Are Cash Back Credit Cards Worthwhile?

There are different types of credit cards that we can choose from and it is a good idea to compare them all to make sure that we are getting the best card to suit our needs. Cash back cards might tempt us – we may think that they will be really good for us to use. However, there are advantages and disadvantages and they will suit some sorts of people more than others. This means that it is a good idea to have a look at them in detail and think about whether they will be suitable for you.

How a Cash Back Card Works

A cash back card will give you a reward when you spend money on the card. This is sometimes points or some sort of reward but with a cash back specifically it will be some money. What happens is that you will get a percentage of what you have spent given back to you the following month. It is credited to the card so you can use it to pay for things. This sounds fantastic as you get rewarded for the shopping that you do without having to make any effort at all.

Advantages of a Cash Back Card

Therefore the card is really good for anyone that uses their credit card a lot to buy things. They will be able to get some money back for everything they buy. Cards will differ in how much money they give and so you will need to check this out. Some will also give rewards rather than money and that could be better but it depends on whether the rewards will be useful to you or not, so it is worth investigating this.

Being paid to use a credit card can be fantastic. It is not something that we probably expect to be able to get and so it can be very tempting to use a card like this and get the cashback. However, there are some disadvantages that you need to be aware of.

Disadvantages of a Cash Back Card

The interest rate on this sort of card can be higher than on a regular credit card. It is well worth checking this out. If you tend to use a credit card and not repay everything you spent each month, then it can be a good idea to check out the interest rates on different cards. You might find that, even with the cash back, it will be cheaper to use a different type of card. This is because the cashback tends to be a very small percentage of what you have spent and the interest a lot higher. Therefore, the card tends to be most suitable for people that repay their credit card in full each month. If you always do this then it can be really worthwhile getting a cashback and benefitting for that small amount of money each month to help you out.

It can also be tempting to justify buying things because you will get cashback on it. However, the amount of cashback that you get is very small. It means that you cannot justify things like this. If you are buying things that you would have bought anyway, then this is great, you will get the money back, but otherwise do not buy extras. If you feel that you are the type of person that would justify buying things because you are getting some money back for doing so then it is probably best to not get a cash back card as you may end up just spending too much. However, if you know that you will just use the card as normal and pay it off in full each month then it could be well worth it.

Should I Pay Off All my Debt?

There are many people that work really hard to make sure that they repay their debts as quickly as possible. They decide that they want to get rid of them all and they will then clear them. However, is this a good idea?

Early Redemption Fees

It is worth making sure that there are not fees on the debts that you are repaying to start with. For example, you will find that some loans will have some thing called an early redemption fee. Basically, this is something you will be charged if you repay the loan early. Some loans do not have this charge at all, some have a very small one to cover administration fees and others have a really large charge to try to stop you moving to another lender or repaying early as they will miss out on the interest that they would otherwise have had. It may not be immediately obvious whether this will impact you. It can be wise to get in touch with your lender directly and ask them and then you will know for sure.

Interest

It is good to see how much the interest on the loans is. If it is very ow, then there is a chance that you might be better off putting your money elsewhere. For example, a mortgage rate can tend to be one of the lowest loan rates but you may find that there are savings accounts that will give you more money. So, if you put money into the savings account rather than against the loan, you will actually get more money. This can be rare though and you will need to keep checking the rates to make sure that you will not be better off repaying the no credit check loan rather than putting the money in a savings account. This is because rates do change from time to time and this means that we will need to keep a check on what they are. Even if the Bank of England base rates do not change, lenders and savings account providers may still change their rates. You may not even notice so it can be wise to ask the provider every so often so that you can be sure of what is going on with them.

Alternatives

It is also good to think about alternative problems with repaying your debt. It takes a lot of effort to repay your debt quickly and early. It means that you will have to sacrifice a lot of things or work much longer hours so that you have enough money to be able to repay the debt. It is worth thinking about the impact that this might have on you. Working a lot more will mean that you have less time for leisure. For some people, they will be able to cope with this, but it is a good idea to consider whether it is something that you will personally be able to cope with and if you can, how much you will be able to cope with. He same as cutting back on spending as many of us really like to treat ourselves to a few things and having to give that up can be hard. It might be sensible to have a compromise, where you do a little extra work and cut back a little bit but still have leisure time where you can relax and buy yourself a few treats. You have to think that if you have large debts then this new lifestyle might go on for a very long time and so you have to make sure that it is something that you will be able to manage.

Is a Zero Interest Credit Card Worth Getting?

There are a few credit cards which have zero interest. This sounds fantastic but it might get you wondering whet there are so many people that do not use this sort of card. This is because there are pros and cons to the card and it is a good idea to be aware of these so that you can make a calculated decision as to whether this card is suitable for you.

Cost

Obviously the cost of the card is fantastic. You will be able to use it and not worry about repaying it as you will not be charged any interest to keep owing the money. However, it is wise to be very careful with this. This is because you will find that the zero interest period will be limited. This means that after a certain amount of time, usually six months. You will start to be charged interest on what you owe on the card. Additionally, it is often the case that this interest rate will be higher than average as well. This means that you could soon start to have to pay a lot of money in interest and if you do not repay the card quickly, then you could end up paying more than you would have done, had you taken out a standard credit card. Therefore, you need to be careful. Some people will move their outstanding balance to another zero interest credit card once the zero interest period is up and continue to save money. This is something worth looking in to before you take out the card as you will need to be sure that it is an option that you will be able to use. Sometimes there are quite a few card issuers offering zero interest cards but often there is not and so you need to make sure that there are some different ones available when you make plans as to what you are going to be doing with the zero interest card.

