If you are going to make the purchase, you may as well double dip as much as possible, right? Apparently, your fellow consumers feel the same way because cash back rewards cards are continuing to grow in popularity. It sweetens the pot when credit card issuers award more points for commonly purchased goods, such as gas, groceries and travel. In fact, a recent survey of cash back credit cards revealed that card issuers tend to pay 28% more points for these types of purchases than other purchases made with the card.
Friend or Foe?
It can be a rewarding feeling to get your credit card company to pay you for stuff you were buying anyway. Don’t be fooled into thinking that the credit card companies are not winning in the situation as well though. Here’s the thing, many consumers are propelled to use their credit card to make purchases because racking up the points and racking up the cash is an incentive. The problem is that some people get out of control and then can’t pay their balances off when the credit card bill comes due. In these situations, you may end up paying more in interest than you could ever reap in cash back rewards.
Cash in Your Pocket
Now, if you are not allowing the cash back reward incentive to change the purchase behaviors you have or you control the purchases, then you can benefit from the deal. Cash back rewards can work in a couple of different ways. You should check with your credit card issuer to find out how its program works. Some credit card issuers credit the cash back to your credit card balance, so it automatically reduces the amount you owe for the month of the credit. Other credit card companies send you a paper check in the mail. Still, a third option is that the credit issuer allows you to choose how you receive your award payments.
Take Advantage of the Bonuses
If you are truly a wise consumer, you will strategically approach how you use your cash back credit cards to reap the highest amount of rewards. Get to know your rewards program so that you know what types of purchases earn you rewards and which purchases earn you bonus rewards. For example, most credit card rewards programs pay more points when you spend money at the gas pump, grocery store or on travel-related expenses. So, instead of paying with your debit card, make sure that you pay with your credit card for these types of purchases and then pay off the balance when the bill comes in the mail.
Also, pay attention to statements, emails from the credit card issuer and statement inserts for bonus times. Some cash back rewards card issuers run special promotions, so for a one-month period any spending you do earns you more rewards. Or if you spend on certain types of purchases during the promotional period, you rack up extra points, which equates to extra cash in your pocket.