You might have already encountered this term when you first got your credit card or during your shopping experience: cash back. Cashback is a form of reward for consumers who want to make more purchases.
Consumers truly love cashback because it rewards them with points or other prizes, such as discounts and freebies. These rewards are often given when you reach a certain amount. If you're willing to spend more, you'll receive even better rewards.
How does cashback work, and how do you earn cashback rewards? In this article, you'll understand how cashback works and how you can maximize your rewards.
What is Cash Back?
Cash Back is a form of reward that is commonly used on credit cards. You earn the rewards by making purchases and many other transactions using your credit card.
The rewards can be through points or miles, depending on the type of credit card that you're using.
After collecting the rewards, you can redeem them for various things, such as statement credits, direct deposits to your account, discounts, gift cards, and more.
Take note that cashback is not cash that you have in your hands at the time of purchase. It only shows up after you have completed the transaction or your purchase is fully processed.
Pros and Cons of Cash Back
As with everything else, there are clear pros and cons in earning cash back or using cash-back credit cards. It is best that you understand these pros and cons so you'll know if earning and using your cash-back rewards is good for you in the long run.
With cash back, you get a lot of discounts on spending. You get to earn money while building your credit score and even reduce your overall cost. However, it can also take some time before you truly start earning with your cashback rewards.
Rewards can also be capped in many cases, and cash-back credit cards require good to excellent credit scores, which may be difficult to achieve.
Tips for Maximizing Your Cash Back Rewards
Earning cash back is very easy. All you need to do is complete your transaction or purchase, and it will automatically appear on your account.
However, there are so many things that you can do to maximize earning more cash-back rewards.
Here are some of the best tips for maximizing your cash-back rewards.
Check Special Cashback Offers
Your credit card provider often has special cashback offers, and you might not even know about them until it's too late.
This is why it is important to download their mobile banking app so you'll receive updates and notifications about any special cashback offers. Use your cash-back credit card during the offer or sign up for it to earn more special rewards.
There might even be instances where they double or triple the number of cash-back rewards that you'll get during the promotion.
Use Cashback Apps
Aside from using cashback credit cards, there are also cashback apps that encourage you to do more transactions and purchases.
These cashback apps often partner with many stores and establishments worldwide. Link your credit card to these apps and use it to make purchases or transactions at the store.
You'll get cashback rewards on both the app and on your credit card. Get double the rewards for simply making one purchase.
Make Good Use of Discount Codes
When you make a purchase, don't forget to use discount codes so you'll pay less but still get the same amount of cashback rewards.
The system often uses the original price to determine the amount of your cashback rewards instead of the discounted price. This way, you still get the usual cashback rewards while paying less.
Apply promo codes and other discount codes on every purchase and use your cashback credit card to complete the transaction.
Take Advantage of Sale Season
The sales season or holiday season is always a good time to spend your hard-earned money for more cashback rewards. During this time, a lot of stores and online shopping websites give out discounts and promos that can help you save money.
It's also a great time to use your cashback rewards credit card to take full advantage of the sale season.
There are credit card providers that even announce bonus rewards during this time to encourage you further to use your credit card for these transactions. You can double or even triple the amount of cashback rewards that you'll get.
Timing is Key to Redeeming Your Rewards
Earning cashback is just one part of the entire strategy. You still need to time your redemption properly to get the most out of your rewards.
Different cashback cards have different types of redemption processes. Check how you can redeem your rewards with your credit card first, then time your redemption properly.
You can wait until the rewards you want become available, or you can align your redemption with future purchases to maximize it.
Save Your Cashback
If you don't have any plans to use your cashback rewards yet, don't redeem them for other rewards.
This is why you must choose a card where cashback rewards don't expire. You can hold on to the rewards and save them for better reward options when you want to redeem them.
Use Cashback to Pay Your Debt
Another way to fully maximize your cashback rewards is to use them to pay your debt. Many cashback rewards often let you redeem for statement credits or direct deposit into your savings account.
If you have been diligently collecting cash back rewards over several months, you can redeem them as a statement credit or direct deposit and then use the credit to pay off your debt.
Some cashback credit cards even let you redeem rewards for a check that you can use for debt payment.
Conclusion
Earning cashback rewards might be easy, but redeeming and using them can be pretty tricky.
This is why you need to be strategic with your cashback rewards and maximize their potential so you can fully take advantage of the rewards that you get.
Follow the tips mentioned above, and you'll most certainly enjoy using your cashback credit card and get more out of it.