Temptation

It is worth thinking about whether having a card like this will be really tempting for you. Think about whether you feel that you will be tempting to spend lots of money on the card because the interest is free, In some ways this will be okay – if you buy what you would normally buy, but pop it on the card, then you can delay paying for it. However, some people will see the card as an opportunity to buy lots of things for free. It is so easy to forget about the fact that we actually have to repay the card at some point. We therefore could easily be tempted to just see it as free money that we can have and not worry about it. Of course, you will need to repay it and there will be interest to pay at some stage. Therefore, if you think that it is likely that you will fall into the trap of thinking that you should buy lots of extra things because you have the ability to be able to do so.

Spend and Save

There are some people which are pretty clever with zero interest cards. They will use the card to buy everything that they would normally buy so food, toiletries, petrol etc. Then put aside the money that would normally use to pay for those things into a savings account. Then when the interest free period is up they will then take the money out of the savings account to repay the card in full and keep the interest. This is particularly good if you can find a savings account which pays high interest but even if you cannot, you will still be able to gain some money from it.

Does it Matter Which Bank I Pick?

There are lots of banks available for us to use and it can often be much easier to just stick with the one that we have always used. Most banks offer similar products such as current accounts, savings accounts, mortgages and loans, so you may feel that there is no point in comparing them. However, there are some differences between the different banks and it is a good idea to get to know what these are and then you will be able to decide whether you would be better off with a certain bank compared to another.

Interest Rates

The interest rates will differ between different banks which could make a big difference to you. For example, you will find that some will have savings accounts which pay out more interest than others and so it is worth considering those to put your savings with. You will also find they differ in the rates they charge for loans such as overdrafts or personal loans. Therefore, you will need to check these out if you are looking to borrow money.

Reputation

Some people get very concerned about the reputation of the bank that they choose. This is understandable because you are trusting them with your money and you want to be sure that they will look after it well. However, it is good to make sure that you look into their reputation in a useful way. Some people will just feel that if they have heard of the bank then they can trust them. They assume that a well-known bank will have to be good or else its reputation will be spoiled. However, this is not always the case. If a bank is not well-known it will need to have a good reputation because it will depend on people telling each other about it in order for it to get new customers. If it has bad reviews it will massively damage it. A large well-known bank is protected from this because many people just assume they are good and will not read their reviews.

Branches

Some people like to be able to go into a branch of their bank so that they can easily draw out and pay in money and also talk to the staff if they have any problems. However, some banks these days have no branches at all or branches are scarce as many are shutting and this means that if you do want a branch you will need to check this before choosing this particular bank.

Online Banking

Some people really like to be able to use an online banking system or app. It is a very convenient way to bank and it means that you do not have to be near to a branch or cash machine and you do not need to wait for banking hours to do transactions. It can not only give you more control over your money but means that you will be able to instantly get a balance which can be very helpful if you are trying to stick to a budget.

Customer Service

Customer service is something which many people have strong feelings about as well. They want to be able to know that if they need some information or have a question or problem that they will be able to get in touch with the bank and get the information that they need. This could be through a call centre, online chat, email or something else. It is worth thinking about what you would want and whether the bank in question offers this. It can be wise to even get in touch with the customer service department before taking out the account to find out what they are like.

Should I Stick with the Same Bank for Everything?

There are many people are really loyal to their bank and they will use the same bank for everything – such as their current account, savings, credit card, mortgage and loans. However, there are other people that have accounts with all sorts of different banks. You may wonder whether it is best to stick with the same bank or to use a selection of different banks. There are pros and cons of both and it is worth considering them so that you can decide which will work the best for you.

Interest Rates

One thing that a lot of people will check, before opening a new account or borrowing money is the cost of doing so and the interest rates. With savings accounts, the interest rates vary a lot and it might be best to look for an account that pays the rates so that you get a good return on your money. With a current account, there may some banks that offer accounts that pay interest or have other benefits that you are interested in, some that charge and they will also tend to have an overdraft facility and you will need to think about whether this is something that you will use as there will be an interest rate for this and there may be a limit on how much you can borrow. With loans and mortgages you will need to compare the interest rates and any other fees that the have to find one that is cheapest. These will all vary between banks which is why some people choose to save with one and take a loan with another.

Types of Accounts

Not all banks will offer the type of account that you want. For example, if you want to buy some Premium Bonds then there is only one place to get them and no other bank offers something similar. However, there will some accounts that are common across all banks. You will need to think about what you are looking for and then see who is offering that.

Convenience

IT can be a lot more convenient just having everything with the ne bank. If we need to deal with things in branch, then we will only have to visit one. If we do online banking, then we will only have to log in to one place in order to check everything out. You may even risk forgetting where you money is, if you put it in lots of different places, however you could remedy this by writing it down and keeping the information safe.

Loyalty

It can be the case that you will want to be with the same bank you always have been because you are loyal to them. You might like that particular bank and feel that you want to stick with them. If you have always had a good service from them, then you may see no reason why you should swap to a different one. It can also be a worry, that if you have always been with the same bank, that if you swap then you might find that the one you go to is much worse and that you will regret it.

It is probably better, if you want to better off financially, to not always stick with the same bank. However, you will find that you will forget who you are with then perhaps it is safer to stick with the same one. It is a good idea to compare them though and think about how much of a difference it might make if you do use a different one.

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