00:00 Speaker A
A cashback credit card could be your best rewards credit card. Here’s why and how to choose the right one for you.
00:14 Speaker A
Let’s start with the basics. There are generally three types of cashback cards: flat rate cashback credit cards, just like it sounds, these cards give you a flat rate on nearly all of your purchases, usually 1 to 2%. So, let’s say your card offers 2% unlimited cashback on purchases. If you spend $2,000 during a statement cycle, then you’ll earn $40 back. Usually that $40 can be credited to your account, and sometimes, it can be applied to gift cards or merchandise. Now, this card could work if you’d like to earn rewards on your everyday spending, but you don’t want to track spending categories. Tiered cashback credit cards. These cards offer different rewards rates on different categories. For example, American Express currently has a card that offers 6% cashback at US grocery stores and 3% cashback on ride shares and parking. Now, rotating cashback cards. For these cards, your top rewards categories, they rotate. Today, Chase has a card that offers 5% cashback on bonus categories that typically change each quarter. Now, this card can work as long as you remember to manually activate the new categories in your account.
02:39 Speaker A
So, how do you decide? First, take a look at your bank statements or receipts. Where do you spend the most should be the question that you’re asking. Do you eat out a lot or do you perhaps mostly cook at home? What your receipts tell you will determine if you should choose a cashback card that rewards dining or groceries, or perhaps another spending category. Second, look at where you shop. For example, grocery purchases from wholesale clubs, including Costco, and superstores, such as Walmart and Target, are often excluded from grocery store rewards. Cashback credit cards can be simple to use, and you don’t have to track and convert points. Typically, there are low to no annual fees. However, like most rewards credit cards, cashback cards have very high interest rates. Something to be aware of if you don’t pay your bill in full every month on time. They also require a good credit score, about 700 and above for approval.
04:37 Speaker A
Want to learn more? Scan the QR code for more information on the best cashback credit cards.