We've all heard of cashback credit cards right? But do you know exactly what they are, and how they
could save you money each and every month? Do you use your credit card regularly or would you be prepared
to do so in place of your regular bank debit card? If so you could earn cash by using your cashback
credit card. Here's how it works:
When you make a purchase on your cash back credit card, the card provider will reward you a small
percentage of the purchase as 'cashback'. Depending on the card and provider, this can be anywhere
between 4-6% on each and every purchase. So at the end of the month you will see the cash you have earned
detailed on your statement.
Some companies will give you the choice of having this cash paid directly into a bank account, others
will use it to reduce your outstanding balance. Either way cashback reward programmes are great for
regular users, or those who make large purchases on their cards such as cars, furniture, home
improvements etc.
However, don't be tempted to 'over use' your credit card under the impression you're earning money "so
why not buy it!". Think about it, if you wouldn't make the purchase with cash, don't make the purchase
with the card! Although if you are responsible with your credit cards there's a great technique to make
the most of this type of reward card:
1) Instead of using your debit card and spending your salary during the month, use your cashback
credit card for all of your day to day purchases. Make sure you use it for everything from lunches to gas
to entertainment! But do make certain you do not buy more than you normally would. Simply substitute your
bank card for your credit card.
2) At the end of the month, use your untouched bank balance to pay off your credit card in total, this
will mean you avoid any interest charges on your account.
3) You will now see that you have spent the same amount throughout the month, but have earned 6%
cashback on everything you have purchased or paid for!
For example: If you normally spend around $700 per month, by using this technique you will grab
yourself $42 per month free! That's an extra $504 per year absolutely free! However most of us also make
larger purchases like holidays too! One family holiday for $5000 would earn you $300 spending money! If
you're paying for it anyway, why not benefit from it! You can find the best cashback credit cards available for you here.
