You’ve worked hard to build up your credit, and now it’s time to reap the financial rewards. But even if you’re a frugal shopper, all those rewards can add up quickly. For example, you may have seen cashback credit cards advertised and wondered if they’re right for you.
This guide will explore how cashback works and what makes one card better than another based on your personal spending habits and overall financial goals (like saving money or paying off debt).
Annual fee vs. cash back
Annual fee is the amount of money charged by a credit card company to use its services. Cashback is a percentage of your spending that you get back directly into your bank account or as a statement credit.
When choosing between cards with different annual fees, it may be tempting to choose the one with no annual fee at all, but this isn’t always the best move. Some cards offer higher cashback percentages than others and might end up saving you more money over time if they have lower interest rates as well.
The key is finding the balance between an acceptable cashback rate, reasonable interest rate (APR), and an affordable annual fee for each card so that long-term costs are kept within limits for both parties involved in making purchases using these cards!
Bonus on joining and anniversary offer
Some credit cards offer a welcome bonus when you apply for them. There are also credit cards that offer an anniversary bonus on the yearly renewal of the card. In most cases, these bonuses are in the form of points or miles to be redeemed for free air tickets or gift vouchers or in the form of a 3% cash back credit card. As per SoFi professionals, ” A 3% credit card cashback reward is just the beginning.”
You should check if you are eligible for cashback on the categories where you spend most of your money. Cashback credit cards offer cashback on purchases made in specific categories like gas and groceries, travel, entertainment and dining.
The number of spending categories may vary from card to card, but often they include all the above-mentioned areas plus others such as drug stores and wholesale clubs. Credit card companies usually keep their fee structure confidential, so it is hard to compare them directly with each other.
There are various payout limits on different cashback credit cards. You should check the details before applying for any of these cards. If there is a limit, it should be reasonable. If there is no limit, then you should check if the card has a minimum amount required to withdraw your cash.
If there is no limit and no minimum, then you should check if the card has a maximum withdrawal amount to know whether your application will be successful.
Fee structure of your cashback cards
If you are planning to use the card for a long time, then choosing a card with no annual fee is better. However, if you are planning to use the card for a short time, then it is better to choose a card with an annual fee.
This article provides tips on selecting a credit card that offers cashback. Choosing such a credit card is important as it will help you save money and make the most of its benefits.