Best cash back credit cards
Amongst many cards, usually travel card is best cash back credit card. Travel cards have sizeable and valuable returns and reward. Such cards have problem of understanding. Customer can easily understand the language of dollar or cent. Rewards in the shape of Miles or points can confuse you. You have to analyze welcome bonus, rewards, into APR, regular APR, annual fee, other perk and benefits before deciding a card.
Methodology
Infact, we have research at hundreds of available credit cards to find some best cash back credit cards for you. On the whole, we have worked at different bank and provided companies to search the best. in fact, we have analyze the performers of cards in term of cash back, reward rates, annual fees, welcome bonus and other Parks
Positively, we assigned score to each benefit and weighted cards at these score. Following factors included in our work.
- Cash back reward
- Regular APR
- welcome bonus
- intro APR
- annual fee
- benefits and perks
Without a doubt, after comparing different cards we have listed only a few best cash back credit cards.
What is cash back in a credit card?
A certain percentage with credit card spending is rewarded that is called cash back. Further earned cash back can be the redeemed for money. Sometimes rewards are issued as a statement credit. Furthermore, rewards may send to you through cheque by mail or maybe deposited to your bank account directly. Procedure of redemption depends upon the card providing company or Bank. In the same way different credit cards offer different ways of cash back rewards. Sometimes cash back rewards are flat rates, sometimes complex rate, sometime for specific spending, sometime for specific time or specific category.
How cash back credit card work?
With spending at eligible purchases, card holder will earn certain percentage as a cash back reward. Amount of rewards depend upon the card terms. Undeniably, these rewards are accumulated with each pending till you redeem it. Redemption may have expiry of rewards, so you have to redeem your earned rewards before the expiry.
Allowed redemption could be in the shape of cash, specific purchases or in other shape. You should be aware of redemption policy of the card. The exact way of cash back rewards varies with the card. Some card offers cash back, some cards offer statement credit and some cards provide cheque.
Why credit cards have cash back?
Card companies offer rewards to create customer loyalty. A best tool to increase customer number and market share. this card issuer offer cash back reward for the use of card. Simultaneously, rewards may be cash or other perks and benefits. By this, card holder may cut transaction fee to the vendor. According to research, transaction fee generate revenue of worth more than 170 billion dollar. This revenue is shared between the bank, card issuer and card networks and fintech companies. Normally 2% to 4% of transaction amount is split between the bank, card issuers, network and fintech companies. Customer care easily cut the transaction fee by the cash back rewards.
Example
Take an example that transaction fee is 3% and customer is offered 3% cash back for the use of the card. Certainly, cash back rewards are offered to attract more qualified customer who have good credit score and belong to high income class. Yet the card issuers earn very little percentage but after accumulating are converted into a huge amount. These rewards are tool to attract more customers with very low risk.
How to get cash back?
Once you use the credit card for spending, your card start accumulating the rewards. With each spending, balance of rewards increases. Typically, you can redeem these rewards at your need but before the expiry of redemption term. Purchase price, discount, cash back, statement credit, online deposit, or a cheque or some way of redemption depends upon card issuer. Mostly cards now automatically credit cash back at monthly basis.
Types of cash back credit cards
Generally speaking market has different types of cash back credit cards which are as follows;
1. Straight Rate Rewards
Straight Rate rewards can earn flat rate of percentage. As card holder will earn 1% at every purchase.
2. Complex rewards
Complex rewards are usually a mixture of rates. Such as card holder will get more rewards for specific category and lower rate of rewards for some other spending. Take an example that you will get 4% for travel purchases and one percent for all other purchases.
3. Rotating reward
Rotating rewards are bonus category rewards. Therefore you will get maximum reward for specific category at specific time. An example will explain it. You will get 5% rewards for travel purchases at last quarter of the year. As a routine reward is 2% throughout the year and you will get one percent reward at all other purchases.
How much cash back reward I can get?
Two factors determine the cash back benefit. First, is your card spending? Second, reward rate offered by the card issuer. To explain, take a look at an example. For instance, use spends $5000 per year and reward rate is 2%. Simply, you will get $100 as a cash back reward. Similarly, if spending is $30,000, your cash back reward will be $600. Selected category have special rate of cash backs rewards.
In this situation, offer is that you spend at groceries you will earn 6% cash back reward. Now you have spent $20,000 in a year. Your reward will be $120. it is a large and handsome reward.
it is recommended that take an eye at terms of the card to determine that how much is cash back rate. Multiple cards offer unlimited cash back reward. However, some cards have limit of rewards. Similarly, for specific categories rewards rate is high. And for some category rate of reward is low.
Some common cash back categories
Everyday spending category such as groceries dining and gas usually have attractive cash back rewards than others. Smart credit card issuers follow customize strategy to allow the customer to choose a special rate category. By spending at self-chosen category, card holder will earn cash back. Some common cash back categories are as follows
- dining
- groceries
- gas
- flight hotel
- car rental
- utilities
- home improvement
To maximize your cash back always choose a card that have match between bonus category and spending category.
Factors to consider before choosing cash back credit card
In reality, The major factor to consider a best cash back credit card is one that best fits to your lifestyle and spending habits. A card best for someone may not be best for other due to these factors impact. We will try to help you to choose a best cash back credit card but you should always do the math yourself and compare cash back benefits and your spending habits. You have to analyze the different cards and then choose one for you. Here are some factors to consider before picking a cash back credit card.
Fees
Whether card have annual fee or not, what amount of spending is required to cover annual fees, how much are other fee? Above our some questions that should be answered in term of fee factor.
APR
When you do not have capacity to pay the full credit card due amount then credit card is harmful for you. Because interest at credit card is much higher than other loans. if you stuck in such a situation, go towards the balance transfer facility. Choose a card that have 0% APR offer for the required balance transfer.
Cash back rate
Each card has different rates of cash back. It is important to consider it.
Categories
You cannot get cash back benefit, if your selected card does not have required category. For example your card has 3% cash back offer for gas and groceries but you have to consume the amount at dining. In this case there will be no benefit of cash back.
Redemption
Be true, Cash back is paid in different form such as cash back, statement credit, cheque deposit into a saving account, discount at travel package, free airlines or shopping at specific store. Always consider that what your need of redemption is.
Pros and Cons
In any case, Cash back is awesome way for extra earning. You can earn and claim rewards at qualifying purchases. Sometimes rewards are credited automatic to your card and sometimes you have needed to claim the reward by spending at specific purchases. However there are some Pros and Cons of cash back credit card.
Pros
- Usually redemption of cash back rewards is straight forward in the shape of cash.
- Earning of cash back can be collected easily by multiplying purchases with reward rate.
- Cash back rewards are transparent.
Cons
- Redemption of cash back reward is not flexible.
- Fixed rate of rewards can be earned, you cannot earn higher rate.
- Built in benefits are fewer because you focus at rewards rather than travel benefits credit or access.
Choosing best cash back credit card
Finally, market has a lot of credit card that offer cash back reward but your earning bill depends at your spending habit. Before choosing a credit card for cash back benefits, take a look at your budget and observe your spending habit. After that choose a card that best fits to your life style and spending.