Imagination is more important than knowledge but, if you give your credit card to a man in the early 19’s, he would just laugh in your face and walk off. Fast forward it to 1950 and Boom! America got its first credit card. Take a leap of 30 years, and you land up with the first reward program by American airlines.
The point is, credit card has been with us for almost 70 years and yet we are not fully aware of its functionality. In our age where being frugal has become a necessity, the credit card should be the first to consider. Why? Coz, just take a peek at your wallet, how many credit cards do you see? At least one, right?
Cash back credit helps you to put back some of the money that you just spend back into your pockets. The reward program gives card holder – points, miles and cash and that cash is known as cash back. But are cash back credit cards really worth it? Let’s find out.
How Does Cash Back Work?
Your cash back credit card comes with a predefined set of rules in your cash back program. When you use your card on purchases, you get a percentage on the amount that you have spent, paid back to you. You can either get the cash back directly into your credit card balance which eventually decreases your bill, or you may get these in the form of points which can be later redeemed or transferred according to your preference.
There are three ways through which you can earn cash back.
- Simple CashBack Cards — As the name suggest simple cash back credit card gives a flat percentage of cash back which can be used for any purchases. There is no selected category. You earn the same percentage on every purchase. For example – a Citi Double Cash Back Card which gives 2% cash back on purchases with no caps and no category.
- Tiered Reward CashBack Cards — Every tiered reward cash back card comes with more than 2 categories for cash back. In this type of cash back card, you got categories offering different cash back on purchases. To get the best of it, cash holder has to get different cards to maximize their cash backs. For example – Chase Sapphire Preferred that gives 2x point on travel and restaurants and 1x point on other purchases.
- Category Bonus CashBack Cards – Category bonus cash back is the mixture of the above two categories and is also known as rotating spending category. In this type of cards, you will be getting simple cash back on every purchase and every quarter can give you double cash back on the various categories. That means that every quarter you get 5% cash back on a different category.
The reason why cash back trumps other reward categories is because of the fact that you get to use this card for everyday purchases unlike travel cards or business cards which can be only used during specific occasion and plus cash back comes tax-free.
The Golden Rule
If you want to keep your cash back to yourself, always remember to pay your credit card balance in full on time. Otherwise, the late fee and interest rate will take all your hard earned cash back from the credit card.
Best Credit Card for Cash Back
Now that you know how cash back credit card works, you need to know which cash back gives you the most reward with minimum requirement. Here are the top 3 cash back credit cards preferred in the market.
Chase Freedom Cash Back Credit Card
Chase Freedom is a rotating spending category cashback credit card which lets you earn 5% of cash back on various different categories with 1% cash back on every purchase which means you will be earning a minimum of 1% on groceries, gift, repair, and other categories.
To get the better of cash back with Chase Freedom, you can combine points with other chase cards onto one card.
With no annual fee and 0% Intro APR for 15 months on balance transfer and purchases, Chase freedom is a stellar option for cash back credit card.
Capital One QuickSilverOne Cash Back Credit Card
Capital One QuickSilverOne earns 1.5% cash back on every purchase which is best suited for a cardholder who use their credit card every day. Although the card comes with an annual fee, the credit card offers high reward rate and no foreign transaction fee.
A cardholder with an average credit card can enjoy unlimited cash back on every purchase all year long with Capital One QuickSilverOne Cash Back Credit Card.
American Express Blue Cash Preferred Credit Card
If you are looking for a multi cash back reward, look no further as American Express Blue Cash Preferred Credit Card has a lot to offer. With 6% cash back at the supermarket on up to $6000, the card also offers 3% cash back on gas station and 1% on everything else.
This Amex card is tiered category reward credit cards which also offer $200 statement credit after you spend $1,000 within the first three months. Summing it up the card is a real steal for cash back.
Now that you have known what a cash back credit is and how to make the most of it, it’s time to give your saving a boost. Although a cash back credit back has a lot to offer one shouldn’t turn a blind eye while purchasing it. Read the term and rate carefully and to get the maximum benefits, try to pay your credit card bill on time. Because cash back credit cards are worth the hype when used correctly.
Shubhi is an aspiring writer who enjoys writing articles that help people find new ways to improve their finances as well as on budgeting and money making ideas. She is a well- researched and knows how to spot trends, providing invaluable insight to her readers. Shubhi’s biggest talent is her ability to inspire, and the medium she chooses for that outlet is her writing. When not working, you will find her travelling, reading and learning new things so as to evolve her ability to write a story that keeps your reading.