It’s a given that you’ll be spending some money each month. Ideally, you’ll try to limit your expenses, but groceries, clothing and – if you want to participate in modern society – electronics aren’t really optional.
Now, here’s the thing: vendors want your business. They’re willing to compete for it by offering better customer service, more innovative products, and of course by spending tons on advertising. They also sometimes allow you to claim discounts; some of which are shown upfront and others a little less so.
Credit card companies offer discounts too, in the form of rebates. They make no money off an account that’s never used, and they’re constantly wrestling to attract new customers. Unless you plan to pay off your balance every single month (which is certainly the most economical way to use a credit card), the most important thing a prospective client should be looking at is a card’s interest rate. Banks have fairly little wiggle room in terms of what they can offer here, though. They therefore strive to get your attention with a number of bells and whistles, one of which is cashback.
You’ll typically see the cashback amount on your statement at the end of the month. In other words, it’s exactly as if you’ve already paid it on your balance. Alternatively, you may be mailed a check, or get it deposited automatically in a checking account linked to your credit card. This makes cashback different from rewards programs: there are no “points” that are only valid at certain stores and you have to redeem yourself. You can, however, choose to cash out your refunds at an enhanced rate with the card issuer’s partner companies, meaning better deals on flights and gift cards at selected retailers.
The amount of cashback you qualify for depends on which credit card you have. The percentage usually falls between 1% and 3%, but there is one hack you should know about: merchant partnerships. Banks and vendors often make an agreement to double the amount of cashback you earn when shopping at that specific business or spending on a certain kind of item. Just like getting some money back on each purchase makes it a good idea to get a credit card instead of (or in addition to) some simpler payment methods, choosing your credit card depending on what sort of thing you spend most money on is a wise decision.
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Which Credit Cards Offer the Most CashBack?
Cashback percentages aren’t typically the first thing you’ll consider when checking out different credit card offerings. To start with, you’ll have to figure out which packages you qualify for, which depends mainly on your credit score. After that, you should look at each card’s monthly fees and interest rate, as well as any special introductory offers – these by themselves often make switching credit card companies your best choice. Once you’ve done this and eliminated all those that don’t suit you, you can start comparing rewards and cashback programs.
You’ll soon find that different cards are tailored to customers with different lifestyles. Some will work better for people who travel frequently, with higher rewards or cashback rates on expenses like gas, hotel rooms and airfare. Others will prove more profitable if your main monthly expenditure is on groceries and gas.
Here are a few examples of credit cards that can save you money, cash back style:
- Walmart Rewards Card: Operated by Capital one, this is a great option for anyone who’s already a frequent shopper at this no-frills shopping giant. Though you will receive only 1% cashback when using it as an ordinary MasterCard, this rises to 2% on anything you spend in any Walmart store, or on eating out and travel. Better still, you get a full 5% back on online purchases from Walmart, as well as for using the Walmart Pay app in store for the first year.
APR: 17.99% to 26.99%
Monthly Fee: $0
- Citi® Double Cash Card: If you have fairly good credit and want to reap the benefits of cashback without (maybe) changing at which stores you shop, this credit card may be for you. Every one of your purchases gets refunded at 2% (1% when you buy and another percent when you pay your balance, hence the “double cash” part of the name). In case you’re looking to switch cards, you’ll also be happy to know that they offer a zero percent APR for 18 months if you do a balance transfer, though you’ll lose 3% of the balance amount if you exercise this option.
APR: 13.99% to 23.99%
Monthly Fee: $0
- Chase Ink Business Cash Card: Small business owners know how important it is to pinch every penny they can. No matter how large or small your enterprise is, uncontrolled overheads can sink you just as quickly as an unpaid tax bill, so getting an automatic 5% cash back on at least some of them seems like a total no-brainer. This rate applies to office supplies and bills from phone companies and internet service providers only, unfortunately, and is capped at $25,000 annually. You’ll see another 2% refund on payments made at restaurants and gas stations (again up to a yearly $25,000 spend), plus 1% on all other purchases. Another perk that will appeal to small business operators is that you can order multiple additional cards for your employees at no charge, and set spending limits for each.
APR: 13.24% to 19.24%
Monthly Fee: $0
- Discover It Student Cash Back Card: Most students, busy as they are, are probably willing to settle for any reasonably uncomplicated, zero-fee credit card. Don’t miss out on rewards you may be eligible for, though: you can qualify for this cashback credit card with only a moderate credit score and get up to 5% back each month on selected purchases, up to a maximum of $1,500 per quarter. Other payments are refunded to the tune of 1%, but here’s the catch: you have to “activate” those spending categories the 5% rate applies to every 3 months. The ones you drop the most cash on, like bookstores and restaurants, may not be available in any given quarter, perhaps leaving you stuck with only 1% cashback on anything except auto parts and medicine.
APR: 12.99% to 21.99%%
Monthly Fee: $0
- U.S. Bank Cash+ Visa Signature® Card: Getting cash back only when you buy something you don’t need is obviously not a great idea. If none of the other cards on our list quite matches up with your particular spending pattern, this could be the one: instead of earning extra cash back on defined purchases like airfare, accommodation or online purchases, you yourself can choose two categories in which you’ll earn a competitive 5% cashback (up to the first $2,000 spent per quarter). Another, fairly general category you select, like gas or restaurant meals, nets you 2%, while any other payment is tallied up at 1%. You have the option of changing the two categories earning the highest rate every three months.
APR: 13.99% to 23.99%
Monthly Fee: $0
Although owning several credit cards makes your credit score take a slight dip, there’s nothing stopping you from carrying more than one. If you take care to keep all of your balances under control, you can maximize the amount of cashback you earn by always using whichever card offers you the best deal on whatever you’re buying.
