The key to getting the right credit card is to make sure the card works for you, not against you. For example, if you have a habit of carrying a monthly balance then it's advisable to choose a card with a low interest rate. Generally, rewards cards and cash back cards do not have low interest rates. However, if you pay off your balance every month then using a rewards card can actually add to your bottom line.
Cash back credit cards offer a no-hassle way to earn rewards on all your purchases. There's no points to keep track of and you can always get exactly what you want with cash. As the saying goes, "cash is king."
When evaluating cash back credit cards, there’s a few key points to pay attention to:
- Introductory offers: Some cards offer additional cash back earning potential for a limited time. Plan your large purchases during these intro periods to maximize your cash back earnings.
- Special categories: Getting a cash back card that rewards your spending habits is key. Some cards offer increased cash back earnings in select categories such as gasoline or groceries. Others allow you to choose the categories that work best for you. Analyze your spending to take advantage of thee benefits.
- Cash back percentage: Your cash back earnings are based on a percentage of your monthly spend on the card. A 1% earnings rate is common, but can be as high as 5% for special offers or premium cards. If there's an annual fee attached, make sure the cash back (and your spending habits) will outweigh the fee.
Choosing the best cash back credit card depends on your spending habits and goals. Take advantage of special offers and spending categories. Remember rewards based cards generally do not have low interest rates so don't carry a monthly balance on them.