Credit cards with cash-back rewards options can prove to be great saving tools. Many people want to understand how cash-back credit cards work. You can do the necessary research to find the credit cards with rewards best suited for your spending habits. For instance, if you’re a frequent traveler, you’ll need a credit card that offers travel points. On the other hand, if you intend to use the card for shopping, groceries, day-to-day expenses, and restaurant dining, you might want to choose a card that offers savings on these expenses.
Before making your choice, compare the benefits offered by the different credit card companies and tally the rewards you’re likely to earn on each. You’ll be surprised at the savings you can add up.
Choose the Right Credit Card According to Your Spending Habits
Cash-back credit cards typically offer you categories and different tiers of reward points you can earn. If you can match your maximum spending to the relevant category, you can get the card where you can earn the most cash back rewards.
For instance, say, your family spends a major share of your disposable income on utilities, gas, groceries and other essentials. Accordingly, you might want to choose a card that offers added points on these expenses. You’ll still earn points on other purchases, but the points are typically half of what you earn in your chosen category. Let’s try another example. If your family travels or dines out a lot, look for a credit card that allows you to earn cash back on travel tickets, hotel bookings, and restaurants.
Use the Benefits of Promotions and Bonuses
Many credit card companies offer you an added bonus when you sign up for their services. For instance, you might qualify for and receive a sign-up bonus. Then there are also cards that have certain requirements like for instance, the company might have a condition that you make purchases worth a specific sum within the first one to three months of receiving the credit card to avail of a say, 5% cash back.
With a little smart thinking, you could use these conditions to your advantage. To cover the requirement of spending a certain sum, you could charge every grocery trip to the credit card. Consider buying items with a long shelf life or gift cards for upcoming birthdays and anniversaries.
Typically, credit card companies have ties with business partners and offer you extra points if you use their services. For instance, you might have the option of earning 10 times the number of advantage points if you buy groceries at a certain convenience store or rent a car from a particular dealer. By choosing these services, you can earn additional points and make large savings.
There are other ways you can maximize your cash-back credit card rewards, so do a bit of research and make the most out of your credit card rewards.
Pay Off Your Balance in Full Each Month
Cash-back credit cards are a great option only as long as you pay off the balance in full each month. Keep in mind that such cards typically charge high rates of interest on unpaid balances. If you carry a balance and miss the payment due date, you could end up paying high rates of interest that negate the cash-back advantage you earned.