How to Make Cash Back Credit Cards Work for You

In the world of credit card rewards, there are so many factors to consider before selecting the rewards card that works best for your lifestyle. One category of rewards cards that can benefit most consumers is the Cash Back Rewards cards.

How It Works

Typically, a cash back rewards card works by calculating a percentage of the total purchases made on a card throughout the month. The sum total is then offered back to the consumer in the form of an account credit or in an actual check payable to the cardholder. For instance, if you spent $1000 in a month on your cash back rewards card, you can earn $10 back at the end of the billing cycle.

Comparison Shop Card Offers

Different card companies have different rules. For some, the percentage received as cash back may not start calculating until after a certain purchase amount was spent on the card. In other words, you may have to spend $100 before the cash back rewards kick in. Every card issuer will have their rewards program set up differently so it pays to look through different credit card offers and compare. Two things to look for in particular include:

• Percentage Rates on Rewards – Check out the rewards percentages being offered by various banks. The majority of offers will stand at 1% cash back on purchases but some go as far as offering up to 5% on purchases if they are made at specific locations such as restaurants, gas stations, or grocery stores. Read the small print to discover what each card company is offering as a percentage and what spending rules and limitations are involved before deciding on the right card for you. If the places where additional percentage amounts are earned are not normally places where you spend money, find a card more appropriate to your lifestyle to earn the most rewards cash back.

• Fee Check – Keep an eye on the fees that are involved owning the card. There are many cash back cards that do not require annual membership fees but some will come with a higher interest rate. If you aren’t confident you can pay off the total balance of the card each month, a higher interest rate card will not be beneficial. Look for card offers with lower rates and no fees to keep more money in your pocket.

How To Maximize Your Rewards

The only way you can maximize the cash you are getting back is to fully understand how the rewards program works. You also need to keep track of your purchases to ensure you can pay off the balance in full each month. A good rule of thumb is for every purchase you make on credit, you should put the cash equivalent into an envelope so at the end of every billing cycle you will have the cash you need to make the payment. By paying off the total balance, you can be sure to get the full rewards amount. To benefit your personal finances, you should make a habit of always using the cash back rewards money to lower your bill each month. By allowing your purchases to essentially pay a portion of the bill, you are using your benefits wisely, improving your credit, and building a solid credit foundation.