Many people enjoy the advantage of cashback, while others still don’t know much about it. This post will clarify everything.

Cashback is one of the most desired rewards on credit cards. They’re usually straightforward, and the rewards turn into cash on your account very easily.

But is it really advantageous? Keep reading to see if you should get a cashback card.

Cashback is a term that brings joy by itself, isn’t it? It is pretty literal. Cashback is a type of reward. It consists in giving back to you a percentage of the money you spend.

It is usually found in credit cards with rewards programs, but nowadays you can also find some debit cards with this benefit too.

Even the credit cards that give points as rewards usually give the option to redeem these points with a cashback advantage.

But don’t go thinking you’ll get a lot of money back in your hands. These rewards are usually a small decimal percentage.

Most cards will give you a regular rate of 1% cashback on your purchase. This means that for every $1 you spend, you’ll get $0,01 back. 

It may not seem as much when you look at it like this, but remember that you spend hundreds or probably thousands of dollars every month.

And some cards have bonus categories with up to 10% cash back. This could mean hundreds of dollars back to you by the end of the year.

If you consider a $0 annual fee credit card, it is splendid.

Technically every credit card reward is cashback in some way because it will turn into monetary value at some given point.

But as said, cashback goes straight to the point. Is cash back in your pocket.

Everything has at least two sides. It is not different when we talk about cashback.

Even though we hear a lot about the advantage of getting cashback, some specialists can point out drawbacks too.

But it is primarily a benefit by itself. You were supposed to lose money when you spend it. With cashback cards, you will get money back from your shopping. 

Let’s go through the pros and cons of cashback. Analyze it to see if you think it is advantageous or not.

Cashback is one of the simplest ways to understand a rewards program. After all, what does it mean to earn back 1 point per dollar? Or even 5 points per dollar? How much are you really earning as a reward?

Making the conversion of points to monetary value can be confusing. It’s harder to figure out if your rewards are worth the price you pay for the card. The same goes for miles, which can be even harder to estimate.

That’s an important aspect to analyze before applying for a credit card and looking to get an advantage with cashback rewards.

You need to check your spending pattern and your lifestyle to see if it will grant you enough rewards to overcome the price you pay.

This price includes the annual fee, monthly maintenance fee, and even the interest you’ll pay over your credit card balance if you don’t pay full every month.

If the rewards rate on your usual spending does not overcome this price, then the cashback is not worth it for you. 

A rewards credit card can tempt you to overspend. That can happen when you seek to earn rewards by buying things you don’t actually need.

As said before, your rewards need to go along with your regular spending. If you need to overspend in order to make your rewards overcome your fees then you should look for an appropriate credit card for your lifestyle.

Some rewards programs have rotating bonus categories, that change every quarter, or according to your spending pattern. Others have caps for bonus categories.

These kinds of programs will make it harder for you to use your card strategically and can hurt your rewards acquisition and decrease the advantage of a cashback card.

Let’s say you have had your rewards credit card for some time now. You’ve collected thousands of points during these years, and you can’t wait to redeem them. But the fact is that you can’t be sure about your redeeming value.

Your card issuer can change the points redemption rating overnight. Or airlines can decide to change the ratio for transfer miles.

With cashback that can never happen. If you got 1% of your purchase, it will always mean the same value for you. 

This is not a rule, but if you take a look at the credit card options with cashback you’ll see that many of them have no annual fee. They can also give you a welcome bonus as soon as you get the card or when you reach determined spending.

Even with every advantage that you can get with cashback, you’d have to spend too much money to get enough cashback to buy anything on the following list. Read this content to see which are the most expensive things in the world.