If you use a credit card for everyday purchases, such as groceries, gas, dining or online shopping, you may as well get a little something back. With the right rewards credit card, you could even earn cash back on those purchases. But that’s not the only cool perk that comes with cash back credit cards: often, you’ll get a long intro APR period on balance transfers, purchases, or both, and you likely won’t pay an annual fee.
However, once the intro APR period passes, a higher APR will probably apply. You’ll need to pay off your balance on time so you don’t offset any potential cash back earnings.
What are the pros and cons of cash back credit cards?
cash back credit cards can come with many benefits, but there are also some drawbacks you need to consider.
High rewards rate. Earn up to 5% cash back when you use certain credit cards on select categories. Generally, you can find cash back rates between 1% – 5%.
Variety of cash back categories. Earn accelerated rewards on almost every category of purchases, including groceries, gas, dining, online purchases and streaming services.
Simple rewards structure. Enjoy a simple rewards structure that doesn’t require you to calculate how many points each redemption option requires. You always know how much you get from your purchases.
Signup bonus. Depending on the card, you could earn a decent signup bonus if you meet certain spend requirements.
Intro APR period. Get a long intro APR period offer on balance transfers, on purchases, or both with some cash back cards.
No annual fee. Pay a $0 annual fee for most cash back credit cards. Of course, there are exceptions, but it’s unlikely that you’ll find a cash back card with a higher annual fee than $99.
High APR. Watch out for high APR that applies after your intro APR period ends. To make the most of your card’s rewards, pay your balance in full each month before it’s due.
Foreign transaction fee. Pay foreign transaction fees between 1% and 3% on all purchases made abroad or online with foreign merchants. This makes cash back cards poor international traveling companions.
cash back limitations. Watch out for cash back caps as some cash back cards that offer high reward rates limit the amount of cash back you can earn.
Tangerine Money-Back Credit Card
Tangerine Money-Back Credit Card
Purchase interest rate
Eligibility criteria, terms and conditions, fees and charges apply
Tangerine Money-Back Credit Card
Apply today and earn 2% cash back in up to three spending categories of your choice.
Purchase interest rate: 19.95%
Cash advance rate: 19.95%
Balance transfer rate: 1.95% for the first 6 months, 19.95% thereafter
cash back credit cards could be worth considering if you want to save money on interest payments with a long 0% intro APR period on purchases, balance transfers or both; or if you want to earn accelerated cash back on categories, such as:
Department store purchases
Home improvements purchases
Most credit cards let you earn accelerated cash back on multiple categories. But if you can’t pinpoint an exact category where you spend most of your money, consider a cash back credit card with unlimited cash back on all purchases. Most such cards have a flat reward rate around 1% or 2%.
How to maximize your rewards
Spend enough to earn the signup bonus. You may need tomake purchases more aggressivelyto reach the spending requirement by the bonus’s expiration date. The clock starts ticking the day you open your account, which may be a few days before you receive your card in the mail. If your credit limit isn’t high enough, you may have to pay off your balance a few times to make room for additional spending.
Sign up for special categories in advance. If you choose a rotating-bonus-category cash back card, you may need to activate your categories before you earn elevated rewards.
Spend more in categories that earn more rewards.If you won’t earn elevated rewards for certain purchases, consider using a different card.
Use your credit card for purchases only. Cash advances and balance transfers don’t earn rewards. In fact they can cost you a lot more in interest and fees and they usually start accruing interest immediately.
Consider a cash back credit card if you want to earn rewards on everyday purchases and enjoy a long intro APR period on purchases or balance transfers. Several cash back cards even offer a $0 annual fee. Just be sure to pay off your balance on time each month to avoid cancelling out your cash back rewards when the higher APR kicks in after the intro period ends.
If you’re not sure whether cash back cards are the right choice for you, compare rewards credit cards until you find the right type of credit card for your needs.
Frequently asked questions
This means you earn back some of the money you spent on your purchases. For example, if you earn 2% cash back on gas and you spent $100 to fill up your tank, you would get $2 back for your purchase. This may not seem like much, but it can very quickly add up.
Typically, you can get your cash back as a statement credit or a deposit to your eligible account. Depending on the card, you could get other redemption options such as gift cards or merchandise.
If the card provider reports your card activity to credit bureaus (Equifax and TransUnion) then yes, you can build your credit with responsible card use.
Kliment Dukovski is a credit cards writer. He's written over 600 articles to help readers find and compare the best credit cards. Kliment has also written on money transfers, home loans and more. Previously, he ghostwrote guides and articles on foreign exchange, stock market trading and cryptocurrencies.
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