Theresa Chalfant, Writer
@theresa_chalfant
One disadvantage of cashback credit cards is that it can be expensive to carry a balance from month to month due to their high APRs. Other downsides include earning caps that limit cashback rewards on some cards and the fact that cash back cards generally offer smaller initial bonuses than travel cards.
Disadvantages of Cash Back Credit Cards
High regular APRs
Cash back credit cards typically charge high interest rates. Fortunately, you can avoid interest on a cash back card by paying your balance in full every month.
Lower value compared to other rewards
Cash back cards are a useful way to save money, but they may not save you as much overall as the best travel credit cards.
Travel cards tend to offer higher earning rates, bigger initial bonuses, and points and miles that can be redeemed for more than 1 cent each. They may also offer lucrative perks and benefits that aren’t normally found on cash back cards, such as free flights and hotel stays or airport lounge access.
Earning caps
Sometimes, a bonus cash back offer will be limited to a certain spending amount within a given timeframe ($1,500 per quarter, for example). Once you reach that limit, you’ll earn the card’s base rewards rate on purchases in that category for the rest of the period. This means the card may be less valuable than it appears, depending on your spending habits.
May lose rewards
On some cash back cards, you can lose your rewards if you don’t use your card for an extended period or if your account gets closed. Plus, you may not be able to earn new rewards if you fall behind on payments.
Delayed access
It can take a while after you make a purchase before you’ll actually have access to the cash back you’ve earned. You may have to wait a few days or up to several weeks before you can redeem. Bonuses are likely to take longer to hit your account than normal purchase-based rewards.
High annual fees
Some of the best cash back credit cards charge annual fees to compensate for their lucrative rewards. You can still save lots of money with these cards, so long as you earn enough to compensate for the fee.
Most of these drawbacks apply to other types of rewards cards as well. However, both cash back and other types of rewards cards can help you save money, build credit, and finance large purchases. You can compare the best cash back credit cards to see which offers match up well with your spending habits, or consider a travel rewards card if cash back isn’t the right fit for you.
Blue Cash Preferred® Card from American Express
Blue Cash Preferred® Card from American Express
Popular Cash Back Credit Cards from Our Partners
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Everyday Cash Back
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Bonus Rewards
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No Annual Fee
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Fair Credit
People also ask
Is it good to get cash back on a credit card?
Yes, it is good to get cash back on a credit card because you can save 1% to 5% on every purchase you make. Many cash back credit cards also have $0 annual fees, 0% introductory APR promotions, and one-time cash bonuses worth hundreds of dollars.
When It’s Good to Get Cash Back on a Credit Card
When the cash back rewards save you more than interest and fees
The value you...
read full answer by Adam McCann, Financial WriterWhat are the pros and cons of cash back credit cards?
The biggest pros of cash back credit cards are savings on every purchase, $0 annual fees, 0% introductory APR offers, generous sign-up bonuses, and protection against rewards devaluation. The biggest cons of cash back credit cards are lower earning rates versus travel rewards cards and high regular APRs.
Beyond that, the overall advantages and disadvantages of using credit cards apply to cash back credit cards, too. The advantages include convenience and credit-building on the positive side, with the risks of...
read full answer by WalletHub, Financial CompanyHow does cash back work on credit cards?
Cash back on credit cards rewards cardholders for making purchases by returning a percentage of the money spent. The accumulated cash back rewards can then be used in a variety of ways, such as paying your credit card bill, getting a check, or making a direct deposit to a bank account.
Exactly how cash back rewards work varies by credit card company and even by individual card. However, there are some aspects of the...
read full answer by WalletHub, Financial CompanyDid we answer your question?
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