Before you even consider applying for a cash back credit card it is good and financially smart to weigh the pros and cons of getting this type of card. As with all credit cards, the term “credit” means that you still have to pay back what you charged on card, but a cashback card offers better advantages over the typical credit card, here are some of the Benefits of carrying cash back credit cards:
Rebates – The most basic function of a cash back card is to offer you rebate for every purchase. Even the most basic cards will give you at least 1% return on every purchase. It may not seem a lot a first, but when it adds up, you still earn a small amount of savings compared to none at all.
Bonus Rewards On Some Categories – There are banks that offer bigger rewards for gas and groceries. Some reach up to four time more cash back rewards for specific categories which means that the more you spend on these categories, which are usually necessities, the more you earn back!
No-Fee Cards – Skipping the annual fee may mean you earn a lesser percentage in rebate, but it also means you no longer have to worry about hefty credit card fees. There are many cash back cards that do not come with annual fees which are all worth looking into for added savings.
Sign-Up Perks – This is a big benefit for new cash back card applicants because banks offer a higher rebate and better rewards system for new clients. A sign-up bonus gives you the chance to earn more points for a certain amount of time and others even waive fees and offer zero to low interest rates.
Earn Points Through Bills – One of the biggest benefits of carrying cash back credit cards is using them to pay for utility bills that you are required to pay. Since you pay your bills regularly you will always have a way to earn points without going over budget and your spending limit.
Gift Certificates – Not all banks and card offer cash as a reward. There are some that give out gift certificates for shopping, dining, groceries, etc. As a treat for using their card.
The Cons Of Cash Back Credit Cards
Although there are so many benefits of carrying cash back credit cards, there are also some disadvantages like these:
Hefty Annual Fees – The more rebate offered by a card, the bigger their annual fees are. This is common for travel cards, so check the terms and conditions before signing up for a card.
Impulse To Spend – With the thought of earning more points from purchases you are easily tempted to buy things you don’t need. This can result in credit card bills exceeding what you can afford to pay.
Interest Rates – If you cannot pay your balances on time, the interest rates will be more expensive than the rebate you’ve earned.
Before getting any type of credit card, be sure you can make all your monthly payments on time to avoid paying for late fees and staggering interest rates.
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