These days, banks advertise a plethora of different credit card offers to lure us in.
However, not all rewards programs are made equal, and there are no exceptions, especially when it comes to cash back cards. So the question remains — how can you tell if you’re getting the most out of your cash back card?
The Cash Back Standard
According to an article by NBC News, the standard measure of a good cash back credit card today is to earn at least 1 percent on your purchases, and have no annual fee. In a recent study of 50 cash back credit card offers, almost half (48 percent) gave credit card holders 1 percent back from their very first dollar of spending, and 14 percent paid even more than 1 percent. Also, relatively few charged an annual fee.
There are a number of options you can take to be sure you’re getting the most out of your cash back card, and your choices will differ if you are a current card user, or looking to get your first cash back card.
1. Compare reward offers.
Shop around for the best reward offer. For example, the Chase Freedom Visa offers a $100 cash bonus after spending $500 in the first three months of opening the card. On top of that, there is no annual fee on the card. Shop around for the best reward offer.
2. Watch out for fees.
Fees can very quickly make a cash back card far less rewarding. If you’re interested in a card that charges an annual fee, do some quick math and see how much spending it would take for you to even break even on that fee. For example, there is a United Mileage card that charges $80 annually with a reward system that pays only $1 per every $100 spent. You’d have to charge $8,000 just to make that $80 back.
3. Know the terms.
Different programs offer different rewards criteria, such as revolving points categories per quarter, on which you can receive 3 or 5 percent cash back. Be sure to read all the terms of your current or potential cash back card, because sometimes card holders are required to activate their categories each quarter to get the bonus cash back. Also, be wary of advertising that may appear to be offering “up to 5% cash back” because most likely only a few categories of purchases will apply to that percentage.
Review your rewards system thoroughly, and check for spending caps, which will limit how much money you can rack up. After a certain amount of spending, you may not be eligible to receive cash back on purchases that exceed the cap.
4. Consolidate your cards.
If you have cards that you’ve now realized don’t give you the best rewards, consolidate your spending to one solid cash back card to begin racking up cash. However, leaving your old cards to collect dust in your sock drawer may actually work against you, so see our article for how to safely consolidate your spending.
5. Shop through your card’s shopping portal.
Many credit cards have shopping portals, in which you can click through to shop on your favorite sites and get bonus points, just for shopping through that portal. You may receive 1 percent on clothing purchases normally, but by clicking through the portal, you can often get double or triple the points than you would have traditionally.
Take a look around your credit card account to see if there’s a link directing you to a shopping portal. After you click the link, a cookie is made on your computer, and when you check out and pay for your purchases, you automatically get those bonus rewards.
6. Keep an eye out for expiring points.
If you’re not sure when (or if) your points expire, check the fine print in your card agreement. Typically rewards expire between 12 to 18 months, but some programs may offer points that don’t expire for 24 months. If you’re worried about your points expiring, you’ll usually get a couple of notices before they expire.