When looking for a credit or debit card, cashback rewards are one of the perks highlighted by credit card companies. It's usually an advantage that consumers overlook because only a few people understand this. In this article, Payday Depot will be discussing cashback and how it works. Let's dive in!
What Is a Cashback Reward?
A cashback is a credit card reward wherein a portion of purchases is paid back to the cardholder. Consumers usually prefer cashback because they can use this reward for whatever purchase they will make. And it's not limited to dine-in expenses, travel credits, or grocery points that other credit cards offer.
In cashback rewards, the credit card will specify the percentage upfront. For instance, a 3% cashback on purchases means that you'll get $3 for every $100 that you spend. This $3 can be redeemed via check, a statement credit, or bank transfer.
Although the cashback might not seem that much at first, these rewards can add up pretty quickly, especially if you are using your credit cards often.
How to Maximize Cashback Rewards
If you availed a credit card with a cashback reward, here are 4 useful tips on how to maximize this amazing perk:
1. Always Pay Your Monthly Dues in Full
Paying your monthly dues in full will help you avoid interest fees that can hinder you from maximizing your cashback rewards.
Only fully paid purchases are eligible for cashback in some credit card companies. You can check the terms and conditions if this is the case with the credit cards you own.
2. Review Cashback Tiers
Some credit card companies offer tiered or varying cashback rewards. For instance, department store purchases are eligible for 1% cashback, while groceries are eligible for 0.5% cashback. For tiered cashback rewards, a credit card can give 1% cashback for purchases that are from $1 to $10,000 and 2% for any succeeding amount per month. Always review and remember your cards' bonus categories and use the best card for different purchases.
3. Review the Fees Connected to Your Credit Card
Other credit cards offer high cashback rewards but also charge higher annual fees. Make sure that the rewards you'll likely get are greater than the fees you'll be charged with. It's always safe and better to opt for credit cards with zero to low annual fees, even if they don't offer the best cashback rate.
4. Get Updated With Promotions and Make the Most Out of Them
Credit card companies sometimes have promotions wherein they offer double the cashback reward for specific purchases or for a specific period. Stay updated and make the most out of these promotions, especially if you are already planning to make the purchase.
Conclusion
Cashback rewards are great incentives offered by credit card companies. They refund a specific percentage for all eligible purchases made through statement credits, bank transfers, or checks. This perk is great and helpful, especially if you follow the steps outlined above to make the most out of your cashback reward.
