Reasons to Use Cash Back Credit Cards
Saving Money by Choosing and Using the Best Rewards Card
Jun 12, 2009
Choosing a credit card that isn't a rewards credit card is a big money mistake. A rewards card turns every purchase into an opportunity to get something back, and this is a part of being frugal, living on a budget, and saving money.
By far, the best type of rewards card is the cash back credit card. Finding the right one and using it correctly can optimize your savings and essentially amounts to free money.
Cash Back Credit Cards Terms and Conditions
Though most cash back credit cards work on the same principle, terms and conditions differ from card to card. That's why it's important to know how the rewards system works before applying. Make sure to find out:
- whether there's an annual fee for the card
- whether rewards ever expire if unused
- whether there is a limit to the amount of cash back you can earn within a certain time period
- whether you need to request your rewards or if they're sent to you automatically
- method of cash back payment: check, direct deposit, PayPal, or other
- what percentage cash back you earn on purchases
In general, a decent rewards card will give a minimum of 1% cash back on all purchases, regardless of what they are. Some will give between 2% and 5% on selected purchases at drugstores, gas stations, or grocery stores. It should be relatively easy to find a cashback credit card with no annual fees or reward expiration dates.
Use a Cash Back Card for Everything
Paying for purchases with checks or cash is basically throwing money out the window. Major credit cards are now accepted almost everywhere, and a cash back card means the opportunity to get something back out of every purchase. Only use cash or check where cards aren't accepted, and pay for little incidental expenses as well as major monthly expenditures with your card. In particular, see if it can be used for mortgage or rent payments, insurance premiums, and other large expenses.
Never Carry a Balance on a Cash Back Card
The reason credit card companies are able to offer a cash back rewards system at all is because of the profit they make by charging interest. Even the lowest interest rate won't be canceled out by the amount of cash back earned, so it's important to use a strict budget or always shop with a list to eliminate impulse buys with a credit card. And if you can't discipline yourself to use a card like cash and pay the bill off in full every month, don't use it at all.
Advantages of Paying with Credit
Credit cards in general are a very safe and convenient way to pay. It's less hassle than counting money or writing a check. It's also much safer than using a debit card, because a debit card gives potential identity thieves direct access to a person's bank account. Credit cards are guaranteed against fraudulent charges, and a person can even set up automatic monthly payments from their bank account to safeguard against missing a payment.
By finding the best possible cashback credit card and using it responsibly, people can save a lot of money just by making purchases that need to be made anyway. It pays to look into a cash back credit card because of the potential to receive a percentage back on each and every purchase.
Other articles of interest by Jenny Evans:
"Saving Money on Online Purchases"
"Saving Money on Your Phone Bill"
"Save Money when Grocery Shopping"
 |
