Mortgagerateslocal.com – Do you want to save money every time you shop online or in-store? Do you want to earn rewards for using your credit card responsibly? Do you want to get cash back from your credit card without paying any fees or interest?
If you answered yes, then you need to learn how to get cash back from a credit card. Getting cash back from a credit card is not difficult, but it does require some planning and strategy.
You need to choose the right credit card for your spending habits, pay your balance in full every month, and redeem your rewards regularly. By following these simple steps, you can maximize your cash back earnings and enjoy the benefits of using a credit card.
We will explain how to get cash back from a credit card in detail. We will cover how do cash back works, how choose credit cards and maximize earnings. Let’s get started!
What are Cash Back Credit Cards?
Cash back credit cards are a type of rewards credit cards that give you a percentage of your purchases back as cash. For example, if you have a cash back credit card that offers 2% cash back on all purchases, and you spend $500 in a month, you will earn $10 in cash rewards.
Cash back credit cards are different from other rewards credit cards, such as travel or hotel cards, that give you points or miles that you can redeem for travel-related expenses. Cash back credit cards are more flexible and versatile, as you can use your cash rewards for anything you want, such as paying off your credit card balance, depositing to your bank account, or getting a gift card.
Cash back credit cards are also different from debit cards that offer cash back at checkout. This is when you use your debit card to withdraw cash from your bank account at the same time as you pay for your purchase at a store. This is not a reward, but rather a convenience feature that allows you to avoid ATM fees.
How Do Cash Back Credit Cards Work?
Cash back credit cards work by earning cash rewards on every eligible purchase you make with your card. The amount of cash back you earn depends on the rewards rate and the spending categories of your card. Some cash back credit cards offer a flat rate on all purchases, while others offer tiered or rotating rates on specific categories, such as groceries, gas, or dining.
The cash-back rewards you earn are usually tracked as points or dollars, and you can redeem them once you reach a certain threshold, such as $25 or $50. The redemption options vary by card, but they typically include:
- Statement credit: You can apply your cash rewards to your credit card balance, reducing the amount you owe.
- Bank deposit: You can transfer your cash rewards to your bank account, increasing your savings or checking balance.
- Check: You can request a paper check with your cash rewards, and deposit or cash it at your convenience.
- Gift card: You can exchange your cash rewards for a gift card from a variety of retailers, such as Amazon, Starbucks, or Walmart.
- Charity: You can donate your cash rewards to a charitable organization of your choice.
Some cash-back credit cards may also offer other redemption options, such as merchandise, travel, or experiences. However, these options may not offer the best value for your cash rewards, as they may have lower conversion rates or higher fees.
How to Choose the Best Cash-Back Credit Card for You?
There is no one-size-fits-all cash-back credit card, as different cards suit different spending habits and preferences. To choose the best cash-back credit card for you, you need to consider several factors, such as:
- Your credit score: Your credit score is a measure of your creditworthiness, and it affects your eligibility for different credit cards. Generally, the higher your credit score, the better your chances of getting approved for a cash-back credit card with a high rewards rate and low fees.
- Your spending patterns: Your spending patterns are the types and amounts of purchases you make on a regular basis. You should analyze your spending patterns to find out which categories you spend the most on, such as groceries, gas, dining, or entertainment. This will help you choose a cash-back credit card that offers the highest rewards rate on those categories, or a flat-rate card that offers a consistent rate on all purchases.
- Your redemption preferences: Your redemption preferences are the ways you want to use your cash rewards. You should think about how often and how much you want to redeem your cash rewards, and what you want to use them for. This will help you choose a cash-back credit card that offers the redemption options that suit your needs, such as statement credit, bank deposit, or gift card.
- Your annual fee tolerance: Your annual fee tolerance is the amount of money you are willing to pay for a cash-back credit card each year. Some cash-back credit cards charge an annual fee, while others do not. An annual fee is not necessarily a bad thing, as it may be offset by the higher rewards rate or other benefits of the card. However, you should compare the annual fee with the potential cash-back earnings and other perks of the card, and decide whether it is worth it for you.
To help you choose the best cash-back credit card for you, you can use online tools and resources, that compare and review different cash-back credit cards based on various criteria. You can also read customer reviews and feedback on different cash-back credit cards to get a sense of their pros and cons.
How to Maximize Your Cash-Back Earnings?
