While cash-back credit cards have been popular for some time now, they are only growing more popular as time passes. With more and more people looking to maximize their spending, the opportunity to earn what is essentially “free money” is hard to ignore with cash-back rewards.
Choosing the right cash-back card can be a big step toward earning money back. It’s essential to pick a card that best aligns with your spending habits. Using multiple cards may be the smartest way to add the most cash back. The right cash back credit card can earn you hundreds, or thousands of dollars a year for free. Click here now to see our top picks. (Sponsor)
Key Points
The good news is that there is no universally true way to make these types of credit cards work best for you. Instead, you have to make some sound decisions about your spending habits and the most important bonus categories that you can then use to find the best cash-back rewards card.
Choose the Right Card Type
You need to choose the right type to make your cash-back credit card work hard for you. The most common card type offers a flat percentage rate on all purchases, but this isn’t the only option.
Flat-Rate
This percentage generally ranges between 1-2%, with 1.5% being the most common reward, and you will receive this back on all purchases. For example, for every $500 you spend with a cash-back credit card earning 1.5%, you’ll receive $7.5 back at the end of each billing cycle.
Bonus Categories
As popular as flat-rate cards can be, plenty of credit card shoppers prefer a card offering bonus categories. This might be a credit card that offers a solid 1% cash-back on all purchases but provides bonus percentages for different categories.
For example, the Blue Cash Preferred Card from American Express offers 6% cash back on groceries and 3% on gas stations. While the cash-back rewards are limited to $6,000 per year in purchases, there is still plenty of opportunity to earn as much as $360 in cash-back rewards on groceries alone every year.
Rotating Categories
If you truly want to make cash-back credit cards work hard for you, select one with a set of rotating categories. The Discover it Cash Back and Chase Freedom cards are the most popular. Every three months, both cards offer rotating categories like restaurants, gas stations, gym memberships, or streaming subscriptions that earn you 5% cash back on every purchase during this quarterly period.
Think About Your Spending Habits
You can’t make a cash-back credit card work hard for you without truly sitting down and thinking about your spending habits. Are you someone who eats out regularly or fills up at gas stations multiple times a week? If so, there is a credit card that works best for these situations, like the Blue Cash Preferred card from Amex.
However, you can also look at something like the Bank of America Customized Cash Rewards Credit Card that allows you to choose your preferred category. With this card, you can earn 3% cash back across various categories like gas and EV charging stations, online shopping, cable, streaming and internet plans, or home improvement stores.
Determining what you spend the most on every month will be the best way to make your cash-back card work hardest for you. A card like the Bank of America card likely sounds excellent if you do a lot of online shopping. Alternatively, if you live on Amazon, going with the Amazon Prime Visa with 5% cash back on all Amazon purchases will help you quickly rack up rewards.
Charge Everything!
This will likely be a controversial take on my part, but the easiest way to make your cash-back card work hardest is to charge everything every month. However, this advice has a caveat: you must pay everything off on time.
If you charge everything and don’t pay it off monthly, you will accrue interest that will quickly offset any potential cash-back earnings. Ultimately, this means you only have to charge the money you must spend every month and not a penny more.
This means you must control your budget and spread your purchases across multiple cards to maximize your monthly earnings. Take advantage of a card with rotating categories and then use another card that earns either 1.5% or 2% cash back for every other purchase.
Online Shopping Bonuses
The last important advice is to use an online shopping portal, like the Capital One Shopping tool, in combination with the Capital One Quicksilver card. Not only will you earn 1.5% on every purchase with the card itself, but you’ll also earn cashback from more than 30,000 retailers, potentially allowing you to double or even triple your monthly earnings.
Credit Card Companies Are Doing Something Nuts
Credit card companies are at war. The biggest issuers are handing out free rewards and benefits to win the best customers.
It’s possible to find cards paying unlimited 1.5%, 2%, and even more today. That’s free money for qualified borrowers, and the type of thing that would be crazy to pass up. Those rewards can add up to thousands of dollars every year in free money, and include other benefits as well.
We’ve assembled some of the best credit cards for users today. Don’t miss these offers because they won’t be this good forever.
Flywheel Publishing has partnered with CardRatings for our coverage of credit card products. Flywheel Publishing and CardRatings may receive a commission from card issuers.
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