Credit Cards for Cash Back | An Expert Guide
Among rewards credit cards, cash back cards are the most popular. Instead of offering bonuses that can only be redeemed for airline miles or hotel stays, cash back cards reward you for your purchases with actual cash that, for the most part, can be used however you like. Click on the images below to get specific advice from our experts.
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What To Look For When Applying
The ideal cash back reward card will offer generous rewards for the most spending, and even bonus rewards for certain categories of purchases. Ideally, these bonus categories should be for the kind of purchases you make the most, which could include groceries, gasoline or purchases from your favorite retailer. It is also valuable when the bonus categories do not have a limit on the amount of cash back that can be earned. You should also look for cards with low fees, such as a reasonable annual fee, and if you travel outside the United States, no foreign transaction fees. In addition, many competitive cash back cards will offer you a sign-up bonus, which is always nice to have.
What To Avoid When Applying
There are several traps that you can fall into when you apply for a cash back card. First, you will not want a card that has a high annual fee, but not enough rewards for the spending you do. Additionally, you will want to avoid credit cards that do not offer substandard rates of return. Compare the various offers, and see which cards offer the best rewards for your spending. But if you have debt, then you may want to avoid cash back reward cards altogether and focus on cards with lower interest rates. When you carry debt, the interest charges may very well cancel out what you would earn in rewards. Also, if you carry debt, the temptation to earn more rewards may lead to more spending and more debt. It's ideal to only charge what you can pay in full each month to maximize what a reward card can offer you.
Should You Apply For More Than One?
Since there are different cash back cards that can offer rewards for spending in different categories, it can sometimes make sense to apply for more than one. The problem is that many of the best cash back credit cards have substantial annual fees, and it may not make sense for most people to have more than one or two cards with an annual fee. If you try to maximize your cash back rewards by having several cards, you also run the risk of having more accounts than you can comfortably manage. In addition, applying for several cards at once can cause a drop in your credit score, as these formulas interpret multiple applications as being a sign of needing more access to credit, not the desire to earn more rewards.
When Is The Best Time To Apply?
There really is no best time to apply for a cash back credit card. However, you will want to make sure to first find a cash back credit card that is right for you. For example, if you have debt, or you tend to carry a balance on your cards, then reward cards are not your best options, including those that offer cash back. Instead, it is best to focus on non-reward cards, which will have lower interest rates than cards that offer cash back. Keeping in mind that it's generally wise to apply for credit sparingly, you should apply for a cash back credit card when you decide it is best to apply for a new card, and a competitive offer becomes available.
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