each time you go to a fuel station.
Keep an eye on the spending category that earns you the most cash – particularly when you have a Bonus Category Cash Back Card, as this keeps changing from time to time. If fuel earns the most cash now, it could be travel-related purchases next! So be sure to keep your eye on the top category for that particular time.
Be sure to pay your Cash Back Credit Card bill in full. Paying only the minimum amount due will earn you interest and that will completely offset any benefit you might get by earning any cash back.
And never delay your payments. There is absolutely no point paying late fees as this would do away with any benefit that cash backs bring.
Pick a credit card that has a low/no-annual fee. Paying a huge annual fee doesn’t make sense if you end up earning less than the fee for the card.
Keep an eye on the sign-on bonus – some Cash Back Credit Cards can offer you a sign-on bonus, stating that if you spend a certain amount on your card in a certain period of time, you could earn a bonus cash back.
Some cards can offer you a low rate on balance transfers. Some Cards state straight away that balance transfers won’t attract any cash back.
Different cards have different rules – some cards may expect you to accumulate a certain amount of earning before you can draw it out. Keep your eyes on that goal and work towards it. Keep an eye on your budget and spending capacity also. No point in blowing a hole in your wallet just to earn a small amount of cash back.
Sure there are –
Cash Back Credit Cards are great as they boost your monthly budgets and give you a little extra cushion. But it is good to be wise and prudent – like with anything else – you need to use the card wisely in order to gain the most traction.
