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Many consumers use cash back cards to pay for their everyday expenses. Check out which perks are a must when getting a cash back credit card.
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Cash back cards are a popular choice — the most popular, in fact. A credit card study by The Motley Fool Ascent found that 68% of Americans have a cash back card. No other type of credit card was held by more than 32% of Americans.
There’s a lot to like about cash back credit cards. They’re easy to understand, and they make it a breeze to earn money back on what you spend. Still, to save as much as possible, it helps to know what features to look for in a cash back credit card. Before you apply for one, make sure it has the following perks.
1. A high cash back rate on your everyday expenses
One of the main differences between cash back cards is their cash back rates. Bonus categories vary quite a bit from card to card. Some earn more back on groceries, others on dining, and others at online retailers, to name a few common bonus categories.
When you’re shopping for a cash back card, start by thinking about where you spend the most money. That way, you can pick a card with bonus categories that fit your spending habits. Here are some card options that earn bonus cash rewards in popular spending categories:
Gas and groceries credit cardsDining and restaurant credit cardsCredit cards for online shoppingCredit cards for entertainmentCredit cards for streaming services
You could also go with a card that earns flat-rate cash back, regardless of the type of purchase you make. There are a few cards that offer 2% back on purchases, which are a good choice if you don’t want to bother with bonus categories.
2. A competitive welcome offer
Many cash back cards have welcome offers for new cardholders. If you fulfill the terms, you earn extra cash back. For example, a card may have a welcome offer of $200 cash back if you spend $500 in the first three months.
As you compare credit cards, also compare the welcome offers for the cards you’re interested in. They aren’t the only thing that matters, but they can be a great way to earn lots of bonus cash right off the bat. If it’s a dead heat between two or more cards, then the best welcome offer could work well as a tiebreaker.
3. Easy cash back redemptions with no redemption minimum
With most cash back cards, redeeming your cash back is simple enough. But there are exceptions, which is why it’s important to check the rules a card has on redemptions first.
Start by seeing how you’ll be able to use your cash back. Ideally, you’ll be able to redeem it as a statement credit on your credit card bill, or a direct deposit to your bank account. Watch out for cards that give you more limited options, such as store gift cards.
Also, look for redemption minimums. Many card issuers let you redeem any amount of cash back, including as little as $0.01. Others set redemption minimums, such as $25. This makes it harder to use your cash back, especially if you ever stop using the card and don’t have enough cash back to meet the minimum requirement.
4. Purchase protections
You’re probably going to be using your cash back card for most of your purchases. After all, the more you use your card, the more cash back you earn. In case anything goes wrong with a purchase, it’s a good idea to get a card with some complimentary extra protections.
There are several coverages that some credit cards offer on eligible purchases. Here are a few worth looking for:
Purchase protection: Covers new purchases against damage or theft within a set time period, such as 90 days from the date of purchase.Return protection: Covers returns that the merchant doesn’t accept within a set time period, such as 90 days.Extended warranty: Automatically extends the manufacturer’s original warranty.
The exact terms and coverage limits depend on the card. You may not find every single type of coverage on the card you want, but a quality cash back card will normally have at least one or two.
With so many cash back cards available, it can be hard to decide which one to get. By focusing on a few key perks, you’ll have a much easier time narrowing your list down to the best credit cards for you.
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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.
