Credit Card Cashbacks - How To Make Them Work For You? | MarkMeets | Celebrity News, Music, Movies, TV, London Film Premieres

A credit card with a cash-back reward system is an excellent tool to boost your savings and make each dollar spent work harder for you. But not all credit card cash-back programs are created equal – and choosing yours wrong can cause you to steepen your credit card debt and throw your financial stability off balance.

Table of Contents

So, how can you be sure to find the right cash-back credit card for your spending habits and goals?

Here’s all you need to know about finding and using your cash-back perks.

What Is Credit Card Cashback? An Overview

Americans have an average of 4 credit cards to choose from when shopping, but 41% of credit card holders report that the reward credit card with cash back features is their favorite to use – and for more than a reason!

Cash-back credit cards allow you to collect a percentage of a transaction in cash. For example, if you have a 2% cash-back card, you’ll earn $2 for every $100 spent on eligible purchases.

Unlike other types of reward credit cards, cash-back accounts allow you to accumulate a fixed cash value, which can be redeemed via online purchases and statement credits.

5 Tips To Make the Most of Your Credit Card Cashback

A cash-back credit card can be a double-edged sword. When used wisely, it allows you to receive a flat or rotating percentage back from purchases, which can help you save on your everyday purchases and benefit from unique perks.

But how can you avoid building up debt while taking advantage of the rewards your credit card offers? Here are five simple strategies to start using today.

Choose the Right Credit Card for Your Needs

Taking advantage of cash-back rewards always starts with finding the right credit card issuer for your needs. A reputable trustworthy provider allows you to customize your credit card offer to your spending habits and financial goals, thus helping you remain in control of your finances.

For example, when investing with SoFi, you can enjoy high cash-back percentages (up to 6%) on everyday purchases, and take advantage of limited-time offers with cash-back percentages as high as 8%.

Understand Your Credit Card’s Cash Back Program

Cash-back reward programs can vary significantly from one another. Understanding the specifics of your credit card is important to know what purchases to make through that account instead of using your debit card.

The main types of credit card cash-back programs are:

Flat-rate cash-back

These are the most straightforward cash-back programs and allow you to earn the same cash-back percentage on every purchase, usually 1-2%.

Rotating categories cash-back

These programs allow you to earn a percentage on your purchases, usually around 5%, in rotating categories, such as restaurants or grocery stores.

Bonus cash-back categories

Your flat-rate card might have bonus categories that allow you to earn greater rewards, usually up to 6-8% of your purchase. These might be limited to a certain maximum spending per year and can only be earned through purchases in specific categories.

Learn How To Redeem Your Cash Back

If you are looking to budget effectively without hassle, you’ll need to know how to redeem your rewards for maximum gains. Cash-back rewards can be redeemed at any moment after you reach a minimum amount and in more than one way.

With your earned rewards, you can add your cash-back to an outstanding balance to reduce your credit card bill, purchase gift cards, or shop online.

Depending on your credit card issuer, you might even connect your account to PayPal and Amazon.com to be applied automatically to your bills.

Read Your Credit Card Program’s Fine Print

Cash-back credit cards can be infinitely beneficial – but you should always remember that cash-back isn’t free money and that your program might not be as generous as you believe it to be at first.

Luckily, you can set your expectations right simply by reading your contract’s fine print and checking for maximum spending limits, annual caps, and eligible purchases.

Make Sure a Cash Back Credit Card Works for Your Financial Goals

Cash-back credit cards might not be the best choice for everyone. For example, if you are part of the 56% of credit card holders who don’t pay their balance in full each month, a cash-back credit card might cause you to overspend while chasing rewards.

In turn, this can steepen your debt and make it more difficult to keep your finances under control. If in doubt, consider partnering with a professional financial advisor to find the best credit card for your needs.

Author Profile

Dan Dunn

Executive Managing editor

Editor and Admin at MarkMeets since Nov 2012. Columnist, reviewer and entertainment writer and oversees all of the section's news, features and interviews. During his career, he has written for numerous magazines.

Follow on Twitter https://twitter.com/ExclusiveGoss/
Email Dan@MarkMeets.com