If you’ve found a credit card that offers flexible cash back rewards, you’re in business! Unlike point-style rewards, cash back on purchases gives you flexibility and freedom. Often, cash back credit cards run specials offering an even greater percentage of your purchases as cash back. Many charge no annual fee as well. Here are some tips and tricks you can use to make sure you’re getting the most out of your cash back program.
Look for a Deal
Most offer 1% cash back. That’s not bad, but it works out to one penny for every dollar you put on the credit card. If you buy a $1,500 plane ticket, you’d get $15 in cash rewards. You can do better. Look for special offers that give you 5% cash back and you’re making quite a bit more money.
Know Your Categories
Most cash back cards come with restrictions. For example, you may only be eligible for cash back on gas purchases, or only on things you buy at a certain store. To maximize your cash back rewards, look for a card that offers cash back on everything. That said, it is possible you’ll get a better percentage on a card with restricted rewards. Just weigh your pros and cons. If you do decide to go with a cash back card with restrictions, make sure you stay on top of them. Sometimes the restrictions will vary from month to month.
Know Your Limits
Some cards offer unlimited cash back on purchases, but others may cap it at $1,500. If you’re spending more than that and thinking you’re getting your bonus bucks, you could be in for a lousy surprise. If you know your limit, though, you can spread the wealth. Use one card until you max out the bonus, then go ahead and do some spending on your spare.
This is what I’ve been building up to! If you have rewards that are based on your spending, go ahead and spend. You have to buy gas every other week whether you’d like to or not, so you might as well get cash back for it.
Pay it Off
I know I just said that cash back rewards are a great excuse to bust out your credit card, but don’t go crazy. The reality is that most cash back rewards average at about 3%, but most credit cards average close to a 13% interest rate. That doesn’t work out to your advantage! To get the benefits without losing any money, be sure you’re paying your balance in full every single month.