Are Cash Back Credit Cards Right for You?

Cash back credit cards are a type of reward card which does precisely what it says: gives you cash back on purchases! The reward money is totaled up at every anniversary date of your card and then given back to you in one form or another–usually as a check, deposit into your bank account, or applied to your credit card to give you a surplus, which you could use for new purchases or  pay back some of your current debt. Different cards have different ways of handling this though: some cards give a flat cash back rate no matter what you buy while others have varying rates depending on what category of products or services you buy, and when. Cash back cards sound great in theory, but are they actually right for you?

Types of Cash Back Credit Cards

Cash Back Money StackThe most popular cards are those which can give up to 20% cash back in some instances (almost always via online shopping through the credit card issuer’s “mall” so to speak), 5% or less cash back in different areas, and then bonus cash when you spend X amount in Y amount of time. However, just because they are popular doesn’t make them right for you. It’s also important to pay attention to the interest rate you will have to pay if you do carry a balance and try to avoid annual fees as these will chew up your cash back reward. And finally, apply for cards that you will be able to get, even if that means going for a low cash back rate for a while instead of a high one.

What Kind of Shopping do you Use Your Plastic For?

Some credit cards give you more cash back for buying items like gasoline and food;  others just give you a flat rate no matter what you buy. So you will have to pay attention to where and what  you spend with your card. If you do plenty of grocery shopping with your credit card, you should definitely use a cash back card that will give you the most for your shopping. If you only use your credit card for occasional purchases, then a flat rate cash back card is probably better because you won’t be tempted to blow your credit card just to get more cash back. When researching which cards to apply for, take into account what you’ll be using your card for and go from there.

Don’t Maintain a Balance

If you are in the habit of rolling over a balance month after month, cash back credit cards are going to be of little use. This is because the cash will be applied to your debt, not to your wallet. While this means that you get some payment on your debt to alleviate your budget a touch, it does rather ruin the whole ‘reward’ angle. Make sure you can pay off your balance in full every month before you start using a cash back card.

A Wise Choice

So cash back credit cards are some of the most popular rewards cards available. After all, they cover a wide variety of uses and the cash reward is always useful–you’ll get a more tangible and versatile benefit when using this type of reward card. Just make sure that you understand when best to use your card and pay off your balance in full every month so that you can enjoy your extra money.


Darryl Van Dyke has over 20 years experience in the finance industry. He is currently the senior editor & contributor at

  • Jim

    look out for credit cards that have low annual fees, I had a hard time managing such credit cards that gobble up most of the reward money