How to Choose the Best Credit Card for Cash Back
Cash back credit cards are one of the most popular options when it comes to credit cards, and for good reason. Who doesn’t love getting something extra just for using their card? But before you go out and get the first cash back card you can find, there are some things you should consider to make sure you choose the best credit card for cash back. Here’s how to choose the best credit card for cash back.
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| How to Choose the Best Credit Card for Cash Back |
An intro to cash back rewards.
Cash back rewards are usually offered as a percentage of your total purchase. For example, with a card like Chase Freedom, you will get 5% cash back on all purchases up to $1,500 in spending each quarter. The Chase Freedom card also offers 1% cashback on all other purchases and has no annual fee.
The Barclaycard Arrival World MasterCard is another good credit card if you want cash back rewards. With this card, you will earn 2x miles on every dollar spent, which can be redeemed for travel at any time. Miles never expire and there is no limit to how many miles you can earn or redeem.
Analyze your spending habits.
Most cards offer some form of cash back, but it's important to choose one that best suits your spending habits. A card with high interest rates can quickly become an expensive proposition if you're not paying off your balance in full every month. The same holds true if you don't pay on time or have a low credit score.
One way to decide which card is best is by identifying where you spend most of your money and then looking at what categories each card offers cash back in. For example, if you go out to eat a lot, look for a card that offers 5% cash back on dining purchases. If you prefer gas stations, find a card that offers 3% cashback at gas stations and supermarkets.
What to do with your points?.
The first thing you should do is take a look at your rewards program. If there are no restrictions on redeeming points, then you can start thinking about how much cash back you need and what type of shopping habits you have. Do you just want cash back on groceries? Clothing? There are plenty of credit cards with different categories that may suit your needs better than others.
If there are limitations on where or how you can spend your points, then it's time to do some serious math. Say, for example, that you have $3,000 in credit card debt and only need $1,500 in cash back in order to pay it off.
Fixed or rotating categories?.
A fixed category card is one where you know what type of purchases will earn cash back. For example, you might have a fixed-category card that only awards cash back on groceries and a card with broader categories like Gas Stations, Grocery Stores, or Restaurants. A rotating category card lets you earn cash back on whatever type of purchase you make most often.
You might choose a rotating-category card if you don't have any particular type of spending that should always be rewarded over others. Most credit cards offer both types of cards so it's up to your preference which one is best for you.
The pitfalls of store and gas cards.
Store and gas cards are sometimes a great idea, but they often come with drawbacks. The most prominent drawback is that these cards typically don't offer any cash back. For example, if you spend $1,000 on your card and get 1% cash back, you'll only get a dollar - not much to show for all of your hard work.
Additionally, some store cards charge an annual fee even when you don't use the card. The bottom line: choose a credit card that has no annual fee and offers significant cash-back rewards in order to maximize your potential return on investment.
Don’t forget about annual fees.
When comparing cards, it's important to take into account the annual fee. If you want a card that rewards with cash back, be sure that the annual fee is worth it. For example, if a card charges $95 a year and you spend about $5,000 a year on your credit card, then you'll earn about $150 in cash back annually.
But if you spend less than $2,500 on your credit card each year and are only earning 1% cash back with no bonus categories, then that same $95 in annual fees will only net you about $2.50 in rewards - not worth it!
Use your miles/points wisely.
Many credit cards offer cash back and travel rewards. In order to make sure you're getting the best value, it's important to read all terms and conditions thoroughly before signing up. For example, some credit cards give a higher percentage of cash back if you spend over a certain amount each month. Others offer more miles or points if you use your card for a certain number of transactions per month.
Some require that you have excellent credit while others don't care as much about your credit score as long as you pay your balance in full every month. As long as you're paying off your balances in full every month and not carrying an interest-bearing balance, any of these options could be a good fit for you!.
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