Cash-back credit cards. Are they for you?

Cash-back cards have been around for a long time. Some offer 1% back, some 2%, and most do quarterly deals like giving you 5% back on all purchases at gas stations for 3 months, up to a certain amount. And some cards offer airline miles; I have both. Are cash-back or miles cards for you you? I know they for sure are for me!

I have a 1.5% cash rewards card. So, for every $1000 I spend on it, I get 15$ back. There are no limits, and I am not required to use it by any certain date. Therefore, I can build it and build it and build it up. It’s a form of savings.

However, if you are not responsible with credit cards and carry balances over month to month, then a cash-back card will do you no good. Interest will eat away at the cash rewards you have thus received. Think about it: if I have $100 in cash rewards at the end of the year, but I have paid $101 in interest, then technically, all my cash rewards did was pay my interest. In this scenario, the credit card company wins. Also, consider yearly fees. If your card charges you $100 a year to use their card, then you also receive no cash back, even though your account says you have cash rewards. Pretty simple, right?

I ensure that all of my cash-back and miles cards are paid to a zero balance every month. This allows me to reap the rewards I receive. I only use my rewards cards for stuff I have to buy anyways; bills, grocery store, gas, etc. etc. Why not make a little cash for something you have to spend money on anyways? That’s how I see it.

I can utilize this cash for vacations, or for investing. I can use it to buy something fun, or whatever I want. I earned that money by spending money on stuff that I had to spend money on just to live. So why not? If you are responsible with them. I cannot stress that enough… you MUST pay your balances to zero every month, or the credit card company will take back some of your cash rewards in the form of interest on your minimum payments.



Categories: Financial Health

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