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The beginner’s guide to cashback credit cards

Breeze through the basics and learn how to earn lucrative rewards.

If you’ve been looking for a rewards card, you’ve more than likely come across something called a cashback credit card. This is the most basic type of rewards card, easier to track points than travel rewards cards. And if you know how to use cashback cards to your advantage, you can see fantastic rewards.

What are cashback credit cards?

With a cashback credit card, your card provider pays you back a small portion of what you spend. You can redeem your cash back as statement credit or deposits into your bank account.

How do cashback cards work?

A cashback card pays you a percentage of your spending. For example, if it offers 1% cash back, you’ll receive THB1 in rewards for every THB100 you spend.

Despite its name, the card won’t pay you with physical cash. Rather, you’ll redeem your rewards for things of monetary value. These might include:

  • Statement credit.
  • Deposits into your bank account.
  • Travel rewards — hotels, airfare, car rentals, etc.
  • Merchandise.
  • Gift cards.
  • Charitable donations.

Your card provider may redeem cash back for you automatically, typically applying it to your account as statement credit. Some providers require you to have a minimum amount of cash back before you can redeem — often THB100 or more.

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Types of cashback cards

There are three types of cashback cards: flat-rate, tiered and rotating-bonus-category.

Flat-rate cashback cards

You’ll receive the same rewards rate on all purchases, regardless of category. For example, credit card A offers 1.5% cash back on all purchases.

Tiered-cashback cards

You’ll receive a different rewards rate for different categories. For example, credit card B offers 3% cash back on petrol, 2% cash back at grocery stores and wholesale clubs, and 1% cash back on everything else.

Rotating-bonus-category cashback cards

You’ll receive a higher rewards rate for certain categories during certain months. Bonus categories usually rotate quarterly, and you typically have to sign up for the category each quarter. For example, credit card C offers 5% cash back in quarterly rotating categories, typically on up to certain amount in purchases a quarter, then 1%. Rotating categories often include petrol, groceries, restaurants and wholesale-club purchases.

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While the opportunity to earn cash back may sound appealing, cash back credit cards aren’t for everyone. Based on what you spend the most money at — groceries, petrol, travel purchases, flights — you can choose between a cashback, a points or a miles card.

A cash rewards credit card is ideal for you if you:

  • Use your card for everyday spending. Depending on the card you get, spending money on groceries, petrol, dining or purchases at department stores usually tend to have the highest cash back.
  • Want to pay a low annual fee or no annual fee at all. Cashback credit cards have either no annual fee or an annual fee of up to THB2,000.
  • Want an intro APR period. With this type of cards, you’ll often enjoy an intro APR period on either balance transfers or purchases, or sometimes even both.
  • Pay your balance in full every month. Paying interest on a cash back credit card, or any rewards credit card, is one of the worst mistakes you can make. Spending money on interest negates the rewards you’ve earned on your credit card.
  • Frequently use your credit card responsibly. Earning the maximum amount of cash back rewards means using your credit card as frequently as possible. You must be disciplined enough to spend only what you can afford to pay back and to use your income to pay off your credit card balance rather than to make additional purchases.
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Cash back vs. points vs. miles: Which one should I pick?

Cash back is a great choice if you want simple rewards. A card’s cashback percentage makes it easy to gauge the rewards you’ll earn.

Points and miles can be a bit trickier, though they can also be more powerful. For example, a card with 2x points on travel isn’t necessarily offering a 2% rewards rate.

Ultimately, points and miles are best if you want to use your rewards for travel — and you have the patience to maximise your rewards.

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How to compare cashback cards

As you compare credit cards, certain features may stand out to you. Here’s what to look for as you find your next cashback card.

  • Annual fee. If you choose a card with an annual fee, make sure you can earn enough rewards within a year to offset the fee.
  • How much cash back will you earn? While flat-rate cards are easiest to understand, you may earn more rewards through a tiered-cashback or rotating-bonus-category cashback card. Choose a card that pays the most cash back for the categories you spend most in.
  • Signup bonus. Cashback cards commonly offer signup bonuses to new cardholders. If a card has a bonus, consider whether you can meet the spending requirement in time.
  • Earning or spending caps. Some cashback cards cap the amount of rewards you can earn. The maximum may apply to certain categories over certain periods of time.
  • Reward restrictions. Check if the provider sets a minimum of cash back you must have to redeem. Also, look through the card’s terms to see if your rewards expire.
  • APR. Interest rates tend to be higher for cards with rewards than cards without. With a cashback card, pay your balance in full each month to maximise your rewards. If there’s a chance you will carry a balance, consider a card with a lower interest rate.
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How to maximise your rewards

  • Spend enough to earn the signup bonus. You may need to make purchases more aggressively to 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 cashback 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.
  • Pay your balance in full each month. Paying interest on a cashback credit card eats into your rewards. Also, avoid late fees by setting up automatic payments.
  • Use your credit card for purchases only. Cash advances and balance transfers don’t earn rewards. In addition, they usually start accruing interest immediately.
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Bottom line

Cashback cards are typically pretty easy to understand. At the same time, they can offer attractive rewards.

Consider your spending to figure out which kind of card might reward you most. Then, compare your cashback options to find the best product for you.

Frequently asked questions

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