Cash Back Credit Cards: How to Make the Most of Your Money
Cash back credit cards are a big deal right now. Every major credit card company is pushing them hard, and you can stand to earn back a nice little chunk of change on your purchases. Below are some suggestions on how you can take advantage of these offers and get the most cash back from them.
So What’s the Catch?
So the idea of getting paid to spend money is a little counterintuitive, right? Most people think there is probably some catch, or a slew of fees and pages of “fine print.” A few years ago that might have been true; companies made these offers that were less than straightforward. But as competition increased and the concept gained momentum, these offers improved dramatically. As a consequence they are usually pretty straightforward, and not many will stick you with fees.
Pick a Card, Any Card…
If you are considering a cash back card you will need to know about the different options in order to find the right one. Many potential customers are either unsure or confused on how these little guys work. There is no single explanation, but because as the market has grown competitive, companies have introduced new exciting features. Here are the two basic ideas:
1. The General Cash Back Card - Your general cash back card is pretty straightforward. It is probably best for the person who has a broad and unpredictable spending pattern. Citi, Discover, and Chase all offer very nice packages for everyday spending. “Every day items” can earn you up to 5% back, where as other purchases will get you 1%. You will typically get your cash back at the end of an established cycle, or after you cross a value threshold.
2. Points Card – Point cards are a little tweak on the traditional cash back card. Purchases earn you points, sometimes more points if you spend with specific vendors. Amazon.com springs to mind, as does Overstock.com, and Universal Entertainment. Many points cards are targeted on specific purchases. Discover has a gas card, and the Chase 6 for 1 Flexible Rewards offers 6 points for every dollar of gas, groceries and drug stores.
Tips for Maximizing Your Rewards
There are some very simple common-sense-tips to drive up your cash back or point rewards. First and foremost, determine your spending pattern. If you are swamped with day-to-day household expenses you will definitely want to find a card tailored to that situation. Determining the nature of your spending habits can concentrate your rewards from what you are doing most, because there is probably a card that targets that market.
Make sure you read the fine print. Some points redemption cards are restricted to specific kinds of purchases. For instance, Blue by American Express limits your point redemption to retail shopping deals and entertainment packages. That’s great if it is up your alley, but look into the details to make sure you are getting what you expect.
Finally, create more opportunity to purchase. If you carry a balance from month-to-month you are limiting how much you can earn back from your card. If you have more capacity to buy, you have more capacity to earn cash or points rewards. Carrying a balance limits your available purchasing power. Also, by paying your card’s balance each month, you will see a credit line increase more quickly. This is the cash-back jackpot. Upping your limit, as with paying your balance, gives you more purchasing power, and thus more rewards. Start that cycle early, and watch your rewards pile up.
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Ed Vegliante runs the website http://www.Credit-Card-Surplus.com, a well organized credit card directory enabling the consumer to compare and apply for a variety of credit card offers. View more Credit Card Articles.
