Cash back credit cards can be a great way to earn rewards provided you have the discipline to limit your purchases to those you can pay off in full each and every month. The majority of these cards offer the user between 1 – 5 per cent cash back on all purchases, although there are some variations depending upon the card and the bank (for instance, some cards may offer higher rewards for certain purchases). The following are a series of tips to help you use and maintain your cash back credit card in the most effective manner.
Choose the Best Available Card
The first step is really very obvious – find, apply for and obtain the card that suits your needs best. For example, if you spend a significant amount of money on commuting back and forth to work, choose a card that is focussed on giving you cash back when you buy fuel (the BP-Citibank card is definitely worth looking into for this purpose). If you spend a lot on groceries and other goods in stores like Woolies, then the Woolworths branded card is a good option as this lets you earn points as you shop in any of their stores.
If you don’t fit into the above categories and spend in a less loyal manner where you buy petrol from the handiest filling station or you eat out more than you eat at home, then a pure-play cash back card is for you. These will give you cash back at a flat rate on whatever you purchase with the card, whether that’s a meal out with friends or a holiday.
Arrange for a Monthly Direct Debit
The first requirement for using a cash back credit card is paying off your balance in full each and every month. Missing a payment or not paying in full is not an option. Doing so means that the interest charged will quickly negate any cash back (or rewards) earned. With an automatic direct debit it is up to you to make sure that you have enough money in your bank account to cover the balance, so spend wisely. Keep in mind that neglecting to pay your minimum amount will mean that you will receive none of your cash back.
Use the Card!
Using your card to pay for recurring bills (such as your mobile phone, broadband plan or electricity) is an excellent idea as you will be able to consistently receive cash back rewards. Utilities permit you to set up automatic payments so you that your bills are always paid on time. If you are renting your accommodation, find out whether your landlord will allow you to pay for your rent via the card as well.
The basic message is the more you use the card, the more money you will receive back – so try to use your card on as many purchases as possible. And, of course, the larger the purchase, the more you will receive back. However, again, make sure that you will be able to pay the balance off in full and on time. Also, ensure that you are only using the card for purchases as this will maximise the amount that you receive back.
Avoid Fees at All Costs
In order to ensure that your cash back benefits are maximised, it is essential that you avoid fees as much as possible. Paying interest on your credit card can be severely detrimental to your savings, so at the very least make sure that you pay your balance each month completely so that you do not have to pay additional interest.
Keep in mind that you will also accrue fees if you make your payments after the due date or exceed your credit limit, so make sure that you are keeping track of your purchases!
Think of it as a Debit Card
Instead of treating your cash back card as an actual credit card, consider it more like a debit card instead. Although a debit card ensures that you are not spending outside of your means, a cash back credit card can do the same thing as long as you practice some discipline with your spending. And, on top of living within your means, you could also be earning cash back on a vast majority of purchases.
What you do with the cash is up to you, but you could use it to top up a savings account, pay off a loan or even make overpayments on your home loan. Or, you could just spend it!
Know the Terms of the Agreement
Without doubt one of the most important things to be aware of when it comes to cash back credit cards is exactly how the cash is given back to you. This can be done in a variety of ways, so you’d be best to check with the bank before applying. Determine if you can request payment via cheque once the total cash back amount reaches a minimum amount, if you can get an automatic payment to your bank account, or perhaps receive payment once per year via cheque. Another interesting way to use your cash back is to automatically reduce your total balance on your statement.
Be mindful that in some cases there will be a date at which point the cash back rebates will cease. Make sure that you are constantly keeping track of these dates (if there are any) so that you aren’t caught out. If this occurs, there is really no point in keeping the card and you may wish to start to search for another offer from a different bank.
Credit Cards with Cash Back
| Credit Card Offer | Purchase Rate (p.a.) | Balance Transfer (p.a.) | Annual Fee | Apply now | ||
|---|---|---|---|---|---|---|
| rate | period | |||||
|
BP-Citibank Credit Card How about 10% cash back on petrol at BP? And 0.5% cash back on everything else. |
20.89% | 0% | 6 months | $89 |
Featured Card |
|
ANZ Rewards Credit Card 10,000 bonus ANZ Rewards points for signing up. Cash back + Shopping vouchers. Apply before 12-06-12 |
19.89% | - | - | $89 |
Editor’s Choice |
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