Once you have chosen the best cash-back credit card for you, you can use some tips and tricks to maximize your cash-back earnings, such as:
- Pay your balance in full and on time: This is the most important rule for using any credit card, especially a cash-back credit card. By paying your balance in full and on time, you can avoid interest charges and late fees, which can eat into your cash-back earnings. You can also improve your credit score, which can help you qualify for better credit cards and offers in the future.
- Use your card for all your purchases: The more you use your cash-back credit card, the more cash rewards you earn. Therefore, you should use your card for all your purchases, big and small, as long as they are eligible for cash back. You can also use your card for recurring payments, such as utilities, subscriptions, or memberships, to earn cash back automatically every month.
- Optimize your spending categories: If you have a cash-back credit card that offers tiered or rotating rates on specific categories, you should optimize your spending categories to earn the highest rewards rate possible. For example, if your card offers 5% cash back on groceries in a certain quarter, you should stock up on groceries during that period. You can also use multiple cash-back credit cards that complement each other, such as one that offers a high rate on gas and another that offers a high rate on dining, and use them accordingly.
- Take advantage of bonus offers and promotions: Some cash-back credit cards may offer bonus offers and promotions that can boost your cash-back earnings. For example, some cards may offer a sign-up bonus, such as $200 cash back after spending $1,000 in the first three months. Others may offer extra cash back on certain merchants, categories, or events, such as 10% cash back on Amazon purchases during Black Friday. You should keep an eye on these offers and promotions, and take advantage of them when possible.
- Redeem your cash rewards wisely: The way you redeem your cash rewards can also affect your cash-back earnings. You should redeem your cash rewards regularly, as some cards may have expiration dates or minimum thresholds for redemption. You should also redeem your cash rewards for the option that offers the best value, such as statement credit or bank deposit, rather than merchandise or travel, which may have lower conversion rates or higher fees.
What are the Pros and Cons of Cash Back Credit Cards?
Cash-back credit cards have many advantages, but they also have some drawbacks. Here are some of the pros and cons of cash-back credit cards:
Pros
- Cash-back credit cards are simple and easy to use. You don’t have to worry about complicated points or miles systems, or redeeming them for specific items or services. You just earn cash rewards on every purchase, and use them for anything you want.
- Cash-back credit cards are flexible and versatile. You can use your cash rewards for a variety of purposes, such as paying off your credit card balance, saving for a rainy day, or treating yourself to something nice. You can also choose from different redemption options, such as statement credit, bank deposit, or gift card.
- Cash-back credit cards are rewarding and satisfying. You can save money on everyday expenses, such as groceries, gas, and online shopping, and feel good about your spending habits. You can also see your cash rewards accumulate over time, and enjoy the benefits of your hard-earned money.
Cons
- Cash-back credit cards may have lower rewards rates than other rewards credit cards. Cash-back credit cards typically offer 1% to 5% cash back on purchases, while other rewards credit cards, such as travel or hotel cards, may offer higher points or miles rates, such as 2x or 3x on purchases. However, this may not be a fair comparison, as points or miles may have lower value or higher fees than cash rewards.
- Cash-back credit cards may have higher fees or requirements than other credit cards. Some cash-back credit cards may charge an annual fee, which can reduce your net cash-back earnings. Others may have higher interest rates, foreign transaction fees, or balance transfer fees, which can increase your credit card costs. Some may also have minimum spending requirements, activation procedures, or expiration dates, which can limit your cash-back potential.
- Cash-back credit cards may tempt you to overspend or carry a balance. Cash-back credit cards may make you feel like you are getting a discount on every purchase, which can encourage you to spend more than you can afford. This can lead to accumulating debt, paying interest, and hurting your credit score. You should always use your cash-back credit card responsibly, and only spend what you can pay off in full and on time.
Conclusion
Cash-back credit cards are a great way to earn money while spending money. They are simple, flexible, and rewarding, as they give you a percentage of your purchases back as cash rewards. However, they also have some drawbacks, such as lower rewards rates, higher fees, or spending temptations.
You should choose the best cash-back credit card for you, based on your credit score, spending patterns, redemption preferences, and annual fee tolerance. You should also use some tips and tricks to maximize your cash-back earnings. By following these steps, you can get the most out of your cash-back credit card, and enjoy the benefits of your hard-earned money.
