Your everyday purchases, like gas and groceries, can earn you rewards. This is all possible with a cashback rewards credit card.
A cashback rewards credit card earns you a percentage of cash on purchases charged to your card. The savings percentage is typically between 1-4%.
Unlike a points rewards credit card, you’ll be rewarded in cash. You won’t earn points that can be redeemed for travel or merchandise. Because of this, cashback rewards credit cards are less complicated.
Cashback credit cards base rewards on a flat-rate, bonus, or flexible bonus structure. In Canada, flat-rate structures are more common.
For instance, you have a cashback rewards credit card offering 2% cashback on gas purchases. If you purchase $300 worth of gas, you'll receive $6 cashback. This essentially means you'll save 2% on your gas purchases.
The cash you earn back can be redeemed for statement credits or a deposit into your bank account. Alternatively, you can request it in a cheque that’ll be mailed to you.
Keep the following benefits and drawbacks in mind when shopping around for a credit card.
A cashback rewards credit card can be a valuable addition to your wallet. However, not every card is built the same.
Some may have perks that are catered to consumers with a specific lifestyle. The earn rates and spending categories might differ too. Therefore, consider these pointers when choosing a cashback rewards credit card.
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Anyone can benefit from a cashback rewards credit card. After all, who wouldn’t want to earn cashback on their money? What’s more, with so many available today, it’s easy to find the perfect card for you.
Every cashback rewards credit card has its own specific earn rates. One might offer 2% cashback for groceries, while another earns you 0.5% cashback for the same category. The same goes for the spending limits. Some credit cards limit how much you can earn at a specific rate. In general, the more you spend with your cashback rewards credit card, the more you earn.
The credit card that will maximize your cashback rewards has high earn rates in categories you make the most purchases. That’s why it’s essential to understand what you spend most of your money on.
While it’s understandable to want to earn high rewards, the most lucrative credit card may not be the best for you. For instance, you may get a cashback rewards credit card that earns 4% cashback on groceries, but the annual fee is $199. Make sure to calculate whether you’ll make up the annual fee with your purchases.
There are three types of cashback rewards credit cards: