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Why a Cash-Back Credit Card is a Great Choice

Why a Cash-Back Credit Card is a Great Choice

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Cash-back credit cards can be a great choice for people who prefer not to keep cash with them. Moreover, these cards can actually give you money for using them.

Travel rewards vs cash-back rewards

Travel rewards credit cards allow you to accumulate points when you make purchases with them. These points can then be used for your next travel. The downside is that the guidelines are often complicated. There are also multiple restrictions surrounding the points. By contrast, cash-back credit cards are usually a better option. Their terms are simple enough to understand. The rewards are also versatile enough to be used for a variety of things. Cash-back cards are definitely a good option if you want to make the most out of your spending. The fact that you get something in return every time you spend is not a bad deal at all.

The benefits of using a cash-back card

Credit card users have many reasons to prefer cash-back cards over other cards. Here are some of them:

Returns

This is definitely the most prominent feature of a cash-back card. Usually, the minimum amount of cash return is 1% of every purchase. For example,  let’s say you used your card for a $100 purchase. You earn yourself $1 back. This may seem small to you, but this is just the minimum. Most cards offer bigger returns for certain types of purchases. If you use your card for a purchase at the drugstore or grocery store, for instance, you may get a larger percentage of the price in return. Sometimes, the extra rewards can reach up to four times the minimum.

Fees

The annual fee is often the first detail people check when getting a credit card. For travel reward cards, the fees are usually quite high. This is not the case for cash-back cards. Many cash-back cards do not require you to pay any annual fee. For those that do have fees, the cash rewards given are usually much higher.

Bonuses

It’s normal for credit card companies to give rewards to their users. With cash-back cards, the cash you get back is already a given. The good news is there’s a lot more you can get from frequent use. Credit card companies may give you a sign-up bonus when you opt for a cash-back card. Other bonuses may include higher returns for a certain time period. Your annual fee may also be waived.

Limits

Different card companies may only give you rewards up to a certain spending limit. This makes it the perfect option for those who do not really spend a lot. If you need to make larger purchases with your card, however, you may want to think about other options.

How to make the most of your cash-back card

Once you get your cash-back card, you have to make sure you maximize it. The rewards are the main reason you chose this option, after all. The best way to make the most out of your cash-back card is to keep track of spending categories that give the most rewards. For example, some cards give more rewards when you use your card for grocery shopping. On the other hand, some may give you better deals when you use your for gas. A great example would be the Scotia Momentum Visa Infinite. Did you know that they give you 4% back every time you use your card in grocery stores and gas stations? As for Tangerine Money-Back Credit Card, they give you up to 2% in chosen categories. Just make sure you double check the spending categories. You may be surprised that you’re not getting the rewards you’re expecting because of confusion in some categories. For example, Costco and Walmart do not always fall under grocery stores. Now, what if you have both of these cards mentioned above? That’s even better! This means that you can use the cards for specific purchases. Use your Scotia Minimum Visa Infinite when making gas or grocery purchases. Then, use the other card for other categories.

What to Consider in Choosing a Card

Choosing the right card is not just about picking the one everybody else uses. Here are the most important questions you should ask before you decide:

What gives you the most rewards?

A good choice is the MBNA Rewards World Elite Mastercard. If your annual spending is around $25,000, you may end up with a net of $411 in cash. This amount comes after the annual fee has been deducted. That’s 1.64% in returns! The MBNA Rewards World Elite Mastercard also gives a $100 sign up bonus. This means that on the first year, you may be taking home up to $511 in rewards. The Scotia Momentum Visa Infinite is also a great choice. Don’t let the 1% cash-back on regular purchases dissuade you. If your list of expenses has groceries and gas on top, you’ll be surprised what the 4% bonus can do. With $25,000 annual spending, you may earn more than $400 in rewards for the entire year. Obviously, your biggest expenses should play a huge role in your decision. As discussed earlier, certain purchases will give you more rewards than the others. Check what spending categories each card gives the most rewards to. Go with the cards catering most to your biggest expenses.

Do you hate paying annual fees?

The great thing about cash-back cards is that some providers still offer no-fee cards. Look for cards that do not require a fee, then you’re good to go. Before completely discounting card options that require annual fees, consider all the options. Sometimes, the annual fee is more than worth it. Cards with annual fees usually offer more perks than the usual cash-back card. The rewards may be higher. There may be added bonuses, too. Do some computations and see if you could gain more rewards through this option despite the fee.

