It can be a good idea to think about what type of credit card will suit you. If you are considering getting a card, then it can be good to look at this, at this stage. If you have already got one, then it can be a good idea to think about whether the one you have is the most suitable for you. There are differences between different types of credit card. One type that is perhaps not that well known is a cash back credit card. These can be great, but they also have disadvantages and it is a good idea to understand a bit more about them so that you can decide whether you think that they will suit you.
How the Cashback Works
The cashback is paid depending on how much you spend on your card. So, it is a percentage of everything that you spend on the card. This means that you will get more cashback if you use the card more. It is worth noting that it will be a very small percentage of what you spend. The amount will vary a lot though depending on which card you pick and so it is worth comparing the different cards to see which has the best cashback rate. It is worth being careful though as there may be additional terms – you may have to spend over a certain amount of money in a month or there may be an annual fee on the card. So check all of the rules before you sign up.
It is also well worth checking out the interest on the credit cards as well. It is possible that they will charge a higher interest rate on this credit card because they need to make the money back to cover the cost of paying the cashback. This will not ne a problem if you plan on repaying the card in full each month. The interest rate will be irrelevant as you will never have to pay any interest. However, you do need to be careful as you never know when there might be a situation when you cannot afford to repay the card and you have to start paying interest. It is also really wise to make sure that you set up a direct debit to repay the card in full each month so that there is no chance that you will forget.
Will it Benefit me?
There is a risk with a cash back card that card holders will use it as an excuse for spending more money on their credit card. It is fine if you decide to pay things on the credit card rather than a debit card or with cash, that you would have bought anyway as you will benefit from the cashback. However, if you like spending money and do not need much of an excuse to spend more, then this could be a problem. You might feel that it is good to buy extra things, that you would not normally of bought, so that you can get the cashback. It is so important to remember that the cashback is a tiny amount and you should not use it as a reason to spend extra money. If you feel you will be tempted to use it as an excuse to spend more than you can afford then it is probably best to not get one. It is also not a good choice for anyone that does not repay the full balance of their credit card. It is far better in this situation to get a card with a really low interest rate.