Credit cards with cashback rewards are credit cards which offer cash rebates and cash incentives for making purchases with your credit card. Available to people with most types of credit history, cashback credit cards often deduct a sum from your outstanding credit balance at the end of each billing cycle, calculated as a percentage of what you have spent on selected goods and services in the preceding month.
Types of Cashback Credit Cards
There are many different types of cashback credit card, and determining which are the best cashback credit cards for you can be quite a puzzle. Cashback credit cards are available with an introductory 0% APR offer on balance transfers and new purchases, with $0 annual fees and some will offer enhanced rates of cashback for selected purchases – for example paying your restaurant bill with your cashback credit card at certain eateries.
However, if you have no outstanding balance on your existing credit card, always pay your credit card bill on time and only ever eat at home, none of these benefits will be of any interest to you. Therefore, it is always best to shop around to find the most appropriate cashback credit card for your requirements, as you may be foregoing a higher rate of cashback for a facility which you do not need.
Using a Cashback Credit Card
Typically, credit card companies will try to encourage you to use your cashback credit cards to make certain purchases, and get you into the habit of frequently relying on your cashback credit card as a means of payment. Consequently, you will find some credit card companies offer a higher rate of credit card cashback for goods purchased at a grocery store, on flights with selected airlines or for filling up your car with gas.
Some cashback credit cards offer an initial cashback bonus after making so many purchases with your new card. Others may offer higher cashback percentages if you use your cashback credit card to shop online, or offer to pay your cashback to you by means of a quarterly check – a better way for some of seeing the benefits of a cashback credit card rather than having a token amount deducted from a monthly statement. Even though a minimum percentage of cashback is usually available on all types of cashback credit cards, it often pays to shop around.
Top Tips for Cashback Credit Cards
- Locate the best cashback credit card deals which reward you for using stores you already use. There is little value in driving 50 miles to make a credit card purchase for 1% cashback.
- Choose cashback credit cards which have no expiry period or limit for the amount of cashback you can receive. You may think this unimportant now, but your spending habits may change.
- Avoid making additional purchases with cashback credit cards simply to earn more cashback. Even at the highest rates of return, the cashback you receive will not justify the expense.
- Compare the annual fees and interest rates being charged by suitable cashback credit card companies before you apply. Doing the math may be difficult, but financially worthwhile.
- If you are in business, pay as many suppliers as you can through your cashback. Not only will this help with your cash liquidity, but will earn your company a significant income as well.
- Take advantage of any sign up bonus offered by the cashback credit card companies. Some will offer enhanced percentages of cashback over an initial period or cash gifts as incentives.
- Be aware that cashback credit cards often have a higher rate of APR. If you are not the sort of person who pays their credit card bill each month, cashback credit cards may not be for you.
- When you subscribe to a new cashback credit card, do not cancel your old credit card (particularly if it has no annual fee). Cancelling credit cards may negatively affect your credit rating.
For people who completely clear their credit card accounts at the end of each month, cashback credit cards are an excellent way to save money on your household or business expenses. The better your credit rating, the more the credit card companies want your business and will offer a higher rate of cashback. Check your credit rating before you apply in case you could get more!