There’s no doubt that cash back credit cards offer the easiest rewards. Every time you make a purchase, you get a percentage back in cash. Deciding which is the best cash back credit card for you is hard, but it can be easy to narrow down your options once you know how cash back cards work.
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When using cash back credit cards, you earn cash that can be deposited into your bank account or applied as a statement credit. How much you get depends on the card, earn rate, and where you’re shopping.
Cash back credit cards are popular because what you’re getting is easy to understand. Quite often, the cash back you’ve earned is displayed on your monthly statement or in the mobile app. Since you’re earning cash as your reward, you don’t need to worry about expiration dates or your points devaluing as with rewards credit cards. There’s also no need to report cash back earned as income since the Canada Revenue Agency considers it a discount/rebate.
If you’ve decided you want to go with a cash back credit card, you should look at a few specific details to help you narrow down your choices.
In most cases, the annual income requirement and earn rate are the first things you’ll want to review. There’s no point in applying for a card where you don’t meet the minimum income requirement as you won’t be approved. If you carry a balance on your card, also be sure to look for a comparatively low interest rate.
Choose a card where you get bonus cash back on the categories where you do the most spending. Finally, the additional benefits offered will help you choose the card that’s right for you.
You can apply for a cash back credit card online or at your financial institution. Keep in mind that there are typically a few basic requirements that you need to meet to be approved:
Once approved, your card will be mailed to you. As soon as you get it, you just need to activate it before you can start reaping the rewards.
Cash back credit cards are great if you want rewards that are easy to use. Cash doesn’t expire and you’ll always know the value. The more you spend, the more cash you’ll earn.
Barry Choi is a personal finance and travel expert. His website moneywehave.com is one of Canada's most trusted sites when it comes to all things related to money and travel. You can reach him on Twitter: @barrychoi.