Cash-Back 101: How it Works and How to Get More

Credit cards are not just a way to pay for your purchases, in addition to the usual feature you can get various bonuses for using them. Some may offer you bonus fuel at the gas station, some — discounts in restaurants, or extra nights in hotels. And some of them may even offer you cash.

First, you just need to understand what a credit card with cash-back is. We know that it’s pretty much everywhere nowadays, but still — start with the basics. 

Cash-back is a credit card that is programmed so that when you spend money on it, you are automatically refunded some of them. This is usually between one and five percent of the amount spent.

Over time you accumulate a certain amount of money with it, and when it reaches a certain value you can spend it. You can simply spend this money on purchases in the supermarket, or withdraw it in cash, or you can write a check for this amount.

How do you “magically” get your money back?

It’s not really that hard to understand. This is primarily an illusion of benefit, it seems to you that this money is returned to you for free. In fact, you spend a lot more than you get back, and this is beneficial to the bank with which you work.

When you buy something, the bank charges a fee from the place where you bought something, whether it is a supermarket, cafe, or online shopping.

 The cash-back service connects to the affiliate program of the online store and attracts the customer to the store to buy. For the purchase made by the customer, the service receives a commission. The cash-back service gives most of this reward to the client.

There are now several types of cash-back cards. They are mainly divided into three categories: Cards with equal (constant) interest, multi-stage bonuses, and the usual brief where there are bonuses for purchases.

Cards, where there is already a fixed percentage for purchases, work as easily as possible, if there is a 3% for purchases, then the same cash-back is returned to you. It is clear that the larger the transaction amount, the more money you get back.

These cards are suitable for people who often use the cards but do not pay attention for some time to the number of bonuses received.

The next category is cards where multi-stage bonuses are provided. They are best suited for people who spend large sums on various goods and services. This card is perfect for families or the head of the family, it returns money when you pay with it at the gas station, buy groceries in the supermarket, or buy clothes and toys for children.

The latest popular type of credit card with cash-back is a card with various bonuses. The magnitude of these bonuses can vary due to various factors. For example, how much do you usually spend on what products and services, or the activity of your transactions?

Sometimes even the amount of bonuses can change for months. For example, before the Christmas holidays or after them.

It also happens that you have 3% cashback, but it is up to a certain amount, if the amount is more than a thousand dollars, then the cash-back is 1% of the transaction amount.

How to use cash-back and get the biggest bonuses

If you have a credit card with a high percentage of cash back, it will always encourage you to make frequent purchases. You should refrain from this and not buy many different things that you do not really need.

It is best to forget about your cash-back for a while so that when you check it you will be pleasantly surprised by the amount that is already there. It is recommended if you have an active card to check the cash-back balance every month.

Banks differ not only in the rules of cashback but also in the rules of its payment. Most often it is paid at the beginning of the next month or at the end of the current, with the entire amount earned. But in this case, there are options.

Do not think that all the money returned to you in the form of cash-back you get for free, in fact, it is just a percentage of the amount of your transactions.

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