The Best Cashback Credit Cards

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by ratewise

What is a cashback credit card used for? A credit card that rewards you for using it has been gaining popularity over the last few years. So as long as you use it wisely, it can be a great option for getting something back.

Especially on money you already spend on your expenses and purchases. There are a lot of cashback credit card options that are accessible on the market.

A cashback credit card offers you part of your money back when you spend it. The percentage you gain back all depends on where you shop. And even on how much you spend in each place. There are even some purchases that won’t give you any rewards whatsoever.

Interest rates on the best cashback credit cards

The APR or differently known as the annual percentage rate on a cashback credit card is usually higher than on a normal credit card. An average credit card might charge up to 19% APR.

But a cashback credit card can charge up to 23% APR. There are even some cases where these cashback cards charge more than that. The only way to prevent yourself from paying these high rates is to not spend more than you can afford to pay back. And also to clear your card balance each month on time.

What are the different cashback rates?

Different cashback cards offer different rates for a wide variety of spending. Let’s take an example. It could be possible to get a 0.5% cashback for spending on one item in a small store and one percent cashback if you use your card in a big chain supermarket.

There can also be a difference in rate depending on how much you spend at once. To understand more clearly you can get 1% cashback for a purchase of up to £3000. But if you exceed this limit you can get 1.5% cashback.

Some cards pay high introductory cashback rates for a limited amount of time while others offer cashback. But only if you shop at a particular store.

The best cashback credit cards come with a high rate for a limited amount of time. That means that you can earn a higher percentage of cashback for the first quarter of using these kinds of credit cards. After that, they go to the usual 1% cashback rate. 

What to consider before owning a cashback card?

You might like the idea of having a credit card that rewards you the more you use it. But finding the best cashback credit card is not as simple. Before considering owning a cashback card you need to be aware of:

Annual fees. You need a first check if the cashback card includes any annual fees. If the card does include an annual fee, make the proper calculations to come to the conclusion of whether or not it is worth it to own that cashback credit card. 

0% interest offers. Always keep an eye out for the interest offers the cashback card contains. The best cashback credit card is the one with a 0% interest offer.

When making a large purchase and considering paying for it over a period of time, a 0% interest offer can help you by giving you cashback for the sum you spent. It is advisable to know exactly what date the 0% introductory offer ends.

This is the time when the cashback card changes to its usual APR. So make sure that you have paid off the amount you borrowed for your purchase by then to prevent getting charged interest.

The minimum spending requirement. The point of having a cashback credit card is to make money work to your benefit. Unless you are planning to make a lot of purchases on your card, it is advisable to choose a card that has little to no spending requirements.

Although, if you are planning to make expensive purchases and put them all on your credit card, choosing the best cashback credit card might be helpful. It could save you a reasonable amount of money.

Rewards. When choosing a credit card, you need to view in advance what reward best fit your interests and also your spending habits. For instant, you will be able to receive more cashback rewards for shopping at the same place consistently rather than shopping somewhere you rarely shop at.

How to maximize your cashback rewards 

If the best cashback credit card has caught your eye, then you are ready to start saving some money. Here are five ways you can maximize the cashback you receive. 

1. Proceed with the sign-up offer.

If you choose the best cashback credit card that includes a sign-up offer with a high cashback rate for a limited period of time, use it as much as possible.

If you are able to get rewarded with 5% cashback for your purchase, use the card as much for that period of time until it expires. Just to be clear, this doesn’t mean putting yourself into debt that you can’t handle.

It just means that if you have the possibility to choose between using a cashback credit card or a normal method like cash or debit, a cashback card would be the best option.

Even if you already have a card you put you’re spending on if you plan on owning a cashback card that has a high cashback rate for a restricted period it is best to start putting your spending on it.

Here is the catch, if you are unable to pay the cashback credit card in full every month you could be charged with interest rates that could lead you to lose money. 

2. Always select the cashback card that will best fit you.

Before choosing the best cashback credit card that suits you, consider your present spending habits. Then calculate whether your cashback card offer replicates them.

3. Put high expenses on your cashback card.

If you are looking to go on holiday or make home improvements, you can put these costs on a cashback credit card. Always keep in mind if you can afford what you spend in order to pay your credit card bill in full by the end of the month.

4. You can add another user.

Some cards give you the possibility to add another user to the card such as a close family member or your partner. What this means is that both of you are eligible to use the card whenever you have to shop.

However, when adding another user to your card it makes you responsible to pay their debt. As for them, if they are registered on the card as the second party, it will affect their credit report if you make a late payment.

5. Use your cashback credit card like a regular debit card.

In order to maximize the best cashback credit card reward you get, the best way to do it is by thinking of your cashback card like a normal debit card. This means that the proper way to use it is to put a lot of spending on your card.

Keep in mind that this will only be spending that you can afford so you don’t strain yourself financially.

If you make this kind of credit card the primary payment method you use, the best way to pay off the amount you have spent is by paying in full at the end of each month. Or you can pay off the amount you spend immediately.

This is a great way to maximize the cashback you will receive. Check out if your cashback card has a limitation period. This is done to make sure that you have not gone over the cashback card limit. If you have, there will be no point in spending on your card.

Is a cashback credit card really worth it?

Before considering owning the best cashback credit card you need to observe your spending habits in the months prior. This means keeping up with what you spend and where you spend it.

Then make the proper calculations to see if getting a cashback credit card will be to your advantage or disadvantage. Using the best cashback credit card the wrong way will just make matters worse on many levels.

This includes negatively impacting your credit report and losing a lot of money due to high-interest rates. 

The most preferable way to use a cashback credit card is if you have to spend a big amount of money in a short period of time. This will save you money while making your purchases.

It’s not advisable to get this card if you are a person that has no plans of paying large amounts and has a budget before spending on something.

Do you get charged every time you use your credit card?

You won’t get charged immediately every time you use your credit card to make a purchase. But when you use your credit card you may be charged a fee if you withdraw cash at an ATM. You’ll also be charged interest if you don’t make your credit card bill payments on time.

Does having several credit cards hurt your credit score?

Having multiple credit cards won’t hurt your credit score if you are able to keep your spending within your budget and you make your bill payments in full on time.

You have to know your ability to organize your finances and track multiple credit cards.

Is it better to cancel unused credit cards or keep them in the UK?

It is better to actually keep your unused credit cards open so you have a longer credit history and amount of credit available to you. This will potentially raise your credit score and help you if you apply for a loan in the future.

Is it bad to pay your credit card twice a month?

It is not bad to make multiple credit card payments every month. The most important thing is that you do not exceed your credit limit and you make your payments on time to avoid interest and fees. 

How many is too many credit cards?

You can have as many credit cards as you feel you will use. However, try not to apply for more than one credit card every six months as this could harm your credit score. 

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Categories: Credit Cards