Are you getting the most out of your cashback credit card? Credit card companies have devised various loyalty schemes over the past two decades to keep their customers spending on their imprint. The cashback credit card is one of the most popular of these schemes. After all, who can't use cash?
How Cashback Credit Cards Work
The concept is a simple one. You get a percentage of your spends on the credit card back as cash. Some cards track your cashback amount and allow you to request a cash gift card when it reaches a certain amount. Others send out a cheque or gift card once a year for the amount of cash back that you've earned during that period. Still others apply your cash back directly to your account balance each month. No matter the method used, it's the equivalent of getting a discount on your purchases.
What Can You Buy with Cashback Credit Cards?
Cashback credit cards are no different than any other credit card when it comes to spending. You can use them to buy anything at all. However, some cards give you different levels of cash back for different types of purchases. Many will pay you cash back for any purchases made at convenience stores and petrol stations and a lesser amount or none at all for other purchases. There are many credit cards that are co-branded or associated with particular merchants. Those may pay double cash back when you use your card at those merchants' shops.
How to Get the Most from Your Cashback Credit Card
The more you spend, the more cash you get back. The credit card companies hope that getting cash back will encourage you to spend more, and rack up interest charges. Since interest charges on cash back credit cards are often higher than those on credit cards that don't give cash back, you'd end up canceling out the benefit. To get the most out of a cashback credit card:
- Compare cashback credit cards and apply for the best credit card - the one that offers the highest rate of cash back and the lowest interest rate.
- Use your cashback credit card for all your daily purchases.
- Avoid spending more than your budget will stand.
- Pay off your account in full by the due date.
Shop around online and compare credit cards to find the best deal, then start spending to save.
