Fortunately, cash back is the most straightforward rewards currency. But there are still a handful potential complications to keep an eye out for. So make sure to search for the following terms whenever reviewing an application.
Tiers: Some cards will give you a starter cash back rate until you spend a certain amount of money or a certain amount of time passes by. At that point, a different rate – which could be either higher or lower than the first – kicks in. For example, you might get 5% cash back on dining for the first six months and just 1% thereafter. Rewards tiers can seriously affect any cash credit card’s value proposition.
Caps: Some cash reward credit card offers also limit the amount you can earn, be it in certain spending categories, over a certain timeframe or some combination of the two. For instance, a card offering 3% cash back on gas purchases might only offer it for the first $200 you spend on gas per month.
Enrollment: Cards with “rotating bonus categories” (another important term to be aware of) usually require you to sign up for bonus rewards on a quarterly basis. For example, cash back rewards credit cards often advertise up to 5% cash back on major expenses such as dining, travel and gas. But unless you enroll each quarter, you’ll only get 1%. These enrollment requirements are the credit card companies’ way of advertising particularly lucrative rewards without actually giving them to everyone who opens a card.
Bonus: Many cash back cards offer initial rewards bonuses. This gives you extra cash back just for signing up, making a single purchase or spending a certain amount in the first few months. Others provide annual rewards bonuses, which boost your accumulated rewards by a certain percentage.
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