How to Maximize the Potential of a Cash Back Rewards Card

Posted on December 22 2010 by Imogen Gwynne

How to Maximize the Potential of a Cash Back Rewards Card

Cash back rewards cards can be a great way to save money and reduce the amount of debt generated by credit card usage. However, choosing the right cash back rewards program, and making the most of the rewards system, is not always as easy as it seems. Each credit card has different terms that govern the program, making it imperative to review the fine print and consider the following tips in order to maximize the benefits of a cash back rewards card.

Understanding Rewards Terms

Perhaps the most important aspect of a cash back rewards card is the cash back percentage, also known as the rebate percentage. Most cards offer 1% to 2% cash back on every purchase made with the card, but this rebate percentage isn’t applied until a certain amount of money has been spent. Fortunately, it’s possible to find that threshold amount by reviewing the card’s terms prior to applying. Most cash back rewards cards also offer higher rebate percentages for specific types of purchases. For example, the card may offer 5% cash back on all gas, grocery, or online purchases. Understanding the card terms before applying is the first step in choosing the right card and maximizing the benefits once the account is activated.

Tracking and Planning Rewards

To fully realize the benefits of any type of rewards card, it’s best to thoroughly track all purchases made in order to adequately plan for the coming rewards. By keeping a detailed record of expenditures, it’s possible to decide which purchases to make to maximize the monthly rebate check or balance credit. Ideally, a cardholder should already know what they’ll use their rewards for before they’re even earned. This will make it easier to make useful purchases that will contribute to an overall goal, rather than spending money randomly or frivolously in hopes of receiving a higher rebate.

Consider Fees and Interest Rates

Choosing a card based solely on the benefits of the rewards program is not advisable, as high fees and interest rates could ultimately negate these benefits. It’s important to note that many of the best cash back rewards programs come with the highest interest rates, and may include significant fees as well. Thus, it’s recommended to find a healthy balance between low interest rates and a beneficial rewards program to maximize the benefits of a cash back credit card.

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