I’m sure you’ve heard of a cash rewards credit card before; some of you may know how it works and some may not.
In this article, I am going to discuss how a cash rewards credit card works and how you can benefit from one.
However, first, we must go over the basics.
When you are using your cash rewards credit card, you want to make sure that you capitalize on the rewards that are available.
In order to accomplish this task, there are some things that you should remember at all times.
First, NEVER overspend! The rule of thumb when using any type of credit card is that if you cannot afford something, don’t buy it. You have to treat this cash rewards credit card as if it were cash. If you can’t do this, then don’t apply for one.
Secondly, ALWAYS pay your balance on time and in FULL; if you can’t pay in full, you’re not going to take advantage. Why not? You will end up paying more money that has accumulated in interest at the end of the billing cycle rather than the rewards you are actually going to qualify for. This is defeating the purpose of the cash rewards credit card.
Now that you have a general understanding of you what you can and cannot do with a cash rewards credit card, I will now discuss how this type of credit card works.
There are cash rewards credit cards out there that will give you multiple points for particular categories. For instance, a credit card company may offer you 3 points back on groceries, 2 points back on gasoline purchases, and 1 point back on everything else.
The points that you earn from using your cash rewards credit card can be exchanged for gift cards which can be used just about anywhere. On the other hand, if you prefer to exchange the points for cash, you can always sell them on EBay.
Now let’s use the above example and your spending habits look like this:
You spend $1,000 on groceries a month
You spend $300 on gas for the month
You spend $1,000 on anything else
We have a grand total of $2,300. Now, we can break this down to show you how much you’re going to get on your cash rewards credit card.
For the first category of groceries, you are going to get 3 points back for every dollar you spend. You spent $1,000 and will get 3,000 points back. For the gas, you get 2 points back. For the $300, you get 600 points back. For everything else, you will get 1 point back. For the extra $1,000, you get 1,000 points. This leaves you with 4,600 points!
Now, the question is what can I get with 4,600 points? With some of the credit cards I have worked with, I have received $50 gift cards to just about anywhere for 5,000 points. Of course, this differs among the different cash rewards credit card companies, but I am hoping that you now have a good understanding.
Building up points is really not that hard. In fact, it is quite simple! All you have to do is follow the rules that were previously discussed and find a cash rewards credit card that suits your spending habits. As long as you use this card for most purchases, you will be able to take full advantage of your everyday spending.
Tags: Cash Rewards, Cash Rewards Credit Card, Cash Rewards Credit Cards, Credit Card, Credit Card Companies, Credit Card Company, Credit Cards
