Three main types of cashback credits
Three main types of cashback credits
Cashback has made it easier for people to save money on their purchases. Every time you make a purchase you get cashback. Cashback credit cards guarantee you some sort of reward every time you make a purchase. Just like normal credit cards, they have a limit, interest rates and monthly statement. This is a good way to save some of your money, especially if you spend large on utilities and common household goods every year.
Many people prefer cashback credit cards because they are more rewarding and flexible as compared to credit cards with points or miles. The other thing is, redeeming your cashback is simple so issues like expiration are not overwhelming. Creditors can deposit the cashback on your bank account, write you a check or give you a voucher to spend at a specific shop.
There are three main typed of cashback you should know about
The flat rate cashback credits cards
With this, you will get a similar reward for all the purchases you make and the credits have no earning limit. For instance, you can earn 1.5% cashback for every purchase you make using this card. These rates may seem too little for a reward but they pay off. When you make purchases and pay all your utilities every month, you can get a cashback averagely $200. If you need additional financial help, consider payday loans.
This is the simplest cashback credit card you can use. You don’t have to do any maths or use it for one type of service to earn your cashback. The main features on these types of cards include a high rate of 1.5% or more, a sign up bonus and annual fees.
The tiered cashback cards
Unlike the flat rate, it pays a different interest rate depending on the category of purchase. For some, low cashback rates are imposed on things like gas and groceries and a high one on other purchases. With some tired cards, high rates are only available if you reach a certain limit. If you spend on the regular, this cashback can be more rewarding than the flat rate cashback cards.
Say you spend $6,500 a year and the flat rate pays 2 percent for every purchase while the tiered cashback offers 3% for purchases exceeding $6000 then it would be wiser to go for the tired cashback services. There is no annual fee, no sign up bonus and a high rate of 3% and more.
The bonus category cards
They offer a high rate on some categories that change throughout the year. Normally, they have a low flat rate on some basic categories but change almost every 3 months for some specific categories. To get the benefits, you have to activate them every time they change. It may be more work but you can end up with more cashback.
You can use this card solely if you have the ability to maximise it every time the categories change. Otherwise, it is very compatible with a flat rate cashback card. The typical bonus credit cashback has no sign up bonus, no annual fee and will need categories that match up with how you spend.