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.

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