When trying to find the best cash-back deals, it’s a good idea to do some comparison-shopping. Depending on what your spending habits are, there may be a card out that’s made just for you. In other cases, there may be a card that simply offers a better plan than others. Whichever the case, the bottom line is that your card should work for you. Not the other way around.
Cash-back cards, while similar in theory, can be a varied bunch: by percentage rates, APR’s, qualified merchants, and more. No two are exactly the same, which makes choosing one that much more a deliberating process. Which one is best for you? What are the pros and cons of each?
Cash Back to You
Typical of many rewards-card offers is 5% cash back on “everyday” purchases, such as groceries and gas. However, there may be restrictions as well, so definitely research. Do your favorite stores qualify? A store like Wal-Mart for example may carry everything you need in one trip, but if you buy your groceries there, most cards won’t recognize it as a qualified cash-back purchase. Such details are important to know beforehand, so that when you do use your card, you use it at acceptable places and during eligible times.
In your research, you may also learn of tiered programs, which increase in value and percentage rate the more you spend. There are also seasonal programs, which change during the course of a year. For instance, the Discover “More” Card offers 5% cash back, but only on certain shopping categories. During the summer months, gas purchases are at a premium. During the winter, clothes and home purchases are the best values.
Also, when assessing which card is best for you, take into consideration some of the other aspects of a card, beyond the cash-back percentage and rewards cap. Look to see if there’s an expiration date or if there’s a penalty for card inactivity. Is there an annual fee? Is it difficult to redeem your cash reward? Answers to these questions may just prove decisive.
Deciding Factors
Make no mistake. There’s a lot to consider when choosing a cash-back card. Some may even wish to make a spreadsheet to compare the offers side by side. Still others, who are less analytical, may simply find a card that meets a deal-breaker: such as percentage rate or where points can be earned. When deciding on a card, it may also help to ask yourself a few questions:
- How much do you spend on “everyday” purchase?
- Where do you shop? Will the card alter this?
- How much will you need to spend to get a rebate?
- Do you mind if the cash back is held until the end of the year?
- Can you pay off your monthly balance to avoid finance charges?
As for the last question, keep in mind that cash-back cards often have higher interest rates and thus, if you’re thinking of making a big purchase and then payments, you’ll basically be negating any potential profit you could earn by having to pay (the penalty of) interest.
Also, the finance charges on such cards could discourage more spending, thus limiting any more points or earned cash back you could receive. What’s more, look for cards with no annual fee. If your cash back is held until the end of the year and it comes to $60. Imagine if your annual fee is $39? Then a whole year’s spending will only garner you $21!
What’s Best for You
In the end, the greatest determining factor though on cash-back credit cards is you and your spending habits. For instance, if you’re not an “aggressive spender,” then a tiered program isn’t worth it. If you have a business, you might look into a card that rewards purchases made at niche stores. If you’re a couple, you could work together to maximize earnings and also increase cap limits (which will double).
Indeed, each individual has a different need and fortunately, there are so many cards these days, there’s bound to be one that matches your needs to a “T”.
One final reminder though is that in addition to paying off your balance each month, keep in mind that you should never try and spend more for rewards. You could get yourself into trouble this way and as said, if finance charges are incurred, any potential earnings could be wiped out in an instant. Remember, your card should work for you.
Never the other way around.
