Cash back rewards offer simple ways to save money on the products that you already buy, both in-store and online. Cash back rewards are most commonly provided through credit cards, store cards and online cash back websites. While there are a lot of benefits to cash back rewards, it is important to understand the potential drawbacks of these programs, such as interest rates on balances, as well as how you can optimize the cash back that you receive and save more on purchases.
Many cash back rewards offers will provide greater cash back amounts depending on your purchase type such as gas, groceries or household goods. Others may offer higher cash back amounts for shopping in a particular store. It is worth knowing that many of these cash back rewards programs contain limits and you will only be able to receive a specific amount of cash back within a one-year period.
To learn more about the various cash back rewards programs that may be available to you, including store cards, credit cards and online cash back websites, review the information that has been provided within the sections below.
Cash Back Shopping 101
Cash back is one of the simplest rewards for shopping at your favorite stores or making specific purchase types. While the majority of cash back opportunities comes in the form of store and bank credit cards, there are plenty of opportunities to earn cash back rewards through online shopping. Cash back shopping refers to earning credit back onto an online account or credit card with every purchase that you make. Therefore, it is one of the easiest ways to save money on purchases as you need not generally go out of your way to gain savings. Since most cash back rewards program offer hefty cash back amounts, cash back shopping is a highly competitive form of rewards.
The amount of savings that you can earn through cash back shopping will depend on how well and often you optimize your spending. Most cash back reward programs will offer a variety of cash back options, depending on your purchase type. Imagine you have two different cash back credit cards that provide different types of cash back rewards. For example, one of your credit cards is a store credit card that offers six percent cash back for in store purchases and one percent cash back on everything else while the other cash rewards credit card offers five percent on gas purchases and one percent cash back on any other type of purchase. In a scenario such as this one, you can optimize your cash back rewards by utilizing the appropriate cash rewards card for the appropriate purchase.
There are several online shopping websites that also offer cash back rewards program. These websites hosts a number of different stores, will often provide customers with coupons for additional savings and allow you to earn cash back on qualifying purchases.
While there are some enormous benefits of cash back rewards, these rewards are not without their pitfalls. If you are not cautious about your spending habits, you could find yourself carrying balances on cash rewards credit cards from one month to the next. Depending on the interest rate that you have been provided, you may end up paying more in interest than you will earn in cash rewards. In order to maximize your cash back rewards, it is recommended that you pay your balance off in full each month before you incur interest charges.
It is also worth knowing that many of the credit cards that offer cash back rewards will have a limit to the amount of cash rewards that you can receive within a one year period.
Store Credit Cards and Reward Programs
There are many store credit cards that offer cash back rewards and it is important to review each store card before selecting one that is best for you. There are also several cash back reward cards details to examine, including:
- The rewards that are offered through the use of the card
- What types of purchases offer cash back rewards
- Cash back reward limitations
- Annual fees
- APR and interest rates
- Whether or not the card offers grace periods
As mentioned previously, cash back rewards cards that have higher interests rates and APRs may end up costing you more if you carry a balance from month to month. However, some of the higher APR cards will offer a grace period before interest on a purchase will be charged.
Some cash back rewards cards may have different eligibility requirements, such as membership. For example, the Amazon Prime Store Card, which offers five percent back on all Amazon.com purchases, requires you to be an Amazon Prime member. While an Amazon Prime Store Card may be a good idea if you make a lot of online purchases, there are a variety of other companies that offer cash back rewards to both online and in store purchases, including popular companies like:
- Gap Inc.
It is worth knowing that store cards are not the only type of credit cards that can provide you with cash back rewards. There are several notable credit card companies that offer cash back rewards.
Online Cash Back Rewards
A cash back website offers many of the same benefits that a cash back rewards card does, without having to apply for a credit card. This can be a prominent factor for those who may not meet credit card requirements or for those who do not want additional credit cards. Cash back websites have affiliate relationships with the stores that are listed on their website. By utilizing a special link from the cash back website, you can purchase a number of products including electronics, toys, pet items, clothing and more while earning cash back. The cash back rewards amount is generally a percentage of your purchase. While cash back websites may sound too good to be true, the amount of cash back that you earn is actually a cut from the website’s commission for referring you to your purchase. There are a number of reputable cash back websites, including:
- Mr. Rebates