How to Use Cash Back Credit Cards

Cash back credit cards are becoming popular alternatives to regular savings accounts. Cash back credit cards earn anywhere from 1 to 5 percent cash back on purchases, versus less than 1 percent annual interest for regular savings accounts. Each card has different rates depending upon the purchases, but all the cards have one clear rule: If you miss a payment, there is a penalty. Cash back cards are to be used for monthly purchases to help you accrue additional funds. Pay them off every month and you will start making money.

Instructions

How to Use Cash Back Credit Cards

1. Compare cash back credit cards. Before choosing a specific card, find a card that meets your spending needs. If you travel, look for a card that earns high cash back for travel or for gas. If you shop online, find a card that gives additional cash back for online shopping sites.

2. Manage your account. The purpose of the cash back card is to use the card for all of your monthly purchases and then pay it off each month. Sign up for online account management. Credit cards offer this service so you can keep track of expenses.

3. Use your credit card instead of cash. If your card offers higher cash back rates for groceries, gas or airplane tickets, make sure you use the card instead of paying cash or writing a check.

4. Pay your bills with the card. Instead of writing a check, use your credit card to pay your electric, cable and insurance bills.

5. Redeem for cash. Some credit cards will give you additional cash if you let the cash bonuses build up. Check each credit card for their bonuses.

Tips & Warnings

• Pay off the credit card every month on time. Choose a credit card that will benefit you for the type of purchases you make. Monitor your card online on a regular basis.

• Never miss a payment.

Resources

• Cash Back Credit Cards