How exactly does Cashback Credit Card work and how realistic is it attracting more consumers. It’s really exciting earning a little more money back on your daily spending with your credit card. With cashback Credit cards you do not need to dwell on the thought of how much you’re earning while using the credit card. Redemption with cash back is very easy, a lot of people just get their redemption by deduction from their statement balance or redeem for gift cards.
Types Of Cash back Credit Card
Cashback Credit cards are in the various package. The bonus category tiered rewards and flat percentage cashback cards, all these categories still payback. Flat percentage of cash back is suitable for a targeted set of people or crowd. The bonus and tiered rewards cards offer more rewards but one must work hard to maximize cash back in certain spending categories.
As the name implies, Cashback is the percentage of the transaction amount as cash back. It is a rebate of a percentage of the purchase you have made on your card. According to Daniel Mahoney, a certified Financial planner in Atlanta, when you pay a Merchant $100 with a Credit card, the merchant only receives about $97. The exact percentage depends on the card abs with some credit cards and the spending category of the purchase. For example, a Credit card could earn a higher percentage especially when it’s being used at a restaurant, or office supply store. Assuming, you spend $100 with a card that earns 1% cash back rate, you have accumulated $2. Then you will keep accumulating cash back until you decide to redeem what you’ve earned.
How Cash Back Credit Card Work
Note that, not all transactions are eligible for cash back. Credit card issuers state these exceptions on the credit card terms and conditions. You cannot earn cash back on cash advance and balance transfers. Purchases made with the same cash equivalent items, such as gift cards and person to person payment services such as Venmo.
How do I Redeem my Cash Back
Cashback Credit cards can be redeemed through different means, for example, through online credit card account or by contacting your Credit card issuers. Redemption of credit card cash back minimum depend on the issuers but $25 is a common redemption minimum. Also, methods of redemption vary but generally it involves one of the these mentioned below
- Gift cards – your cashback can be used to buy a gift card. Some stores occasionally put up deals, where customers can get gift cards cheaply.
- Checks –it can be received by mail for your cash back
- Bank account deposits – your cash back can be deposit into a bank account that is linked to your credit card.
- Statement Credit – this is the simplest options, apply your cash back to your current credit card balance. Except you don’t use your card regularly and you’ve more cashback than your current balance.
What To Check out for in a Cash Back Credit Card
- Cash back rates–check out for card that will earn you that extra cash back. So check out your monthly expenses, check places you spend your money, then pick a cash back Credit cards that matches your spending.
- Annual fees–you’re not too good with paying an annual fee for a credit card and they are many cash back credit card without annual fee. So such card are worth it if you have high spending.
- Sign up bonuses – many cash backs cards have sign up bonuses, which are a good way to earn even more back when you get the card at a short period of time.
Some other features include a 0% intro APR offer that apply to purchases, your balance transfer or both.