When Loyalty is Rewarded: This is How Cashback Credit Cards Works

If you haven’t heard of cashback credit cards, this is the time to know what it is and try it out. Sounds interesting, right? A cashback credit card can be good, but it would be better to know which one to go for.

What is a Cash Back Credit Card?

Cashback Credit card is like rebate; they pay back a specific percentage of what you spend. Normally, the rates range between one to two percent for your purchases. If for instance, your card has a back rate of one percent, you’ll earn $0.01 for every one dollar you spend.

Tons of companies that offer reward credit cards always provide for a cash back option. It is important to note that different cards have different advantages. So, a good card will help you cover most of your expenses, build your credit score etc. You can also try out Neo credit card.

How Do the Cash Back Cards Work?

Signing Up

Before you select your preferred card, you should be certain of your spending habits. Cash back cards are designed to suit different types of customers. Some will offer you cash back when you travel while others will reward you if you purchase at certain stores. So, the card will be of benefit to you if you already have a certain buying habit.

Once you have made the decision to sign up for a card, make sure you only sign up for those cards that you will use regularly. Signing up for many cards may seem like a good idea to you, but it will worsen your credit score.

Some cards will require a high credit score, but others like Unsecured Visa are flexible and can favor you. In addition, some cards may offer perks if you have been approved.

One of the most common perk is the sign-on cash, but be careful to read every detail about it. It may look better, but it may force you to spend up to a certain amount to get your bonus. Not fair, right?

The best thing to do is to select a card that offers a smaller sign-up bonus with a higher percentage rate on the cash back rewards.

Annual Percentage Rate (APR)

Annual Percentage Rate from its name is the yearly rate of interest your card gains. That means if you’re consistent in paying your balances on time every month, then you won’t suffer huge interest charges.

You should understand how cashback’s annual percentage works. Its calculation is similar with that of other credit cards. So, no worries.

There are certain things that can increase your interest rates; one, when you like carrying forward your balances and two when you have a higher APR.

Many cards have lower introductory APR when you register. So, you’ll always get the best out of cashback credit cards if you are consistent with payments.


Many cards will offer annual fees ranging between $50 to $100 every year for you to maintain your card. If you need larger cash rewards, go for the fee-heavy cards.

You can do some arithmetic to help you know if the fee will be your best deal. But to be safe, it is better to select a card with a lower or no annual fees.

Wrap Up

You now know what cashback credit cards are and how they work. You should now make sure to try one out to have the personal experience.