What is Cash back card and how to pick the right one?

Nowadays cash back has become a very general term when we are out shopping or making big or small purchases. Many banks and credit card companies are offering some very attractive cash back offers to their customers. Cash back is basically an incentive given by the credit card companies for spending money on their credit card. You get a chance to earn back a percentage of the money you have spent. Generally, a spending limit is defined for these cards in which the cash back is offered to the customers. These limits can be a minimum spending limit after which you get eligible for cash back or a maximum spending limit up to which the cash back is offered to you. This cash back can even be maximized through quarterly promotional schemes and other festive offers. As opposed to cash or debit cards, these cash back credit cards let you earn some rewards for your purchases. But often customers fall into the trap of earning more reward points and end up spending more than required. This is why you need to be very careful with your purchases with cash back cards.

What is Cash back card and how to pick the right one?

How to choose the right cash back card

There are plenty of options available to choose from a variety of cash back cards. However, selecting one which fits your spending patterns and needs is very important. It will help you maximize the benefits you can earn and collect the rewards points. These cash back cards come with a lot of terms and conditions and you should go through all of them in order to find out which one is best for you. There are certain factors which you can consider which will help you make the decision.

Cash back percentage

It is basically the percentage of the amount of your spending that you will earn as cash back. Majority of cash back cards offers a flat rate on all purchases while some offer better rates on some specific purchases. For example, you have an option to get better cash back for your purchases at gas stations as compared to all other purchases. In this case, if you spend a good amount every month on gas it will maximize your cash back as compared to other cards which don’t have this option. Similarly going through the cash back schemes of all cards and comparing it with your spending pattern will help you get the maximum benefit.

Annual subscription fee

Many cash back cards come after paying an annual fee while some have none. But you will also find better cash back schemes in the ones with an annual fee. You may feel that by paying a certain annual fee you will be able to get more benefits as compared to those cards who don’t charge any fee. You might have to do a little calculation and see if it is worth paying the annual fee or you should go for the cards with no annual fee.

Redeeming reward points

Different cash back cards have different ways of redeeming your cash back points. Some cash backs are sent straight to your bank account while on some you get a statement credit in your credit card balance. Other options may be to convert them into gift cards or e-certificates. Find out how these different cards are paying the cash back and which option suits you better.

Other features

It is also important to find out that apart from the cash back, what other feature these cards have. Few things you can inquire about are that if there are any additional benefits associated with the card. Find about any options to maximize the reward points by any loyalty cards. Also the kind of monthly or quarterly offers they come up with. You should also check whether there are any additional charges involved if you use these cards outside your country.

Cash Rebate

The Cash rebate is a term often used by sellers and is usually refers to refunding a part of the cost of a certain article sold. In general term, this is like a discount. But now cash rebate is often used by banks and credit card companies in place of cash back. Here also it is meant for refunding of part of the amount you have spent. You may find in some places they are used interchangeably.

How to choose the right cash back card

Here I will be taking you through some of the main features of popular cash back cards

Walmart Cash back Credit Card

Cash back credit card from Walmart offers cash back in the form of a statement credit of $25. For this, the customer has to make a purchase of $25 on the same day of joining. Apart from this, you get cash back of 3% on the amount spent at Walmart.com. On your purchases at Murphy USA as well as Walmart Gas you get 2% cash back and 1% cash back everywhere else.

Chase Cash back Credit Card

Chase card services offer a number of different cash back cards with different cash back schemes. While Chase Freedom cards have no annual fee, its Sapphire card is free for the first year only and after that comes with a $95 annual fee. Every new member gets Chase rewards in the form of a bonus of $150 for a purchase of $500 from the card in the initial 3 months. With Freedom Unlimited Card you can earn 1.5% unlimited cash back on every purchase whereas in Freedom card, you earn 1% on all of your purchase. But for bonus categories, it can go up to 5% up to the maximum limit of $1500. You can check Chase Freedom bonus categories for each quarter to find out the categories in which you can maximize your cash back.

Discover Card

Discover card services offer a variety of credit cards under its umbrella. Under the cash back cards, it has Discover It card with no annual fee. It offers cash back of 5% on selected places in each quarter up to a certain quarterly maximum amount. In all other purchases, you get flat 1% as cash back. Through Discover card online services you can apply and pay for the card online. The Discovery card payment can also be done through e-mail, phone or direct deduction from your bank account.

American Express Blue Cash back Card

American Express Blue Card has two varieties. In Blue Everyday card, you don’t have to pay an annual fee while it gives you $200 cash back for spending $1000 in the initial period of three months. In Blue Preferred card there is an annual charge of $95 and you get $250 cash back for spending $1000 in the next 3 months just after joining. Amex Blue card can be linked and paid through your American Express account.

Conclusion

Before selecting any cash back card, always perform an assessment of your spending pattern along with the available features of the card in order to select the best suitable option. Ensure that the card’s cash back scheme should fit your spending habits. Avoid spending extra money in order to get a certain benefit. This will negate the benefit of owning a cash back card and in return, you may start spending more money than you used to spend earlier.