As the name suggests, a cash back credit card earns you cash rewards for each dollar you spend. In other words, you get cash back when you use your credit card. How about that for a benefit?
While no two cash back credit cards are the same, the premise is identical: you will receive a predetermined amount of cash back, typically one to two percent, on every purchase. The more money you spend on your credit card, the more cash back you will receive.
Questions You Should Ask About Cash Back Credit Cards
The ability to receive cash back from your credit card company should be enough for you to consider such an offer. Before doing so, here are several questions to answer:
Which are the best cash back credit cards?
You can learn more about the many offers by scouring the internet. Every major credit card company offers several of these credit cards, so you won’t have to look far to find one that suits your finances.
What percentage cash back will you receive?
This is the question that will drive your search. Generally speaking, the higher the percentage the better the offer. After all, you want to earn as much cash back as possible.
Note: while the cash back percentage is important, there are other details of a credit card that deserve your attention (more on this below).
Do you have the opportunity to earn more cash back?
Take, for example, a credit card with a cash back percentage of two percent. While this may be what you receive on most purchases, some offers allow you to earn more on a particular category, such as travel, restaurants, or gas stations.
Are you required to request the cash back, or does it come automatically?
If you are required to request the money, make sure you know the process for doing so. Even more important, make sure you are familiar with any expiration date. The last thing you want to do is miss out on rewards because you forgot to request your money.
How will you receive your cash back?
There are many options for this. Some credit card companies apply it directly to your next statement. Others, however, give you the option to receive the payment in the form of a check. If you want to receive a check, find an offer that can accommodate this.
Other Points of Consideration
As you search for the perfect cash back credit card, it can be easy to overlook other details that are every bit as important. There are other points of consideration that require your full attention. If you ignore these, you could end up with a credit card that doesn’t suit your every want and need.
1. Interest rate.
What is the rate of interest attached to the cash back credit cards you are considering? Is it competitive with the rest of the industry? Is it higher than expected?
Interest charges only come into play if you carry a balance from month to month or if you do a balance transfer, but it may be something you do at some point.
Are you okay with the idea of paying a higher rate of interest if it means you can earn cash back on all your purchases? Does it make financial sense?
2. Fees.
Fees are one of the details that separate the best cash back credit cards from those that are average.
Is there an annual fee? Are there any other fees that you are required to pay regularly? Are there any that could sneak up on you?
There is nothing wrong with paying an annual fee as long as you are comfortable with what you receive in return.
3. Multiple Options.
Is cash back your only option? Some cash back credit cards are coupled with a rewards program. This means that you can earn points for each dollar you spend, cashing these in for everything from travel to home goods and much more.
Tip: you will need to choose between cash back and reward points. Having this option is a perk, especially if you think you may want to change your approach in the future.
The Process
If you have concluded that a cash back credit card is what you want, the process of finding and applying for the right one is simple:
First, search the internet for cash back credit card offer comparisons. Take your time considering the pros and cons of each.
Next, narrow your options based on the features of each card.
Then, make a final decision as to which cash back credit card for which you will choose to apply.
Complete an online application and wait for approval or denial.
Once you are approved, and your credit card arrives in the mail, you are ready to put it to work. With each dollar you spend, you will receive some money back in the form of a cash reward.
Final Word on Cash Back Credit Cards
A cash back credit card is the perfect choice for some consumers, especially those who spend a lot of money every month.
As long as you fully understand the benefits and costs of cash back credit cards, you can make a confident decision that will work in your favor for years to come.
Our Top Recommendations
Chase Freedom Unlimited®
The Chase Freedom Unlimited® does not only offer 1.5% cashback on all purchases, but it also provides bonus rewards when you book through Chase for travel or purchase at drugstores and restaurants. Excellent bonus opportunities also await new cardholders.
Blue Cash Preferred® Card from American Express
This cash-back card offers awesome rewards rates that are perfect for families that spend more on transit, groceries, gas, and streaming.
Citi® Double Cash Card – 18 month BT offer
Those looking for pure value and simplicity would benefit from Citi® Double Cash Card – 18 month BT as it offers 2% cashback on every purchase (1% when you make the purchase and 1% once you’re done paying it off).
Other Types of Credit Cards
Interested in other types of credit cards? Check out these links for more information.
- Business Credit Cards
- Balance Transfer Credit Cards
- Points Rewards Credit Cards
- Gas Rewards Credit Cards
- Sports Rewards Credit Cards