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What is a cash back credit card?
A cash back credit card is a type of credit card that gives you a percentage of your purchase back in the form of cash. For example, if you have a card that gives you 1% cash back on all purchases, and you spend $100 at the grocery store, you would get $1 back in the form of a statement credit or check.
How do cash back credit cards work?
Cash back credit cards offer a rebate on certain purchases. The rebate may be a percentage of the total purchase price, or it may be a set amount of money. For example, you may get a 1% rebate on all purchases, or you may get a $20 rebate for every $1,000 you spend.
There are two basic types of cash back credit cards: flat-rate and tiered. Flat-rate cards offer the same percentage back on every purchase, while tiered cards offer different rebates for different categories of purchases. For example, you might get 1% cash back on all purchases, but 2% cash back on groceries and 3% cash back on gas.
Some cash back credit cards also offer bonus categories that change every quarter. For example, you might get 5% cash back on groceries in the first quarter, 4% cash back on gas in the second quarter, and so forth.
To earn the rebate, you must pay your bill in full and on time each month. If you carry a balance from one month to the next, you will not earn the rebate for that month’s purchases.
What are the benefits of using a cash back credit card?
There are several key benefits to using a cash back credit card:
1. You can earn rewards on your everyday purchases.
2. You can get more value back on your spending than with other rewards programs.
3. There is no limit to the amount of cash back you can earn.
4. Cash back rewards never expire.
5. You can use your cash back rewards to pay for almost anything – there are no restrictions like with some other rewards programs.
How can you maximize your cash back earnings?
Here are a few tips to help you make the most of your cash back credit card:
– Use your card for all of your regular expenses, such as groceries, gas, and utilities.
– Pay off your balance in full each month to avoid interest charges.
– Take advantage of special promotions, such as bonus categories or sign-up bonuses.
– Use your cash back rewards to pay down your balance or save for a future goal.
Are there any drawbacks to using a cash back credit card?
There are a few potential drawbacks to using a cash back credit card. First, if you carry a balance on your card from month to month, you will likely end up paying more in interest than you would earn in cash back rewards. Second, some cards require you to have good or excellent credit in order to qualify for the best rewards rates. Finally, some cash back cards come with annual fees, which can eat into your rewards earnings.