'A rewards credit card that earns cash back is like gold' — use these 3 tips to make the most of it


Almost 6 in 10 people have one or more rewards credit card in their wallet, according to a 2018 survey of 1,218 American adults. The most popular perk: cash back.

The allure is that cash-back cards are easy to understand. There's no points-crunching to figure out the value of rewards you're earning.

"People are realizing that paying for something with cash or a debit card doesn't get them anything in return. And it doesn't cost anything more to use a credit card," says Julian Mark Kheel, director and senior analyst at travel site The Points Guy.

But you'll need to be smart about how you use a cash-back card, just as you would with any rewards card. Here's how to make the most of one.

How to successfully use a cash-back credit card

1. Find a card tailored to your spending habits

Most cash-back cards offer a base reward of 1%-2% back, but some cards offer bonuses as high as 6% back in particular categories. Experts say cash-back cards can be valuable when those bonuses reward your spending priorities and frequent purchases, such as groceries or restaurant meals.

For example, if you do grocery shopping for a big family, consider a card that offers a bonus in that category, making the savings target "easy for families to hit," Ted Rossman, an analyst at, told Grow earlier this year.

2. Use your cash rewards wisely

With a cash-back card, your rewards can typically be redeemed for gift cards, or sent to you as a check or direct deposit into your checking account. But you may also be able to get a statement credit toward your credit card balance, which Kheel says can be a smart option.

"That means instead of paying your monthly bill of say $200, if you apply $20 in cash back as a statement credit, you only need to pay $180 that month," he explains.

3. Pay off your card in full each month

If you can't pay off the balance on your cash-back card on time and in full each month, you'll start accruing interest, which more than offsets the cash back you've earned, he warns. As of late September, cash-back cards carried an average interest rate of 17.46%, according to data.

Say you make $500 in purchases. On many cash-back cards, that will earn you $1 to $2 — with bonuses, maybe $5 or $6. But if you carry forward a $450 balance, you'd owe a bit more than $7 in interest.

"Making a cash-back credit card work for you means using it only to buy things that you would have bought otherwise with a cash or debit card," Kheel tells Grow.

"If you can be disciplined about your budget and not overspend, a rewards credit card that earns cash back is like gold."

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