Credit Cards (US)
What is the advantage of cashback for your life: is it worth it?
Are you wondering if you should apply for a credit card with cashback rewards? Read this post to find your answer.
Learn what is the benefit of cashback: optimize your money with these rewards
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.
What is cashback and how does it work?
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.
You will be redirected to another website
Benefits of cashback for your financial life: learn the pros and also the cons
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.
Easy to get advantage and to use cashback
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.
Check if the rewards rate is worth the card’s price
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.
Any advantage of getting cashback is not worth overspending
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.
Rewards programs with bonus categories can be hard to track
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.
One more advantage of cashback: its value can not be changed
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.
Many cashback cards have a sign-up bonus and no annual fee
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.
See how to apply for the BMO CashBack Business Mastercard Credit Card
Discover how you can easily apply for the BMO CashBack Business Mastercard credit card and save money on your business purchases!Keep Reading
See how to apply for the Milestone® Mastercard® Credit Card
Ready to get a credit card that can help you build your credit? Check out how easy it is to apply for the Milestone® Mastercard® Credit Card!Keep Reading
You may also like
Is it possible to be rich being a Youtuber?
If it feels like everyone around you is becoming rich being a Youtuber, read this post to see how you can do it too.Keep Reading
See how to apply for the Chase Freedom Unlimited® Card
Learn how to apply online for the Chase Freedom Unlimited® Card and start earning rewards on things that really matter, every day.Keep Reading
Learn how to keep your smartphone safe from malware and other attacks
Don't become a victim of cybercriminals! Learn how to keep your smartphone safe against malware attacks with our easy tips.Keep Reading