With all the promotions and tactics that banks and other finance institutions are throwing at people just to get them to invest, with every “good thing” they propose we start to wonder, “What’s the catch?”
When it comes to cash back credit cards, the deal is this: pay for your bills, groceries, and other purchases with your credit card, and you get a rebate by the end of the year. Sounds good right? So the question that follows is, “Do they really work?”
In all simplicity, cash back credit cards do give you what they promise. However, in order to actually make the most of it, you have to start reading the fine print. Here are the things you need to be aware of:
• Fees – That’s right, does your cash back credit card have an annual fee? Most people tend to forget this little detail, and are shocked at the start of the year when they check their mail and find their statement ridden with a few hundred dollars in fees. There are other cash back credit cards that don’t sport this annual fee, so having those will be to your advantage.
• Percentage Rates – Usually when we think of credit card rates, the lower the number, the better. But in this case, it’s the opposite. You would actually want your rebate rate to be higher because that means you’ll be getting more from your cash. Some cash back cards give you 1% back annually, but others can give as much as 5%. However, check to see when you’ll start building the rebate. Some cards require you to have spent a certain amount on the card before you start earning. Others give you a bigger rebate for certain grocery stores, gasoline stations, and shops. The more you know, the more you earn.
• Pay it Monthly – With some cash back cards, failure to pay your credit card debt monthly will mean automatic cancellation of your rebate. Plus, some cash back cards have higher interest rates than ordinary cards. If in case you feel that you can’t pay off your credit card debt monthly, it’s better to get an ordinary card.
• List it Down – Finally, the best way for you to make the most of your cashback card is to list down your credit card expenses. This will give you an idea of how much you expect to get by the end of the year. If you don’t keep track, you probably won’t feel the difference anyway.
Cash back credit cards really do give you a rebate on the money you spent using the card. But when it comes to credit cards, the best thing is to have discipline over yourself and not to have the attitude of “I’m going to get more by the end of the year if I spend more anyway!”. If you don’t have the discipline and if you have a spender’s mentality, it may just be better to pay cash instead.