By Matt
With a veritable glut of cash back credit cards available to consumers, it can be a time consuming and tedious effort to determine which cards offer the best deals. As with most things in life, when evaluating cash back credit cards the devil is often in the details. And when choosing a credit card that is right for you it is important to consider whether the reward structure matches your existing spending habits. You do not want to have to go out of your way in order to receive the promised compensation.
How can I maximize my cash back?
The standard rate of redemption on most cash back credit cards is one percent. Simply put, for every $100 in purchases made with the credit card the card issuer will show $1 in earnings on your monthly statement. In addition to the base rate, many cards offer a premium redemption rate of five percent. The premium rate is paid on purchases made at select retail partners or select categories of retailers and service providers. By sticking to the stores where the premium rate is offered you increase your rate of cash back earnings fivefold. If you spend $150 per week on groceries, and supermarkets are one of your premium categories, you can expect $390 in cash back earnings in one year for buying groceries you needed anyway. This is why it is so important when making a comparison to match potential cards with your spending habits.
Where to compare?
To find the card that works best for you, you need to know which characteristics to consider when making a cash back comparison. Here are a few of the most important features:
- The real cash back rate. Make sure you are getting what is advertised. After taking a look at the fine print you might discover that the cash back rate is graduated, starting at just 0.25% for the first $1000 in purchases.
- Premium rates. Do you shop at the stores where you will receive the premium rate? If not, keep looking. Also be aware that some credit cards rotate their premium partners throughout the year. If this is the case you will need to keep on top of where you will be earning the most rewards.
- The payout. Is there a threshold of earnings that must be accumulated before you can request a check? Ensure the payout is available in cash and not just redeemable for online merchandise. Also check to see if rewards have an annual cap. Some cards will stop paying once you have accumulated $300 or $500.
If you are able to make your credit card work for you without a significant change in your spending habits then it is a win-win situation. With the right approach it will be the easiest money you make this year.
In addition to cash payouts, benefits can be maximized by buying gift cards and other discounted products through the credit card’s website. Say gift cards for a chain supermarket are available at a discounted rate. If you use your earnings to buy $25 gift cards for $20 apiece, you can add $90 to the $390 you already earned.
Leave a Reply