There is a wide range of credit cards that everyday people (not just card churners) can take advantage of to get a bit of return on every purchase they make. Undoubtedly, whether you seek travel points, points that can help finance the purchase of a gift for birthdays or holidays, or something more tailored (let’s say credit cards to maximize returns for shopping at your favorite retailer), there’s something for everyone.
And provided you don’t let balances sit around and build up interest (credit card interest rates are some of the highest out there), I do think credit cards are more than worth evaluating before you sign the dotted line, as they can help save you a great deal of cash on any given year.
While I do view many of the points-based credit cards as providing better returns per dollar spent, it can be difficult to gauge just how much you’re getting back on every major purchase. Indeed, it can be rather tough to convert credit card points into dollars and vice-versa. And for many, points-based reward systems are just unattractive.
For this crowd, the simplicity provided by cash-back cards is just a better fit. That way, you can use the cash back to pay off credit card statements rather than keeping points dedicated to very specific purposes (think travel, expenditures at specific retailers, etc.). Sometimes, it just makes sense to get a bit less back if it means you’ll get greater flexibility with the rewards.
The simplicity of cash-back cards is tough to top!
Personally, I’m a huge fan of cash-back cards because, at times, it can be a real hassle to navigate a user interface so that you can actually spend the points you’ve earned over the years. Not to mention that you’re very likely to have a remaining balance of points that you won’t be able to utilize until a later date.
Of all the types of credit card rewards systems, I’d argue that “cash back” is the best for most folks who don’t like making commitments, whether that’s to a handful of retailers or a type of expenditure (most notably hotel and airfare for most travel-focused credit cards).
Heck, retail-centric credit cards can be a real test of your loyalty. And if you fall out of love with a specific retailer, it can be tricky to ditch a card as you look for other options. I’m sure you’ve seen the folks in various retailers trying to court you with store discounts for signing up for a retailer’s credit card. In many ways, it can feel somewhat aggressive, even gimmicky.
Cash-back cards can save you a good chunk of change!
While some types of cards may have overly complicated reward structures, I do think that, for the most part, credit card rewards do provide real value for consumers. And cash back cards, I believe, are among the best for most. While most cash-back rates are rather modest (they range from 1-3% for all goods, with some having closer to 5% for specific goods), the cash-back return does add up over time, especially if you’re a big spender.
That’s why I’d encourage everyone to put in the homework so they can find the card that’s right for them. If you’re all right with paying annual or monthly fees for a card, your cash-on-cash return may very well be better in any given year. That’s why running through the monthly statements may be worth doing before you think about signing up. Such an effort could save you tens or even hundreds in any given year.
If you’re researching which cash-back credit card is best for you, be sure to check out our sponsor.
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