To take advantage of cash back credit cards, start by comparing offers to find the cash back credit card that projects to save you the most money. Once you have the best cash back credit card for your needs, pay the bill in full every month to avoid interest and redeem your rewards regularly to prevent them from expiring.
It’s important to note that the best cash back credit cards typically require good-to-excellent credit, meaning a credit score of at least 700. But many issuers do offer cash back cards to people over a wide range of credit levels, so regardless of your credit history, there are a few simple guidelines that you can follow to get the most out of a cash back credit card.
How to Take Advantage of Cash Back Credit Cards
Shop around for the right cash back credit card.
Not all cash back credit cards are created equal. Some cash back cards give you a flat rewards-earning rate on every purchase, while others offer higher rates in specific bonus categories. Also, consider cash back cards with initial bonuses and 0% APR offers to complement your cash back rewards.
Use multiple cash back cards.
Consider trying WalletHub’s Island Approach, which is simply using a variety of credit cards for specific transactions. By employing this practice, you can reap more rewards than you would with just one cash back card. This method requires paying a bit more attention to which card you use from purchase to purchase.
If you go this route, avoid applying for more than one cash back credit card at the same time. Start out with just one card and after a few months to a year, when the hard inquiry no longer has a significant effect on your credit score, you can apply for the next one.
Pay off the entire balance every month.
Cash back credit cards often charge high APRs. If you carry a credit card balance from month to month, you could end up paying more in interest charges than you’d earn in rewards in each billing period. So it’s important that you pay your statement balance in full and on time every month.
Carefully weigh the card’s fees.
Don’t be quick to rule out cash back cards with annual fees. In some cases, the cash back you’ll earn over the course of a year will be well worth the cost of an annual fee. If you’re certain you won’t earn enough cash back for the card to pay for itself every year, however, you’re probably better off choosing a card with no annual fee.
Familiarize yourself with the card’s rewards program.
Most cash back credit card rewards never expire, but there are exceptions for account inactivity, fraud, and delinquent payments, among others. It’s important that you review the card’s terms and conditions, just to be sure. Investigate other areas too, such as minimum redemption amounts and how you’re able to redeem your rewards.
If you’re not sure how to get started in your search for the right card, check out WalletHub’s editors’ picks for the best cash back credit cards.
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