Readers: This is article 11 of 25 from my no-nonsense “Credit Card Basics” quick-reference series.
A cash-back rewards card pays you money for every purchase you make so you’ll want to make sure you maximize your dividends by using the following strategies:
Compare interest rates and annual fees. Rewards cards typically have higher APRs than most other cards. As a result, you’ll need to keep the interest rate as low as possible if you plan on carrying a monthly balance otherwise the resulting cost may exceed the value of your rewards.
Keep it simple. Look for cash-back cards with simple terms and minimum restrictions.
Look for a card that conforms to your spending habits. This will allow you to take advantage of various premiums above the basic cash back percentage that may be offered for certain categories such as groceries and fuel.
Read the fine print. This is especially important when it comes to spending thresholds. When a card says you can earn cash-back up to some percentage, it usually means you have to spend over a certain amount before reaching that level.
Avoid cash back limits. Yes, they’re out there. After all, why limit how much you can earn if you don’t have to?
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