Why do we like credit cards with cashback? Simply because of the versatility. There are other credit cards rewards programs which will offer a variety of choices on how to redeem the rewards earned. You could redeem the cash back rewards for air travel, for hotel stays, for house appliances, and even for outdoor equipment. In our experience, however, receiving anything but actual cash leaves you with the choices that are severely limited.
So we prefer credit cards with cashback.
Let’s look at what amount of cash back can you expect with your Discover cash back, MasterCard with cashback, Visa with cashback, or what your American Express cashback could be.
With most cashback cards, 1% to 2% is the normal cashback with no restrictions or limitations. Any single item you spend money on will produce the same, 1%-2% cash back, every time, all the time. The simplicity of this makes 1%-2% cashback cards attractive.
Credit cards offering 3%-5% cash back are normally limiting such high cash backs to specific categories of transactions. When a merchant signs up for the service that allows him to accept credit cards, he must classify the business in one or more commerce categories. The 3%-5% cashback normally follows such categories. Typical categories with 3%-5% cash back are groceries, gas, hotels, travel, fashion and clothing, department stores, and other. As you can see, with a 3%-5% cash back card you will be able to continue to purchase your every day items like gas and groceries, but if you organize yourself to use the right card, you will quickly earn the cash back money.
Due to the nature of cash back and the structure of merchant fees, banks can only allow the above mentioned categories to produce cash back for a limited time. Otherwise, banks will run a risk of losing money. This line of thought gave rise to so called rotating cashback categories. Discover was the first to introduce 5% cash back on different commerce categories, and Chase and others later followed suit. The categories usually rotate, that is, change, on a quarterly basis.
10% and higher cashback
Credit card companies will sometimes offer 10% or more cash back. In the past this was quite unusual but today, it is becoming more and more frequent. Companies like Discover and Chase will sometimes offer 10% discount on all purchases but for a very limited time, such as during the holiday shopping season.
Another reason credit card companies have for offering such “free money”, high percentage cashbacks, is to stimulate spending which should stimulate the economy. While it is questionable that the spending will increase significantly just because of a 10% cash back, you can certainly take advantage of it.
With careful planning and redirecting your usual expenses, you can take advantage of the 10% cash back without falling into the trap of increasing your usual spending at all.
Our all-time champion of high, general purpose charge back is Chase. Their Freedom card did what hardly any card did before. Chase Freedom credit card holders will receive 10% cash back on all purchases up to $100 each month they purchase $100 or more on their Freedom credit card. And that is not all. Some categories will carry the discount of as much as 15% as the usual 5% category discount is added onto the 10% time-limited discount. Find out more information about Chase Freedom credit card and take the maximum advantage!