Non-Credit Card CashBack Programs
Even if you don’t want or don’t qualify for a credit card, you can still take advantage of cashback savings. Ideally and usually at least for online shopping, this will be just as automatic as using plastic, though the retailers you can make use of may change from one month to the next.
Also, some of these programs give you rewards points instead of real money for every purchase. Redeeming these may mean getting gift cards for any of several vendors instead of cash you can use, for example, against your next credit card bill.
Let’s get back to basics: in the good ol’ days, stores would pay to put coupons in local newspapers. Anyone who took the time to cut one out could, for example, get 50￠ off a bag of flour. The store would count on most people buying more than just flour, so they’d make up that half dollar on other products.
Later, store rewards cards were introduced. This streamlined the whole process of coupon clipping for both sides, but had the additional advantage, for the retailer, of providing information about individuals’ shopping habits. Cashback apps do much the same thing, only across numerous different sellers – it’s up to you to decide if the money you get back makes it worth seeing a few more targeted ads.
Finally, another difference between credit card and app-based cashback programs is whether the money refunded to you comes out of the merchant charge the seller pays on credit card transactions. A retailer signing up with an app like those you see below, just like choosing to hand out coupons, is a more deliberate action that indicates that a particular brand is actively looking for business, which suggests that they may offer better deals in general.
There are literally dozens of cashback apps and websites out there, with more popping up like mushrooms all the time. This makes it difficult to determine which is really best for any particular kind of shopper, but never fear: unlike with credit cards, switching between them is quick, painless and free. Here are some of our favorites:
- Rakuten: This website only pays out once every three months using PayPal and mailed checks as payment methods. Still, with a network of over 2,500 vendor partners, Rakuten is one of the first to think about. You can find rates as high as 40% from time to time, though something in the region of five percent is more realistic, especially from major brands like Gap, Dell and Disney. These deals are often paired with hefty discounts you can browse through on your desktop or mobile device.
- Ibotta: Most typical families will be glad they got on this particular bandwagon, which requires you to do very little to earn back some of the money you spend. Ibotta will help you take advantage of cashback offers at over 300 online stores, as well as 500 options for grocery pickup and delivery services. A further 1,500 brands will give you refunds, whether you shop in-store or online. Using the app is almost like playing a game, and at the moment they’ll even hand you $20 just for signing up. You can choose to cash out via Venmo, PayPal or gift cards.
- Checkout 51: Most cashback programs make you shop at particular retailers to earn your discount at the end of the month. Checkout 51, on the other hand, will reward you for buying a promoted product wherever you prefer – just take a picture of the receipt or packing slip. Unfortunately, the items on their list – which is updated once a week – are usually from prime brands, so even with cashback you may end up paying more than a similar, cheaper product. You’ll also need to take care that you buy exactly the product specified, otherwise you’ll lose the refund. Significantly, Checkout 51 also offers rebates on gas, making them a good choice for frequent drivers. Payment is transferred to your bank account as soon as you’ve earned $20.
- Shopkick: Though also an online and in-store cashback app, Shopkick also allows you to claim rewards just by completing assignments like watching videos, browsing websites that interest you and – especially – just walking into certain stores and scanning items’ barcodes. You’ll earn more points (“kicks”) by actually spending money, of course. Unlike the other cashback apps we recommend, you cannot withdraw this in the form of actual dollars and cents – though you can choose gift cards from a wide range of retailers.
Some of the above programs have browser plug-ins that automatically log how much cashback you’re entitled to when you shop online. For offline purchases however, since the website or app you choose doesn’t have access to your credit card statement, you will generally have to take a picture of your receipt to claim your cash.
Depending on how much work you’re willing to do, it’s often possible to “stack the deal” and combine a cashback program with a coupon code (and perhaps even find a better price using a couponing app like Wikibuy). Combining multiple offers can even push your total discount to over 100%, some of which may be in the form of cashback.
What Is CashBack Offering You?
There are more financial tools at your disposal than you probably know about; cashback is one of them. Many people pay more than they need to for personal loans, car insurance and even groceries simply because they haven’t checked out all their options.
With cashback, it’s worthwhile comparing the various apps and credit cards with this feature, side by side with your monthly budget. The amounts you can save in this way may not seem huge, but let’s try a little thought experiment: let’s say you spend $300 per month on some type of purchase, perhaps groceries or eating out. At 1%, that’s $35 back in your pocket by the end of the year; if you choose a card that offers 5%, that rises to $180. In either case, if you found this lying on the sidewalk, you would probably not leave it behind.
What’s CashBack‘s Worst Feature?
The thing to remember about cashback programs, tax-deductible expenses and special offers in general is that they’re not necessarily designed to benefit you. Instead, they’re meant to encourage you to behave in a way that suits someone else.
The Federal government, for instance, wants to increase the amount of renewable energy generated in the United States, so they offer you a tax credit when you install a solar panel on your home’s roof. This does not automatically mean that going green will not end up costing you more money. In the same way, earning cash back is not an excuse to splurge on stuff you don’t need.
If you spend a thousand dollars on hamster wheels and get 3% back, you’ve still wasted $970 (unless, of course, you own a pet store or are building a weird power generator). The way to use cashback intelligently is therefore not to spend more lavishly than you already do, but rather to keep to your old habits and see the small amount you receive at the end of each month as pennies from heaven.
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Sometimes, people lose some of their money to large companies by not knowing about hidden charges, fine print or how interest works. With cashback, you can turn the tables somewhat and effectively pay less for many purchases. Unlike with couponing, this can be pretty much be automatic once you’ve set it up, perhaps by switching to a better credit card.
In other words: don’t delay. Take some time today to figure out how you can make cashback work to your advantage. Two or three percent may not seem like much, but you’d be dancing a little jig if your employer offered you a similar raise – and cashback is generally tax-free.