With Cash-Back Credit Cards, you get part of the value of your purchases back. That is, with each purchase, your “money back” accumulates in your account. The amount is accumulated according to the percentage of gain. For example, Â if the refund rate on your refund credit card is 3% and you spend $ 300 weekly, the total refund will be $ 9 weekly or $ 36 monthly.
Just like any card, Cash-Back cards have pro and con. Read on to find out more.
Pros and cons of having Cash-Back Credit Cards
Welcome bonus
Some cashback cards reward customers who reach a stipulated spending limit for the card in the first few months. For instance, you can earn $100 for spending $$400 Â the first 3 months.
Simplicity and ease to understand the rewards
On the rewards card, each point earned becomes cash. This is easier to understand than travel rewards credit cards.
Cash-back credit cards No annual fee
Cash-Back credit cards generally do not have an annual fee.
Redemption limitation
These cards do not allow you to use points to purchase plane tickets or pay for accommodation e.g. when their price is higher than the money you receive.
Higher APRS
Often, when the card offers cash-back, it has a higher interest rate than that found on cards that do not offer rewards. Therefore, always pay the full amount of the invoice to be free of interest.
Refund limit on some refund credit cards
In the first expenses of the year, you can earn up to 5% in pharmacy purchases. For every dollar spent over $5,000, you will earn just 2%.
If you are looking for a reward for your purchases, you need a refund card. However, if you are in doubt between a travel reward card or a refund card, review the purchases you usually pay with a card to help you choose.
You can use both types of cards. That is, Â you use your travel card for plane tickets and accommodation and your money back card for everyday things.
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In general, like fees for cash-back credit cards it is 1.5% to 2%. The best way to choose your card is to analyze your consumption habits and how much you want to get rewarded for your purchases. Thus, the rates of the cards with the highest rates and calculations how much you could earn annually from them. After that, make your decision.
