Cash back credit card or reward credit card: which one should you get?
Does your credit card offer you cash back or reward points every time you use it? If it doesn’t, you may be missing out on a great feature!
Most credit card issuers today offer cash back and reward points for credit card holders. With a cash back and reward credit card, you can get products for free or on a discount. You can even choose to donate the points you earn to your favorite charity, organization or school. Some credit cards will even let you put your cash back into a savings account that you can use to pay for your child’s college tuition several years from now.
From the many benefits of having a cash back and reward credit card, there is one catch the interest rate on this type of credit cards are a bit higher than credit cards that don’t offer cash back and reward points.
Cash Back Credit Cards Payout
Typically, a cash back credit card will pay between one and two percent on most of your credit card purchases. You would receive the cash in various forms discounts on furniture or gas, check in the mail or as a negative balance on your credit card account.
Reward Cards Payout
When it comes to reward cards, you receive rewards points on purchases that you make. You typically earn one to five points for every dollar you spend using your credit card. However, with a reward credit card, you may only be able to earn points when you make your purchases at specific stores in the credit card issuer’s “Merchant Network” list. If you shop at other location or buy from non participating merchants using your reward credit card, you would either get less or no points at all. After you accumulate points up to a certain amount, you can redeem your points for products offered by stores in the “Merchant Network” list.
Cash Back Credit Card versus Reward Credit Card
A cash back credit card gives you the freedom to use the card at any merchant or locations you choose. However, a cash back credit card will only pay between one and two percent on your credit card purchases. A reward credit card, on the other hand, pays higher, almost reaching about five percent. However, you would only earn points if you use the card on participating merchants.
It is up to you if you want to go with a cash back credit card or a reward credit card. Consider and weigh the pros and cons of each type of credit card. If you are a heavy credit card user, you can rack up reward points quickly, but only if you shop at specific locations and stores. You can accumulate points with a cash back credit card and use it practically wherever you want to shop at, but with the lower payout compared to a reward credit card, you may not be able to get your cash back that quickly.
Keep in mind, though, that before you make your decision, make sure that you have done your research. Check out the credit card companies, compare each of their offerings and weigh their benefits. Do all these things and you will end up with a cash back or reward credit card that is perfect for you.
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