How to pick the right cashback credit card

Nov 5, 2021

How to pick the right cashback credit card
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If you're new to credit cards, or even if you're a seasoned cardholder looking to simplify your life, figuring out how to earn cashback rewards can be a daunting task. It’s important to remember that the best cashback credit card for you is one that you can use frequently and that rewards you for the type of spending you do the most.


Using a cashback card is similar to getting paid to spend money that you would have spent anyway. Or, to put it another way, it's a discount on whatever you buy with the card. Big spenders can easily earn hundreds of dollars in cashback rewards each year.


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Decide which type of cashback credit card you want


Flat-rate cashback card

Flat-rate cashback cards pay a fixed percentage (usually between 1% and 2.5%) on all eligible purchases, whether you plan a long-awaited vacation or spend a ton on groceries for a big family. This simple rewards structure makes it simple for you to earn cashback on everyday purchases.


Bonus-category card 

Choose a bonus-category card if you're willing to put in some effort to get a higher rate of cashback for purchases in some places — for example, restaurants, grocery stores, or gas stations — and less, typically 1 % back, everywhere else.


Bonus-category cash-back credit cards come in two main flavors: bonus categories that remain constant and those that change.


  • Fixed categories

These cards provide a higher rewards percentage for spending in specific categories, such as gas or groceries, and a lower rate usually 1% on all other purchases. The categories remain the same, though some cards limit the number of rewards you can earn in a given category. Fixed-category cards are more complicated than flat-rate cards, but at least the bonus categories are consistent.


  • Rotating bonus categories

Cards with rotating bonus categories provide higher cashback percentages (usually 5%) in purchase categories that change every quarter. From home improvement stores and streaming services to drugstores and wholesale clubs, common bonus categories include everything. 


Be aware of cashback credit card limitations 

Earning cash back on purchases you'd make anyway with a credit card can be very rewarding. Even so, when looking for the best cashback credit card for you, keep an eye out for these common pitfalls.



Reward rates and category spending

High rates in certain categories are wonderful, but not all categories are created equal. Consider how much money you spend in this category on a regular basis. For example, if your card offers 3% back on supermarket purchases rather than a higher 5% back on streaming video services, you're more likely to earn more cashback. This is due to the fact that you spend more money at the supermarket than you do on streaming. And you're probably only getting 1% back on everything else. That's the allure of a good flat-rate card.


Annual fee

This is usually zero because annual fees on cash-back cards are uncommon unless they offer a particularly lucrative cashback rate. And some of them do. If a cash-back card has an annual fee, it must be so good that the fee is easily repaid every year.


Redemption options

Credit card rewards are only valuable when they are redeemed.  When evaluating a cashback credit card, keep an eye out for issues such as minimum redemption requirements and cashback expiration policies.


Additional benefits to look for

Other features to look for in a cashback credit card, depending on your objectives, may include welcome offers, travel insurance, or purchase protections such as extended warranty or trip cancellation/interruption coverage. Consider whether you'd actually use those benefits and how much they might be worth to you.


The bottom line

Cashback credit cards are a great way to earn a little cash back on everyday purchases. At BanqMart, we help you consider your shopping habits and select a card to ensure you get the most out of cashback rewards. 

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