In this article we look at cashback reward cards
This is commonly mentioned on passive income sites and ebooks and I will cover this but I do not particularly like this method of earning passive income as it basically involves spending a lot of money buying stuff.
Most credit card companies offer a cashback reward program, basically a percentage of what the customer spends on their card is paid back to them. Credit card companies offer these programs to encourage customers to use their credit cards to buy more products.
The cashback percentages often range between 0.5% and 2% of the total spend of the card holder.
Credit card companies are able to pay cash back to card holders because merchants usually pay fees on transactions made through a credit card. The difference is where the rebates and cashbacks will come from. So using the previous example if you bought an item at $200 then you can get a possible return of $4.
A common way of earning rewards is if you travel a lot then you can get a rewards card for all of your airline miles.
Cashback rewards advice
Since these are creadit cards you should pay attention to the annual fees because cards with the highest rewards often collect the highest annual fees. Pay your bills quickly.
Most credit card companies offer sign-up bonuses which can be free money.
Do not spend more than you need to – if you need to purchase an item then you can use a rewards card but don’t go overboard buying a lot more products thinking that you will be getting more cash back
Make sure that what you are purchasing is covered by your card. There are always products and services which are not covered so don’t get buying anything on the card which do not give you any benefits
Take advantage of any bonus offers that may come up from time to time if these are offered by your credit card provider.
Some cards have restrictions on the amount of purchases you can make – avoid these
Use your credit card to pay for your bills – if the credit card lets you get rebates on these bill payments. If not do not bother
Now we move onto some examples that we found, there are no affiliate links we have just highlighted the cashback percentage but should look at all terms and conditions
Some UK examples
Amex Platinum Everyday – 5% in first three months (max £100), then up to 1% after
Tandem – 0.5% cashback on purchases
Royal Bank of Scotland Reward – Cash back on £500 monthly spend works out at £21
ASDA Cashback Start Credit Card – 1% cashback on all Asda spend , 0.2% cashback on all other purchases
Some US examples
Discover it® Cash Back – 5% cash back on up to $1,500 in spending per quarter
Capital One® Quicksilver® – unlimited 1.5% cash back on everything
Citi® Double Cash Card – 1% back on every dollar you spend and another 1% back when you pay off your purchases
Chase Freedom – 5% cash back on rotating bonus categories and you can also earn an unlimited 1% cash back on all other purchases
Blue Cash Preferred® Card from American Express – This has a huge amount of percentages, lets go. 6% cash back rate at U.S. supermarkets on up to $6,000 a year in spending, then it comes in at 1%), a 3% rate at U.S. gas stations. There is also a 6% cash back on select U.S. streaming subscriptions and 3% on taxis, rideshares, parking, tolls, trains and buses. All other purchases earn 1% back.
HSBC Cash Back Mastercard – Annual 10% bonus on all cash rewards earned in the previous year, plus 3% cash back on up to $10,000 in spending in the first year. the rate drops to 1.5% after this.
Summary
I personally do not use and never has one of these. I can understand that these are popular and it makes sense that if you use a credit card then you should use one of these. The usual warnings with credit cards are valid – don’t spend too much, pay your bills etc