Is there a minimum income required?

Understandably, card companies want to keep themselves protected. This is why a lot of them have minimum income requirements. Those who have a minimum salary of $35,000 usually qualify for average cash-back cards. World Elite cards may require more, usually around $60,000 to $80,000. Earning a lot less than that? The SimplyCash Preferred by American Express actually has a great minimum income requirement. Basically, anybody with an income of $15,000 can qualify. They also have a sign-up bonus, as well as a 2% cash back rate. That alone makes it a great choice. Note that you may still be approved for a card even if you do not meet the minimum income requirement. However, you have to make sure your credit and payment history is impeccable.

Are there added perks and insurance?

Hands down, the BMO CashBack World Elite Mastercard is the top choice if you think insurance is important. This card offers 14 different types of insurance, so they’re bound to have the kind of coverage you need. They also offer free roadside assistance on top of the other rewards.    

5 ResultsUpdated: May 24, 2019

19.95%

Interest Rate

Free

Annual Fee

3.00%

Balance Transfer

Promotional Balance Transfer: 1.95% interest for the first 6 months

$35,000/year

Minimum Income

Min Credit Score: 640

$25 Gift Card upon Approval

More Details

Earn cash back

Earn 2% Money-Back Rewards on your everyday purchases in two 2% Money-BackCategories of your choice, and 0.50% Money-Back Rewards on all your other everyday purchases.

Earn extra Rewards

Get your Rewards deposited into your Tangerine Savings Account and get a 3rd 2% Money-Back Category.

Automatic earning

Money-Back Rewards are earned automatically on everyday purchases and paid monthly. These can be applied to your Credit Card balance or redeemed into your Savings Account.

No limits

No limit on the amount of Money-Back Rewards you can earn on your everyday purchases. Conditions apply.

Transfer and save

During your first 30 days, transfer balances and pay only 1.95% interest on the transferred balance for the first 6 months (19.95% after that).

Track and categorize your spending

Organize your transactions and stay on top of your spending, so you can see your financial habits and you’ll get a better idea of what you have left to spend each month.

Card details

Network: Mastercard
Provider: Tangerine Credit Cards
Card type: Cashback, Low Interest, No Annual Fee, Travel Rewards

Special Offers

Earn 4% Money-Back Rewards in up to 3 Categories for 3 Months

19.99%

Interest Rate

Promotional APR: 7.99%

Free

Annual Fee

22.99%

Balance Transfer

No Minimum

Minimum Income

Min Credit Score: 300

More Details

Card details

Network: Visa
Provider: Scotiabank Credit Cards
Card type: Bad Credit / Establish New Credit, Cashback, No Annual Fee

Special Offers

7.99% introductory interest rate on everyday purchases for the first 6 months

19.99%

Interest Rate

Promotional APR: 7.99%

Free

Annual Fee

22.99%

Balance Transfer

No Minimum

Minimum Income

Min Credit Score: 300

More Details

More reasons to get this card for your everyday purchases

  • Gas Stations 1%
  • Grocery Stores 1%
  • Drug Stores 1%
  • Recurring Bill Payments 1%

Card details

Network: Mastercard
Provider: Scotiabank Credit Cards
Card type: Bad Credit / Establish New Credit, Cashback

Special Offers

7.99% introductory interest rate on purchases for the first 6 months

19.99%

Interest Rate

Promotional APR: %

Free

Annual Fee

-

Balance Transfer

Promotional Balance Transfer: N/A

$60,000

Minimum Income

Min Credit Score: 550

More Details

Card details

Network: Mastercard
Provider: Canadian Tire
Card type: Cashback, No Annual Fee, Store

19.99%

Interest Rate

Promotional APR: %

Free

Annual Fee

-

Balance Transfer

Promotional Balance Transfer: N/A

Minimum Income

More Details

Collect 4%† in Canadian Tire Money® at any of our great stores. Plus, enjoy 5¢-7¢ per litre in Canadian Tire Money® at Gas+ and participating Husky stations, and more great benefits.

Card details

Network: Mastercard
Provider: Canadian Tire
Card type: Cashback, No Annual Fee, Store
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