Making the Most of A Cash Back Credit Card

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I know you love the idea of free money that you can spend anywhere you want doing anything you want, and I don’t blame you. I love it when someone tells me I can use a cash back credit card all year long and make money with every purchase so that I can eventually turn around and pay for my holiday purchases with my cash back, but is it really that simple? It is and it isn’t. I can’t tell you that it’s simple for everyone, because it’s not. Is it simple for a business owner who spends millions every year on supplies to earn $10,000 cash back with a 1% cash back rate? Yes, it’s very simple for that person to earn a ton of money.

Is it as simple as someone who lives on a tight budget to make a lot of money this way? It might be if you can use the card the right way and you take our advice. I’m not saying it’s always easy, but I’m also not saying that it’s impossible. I am someone who is absolutely in love with the idea of using your cash back to pay for the holidays, and I have a number of ways you can do just that when you take the time to earn your cash back the right way. Since I like to consider myself a bit of an expert on it, I thought I might give you a few pieces of cash back credit card advice. Just call me Santa.

Find the Right Card

Sure, the card that offers 5% cash back seems like the one for you. It’s far better than 1% cash back that other cards are offering, right? Not always. Most cards that offer that staggering 5% cash back are only offering it in certain categories, and those categories sometimes change. If you just don’t spend that much at the supermarket, gas station or on entertainment, this is not the right card for you. The best bet for someone who doesn’t spend that kind of money in categories that offer more will do better with a flat rate card that offers 1% or 1.5% cash back on all purchases. Don’t be fooled by the big numbers; they rarely work out for all consumers.

Find A Card with A Bonus

One of my favorite pieces of advice is to find a cash back credit card that offers new cardholders a cash back bonus. You can check into several cards at any given moment in time to find out what the current offers might be – they change regularly – and then see what you can get out of each card when you make the decision to apply for one. One with a cash bonus at sign-up for spending a certain amount in a specified amount of time is always useful.

Spend Money

Now that you have a card you can use to earn cash back, spend some money. Don’t go over your budget, but don’t be afraid to charge things. My favorite thing to do is buy everything that I normally pay for throughout the month with my cash back credit card. With a solid 1% cash back, I can pay for my mortgage, insurance, cell phone bill, gas, utilities, water, and groceries in addition to our entertainment and fun and earn some significant cash back in the process.

You already pay for those things, so why not pay for them with your credit card and then send in all that cash to your credit card company at the end of the month? You’re now earning money for paying your bills. Who doesn’t love that since it is such a job in the first place?

Pay Off The Balance

The most important thing you can do with a cash back card if you want to earn money is pay off that balance in full each and every month. You cannot keep a revolving balance. Doing so means you’re paying interest and interest means you’re not actually getting cash back. Just keep things paid off by not buying what you cannot afford. It’s a really novel concept when you stop and think it through.

Don’t Redeem Your Cash

If you plan on using the cash back you earn throughout the year on your holiday shopping, which is such a wonderful idea, be sure you don’t cash it out beforehand. Don’t be tempted to ask for it as a statement credit or a check every month or every few months. Keep it all together and allow it to accumulate so that you can get the most out of your cash back at the end of the year. Just think, you can earn a lot of money and basically end up debt-free at the beginning of the new year as a result.

Photo by Getty Images

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