As the consumers shift from the idea of spending all the money they earn to saving more and more, even in a slowly moving economy, cash back credit cards are becoming more popular among them. Not surprisingly, top US banks are competing with each other for the attention of the consumers looking for best cash back credit cards.
In this article we will argue that some of the banks are even using the money reward cards as a loss-leader. Meaning, you can possibly make quite a sum of money by just using their card. The banks want to attract new customers and entice old customers to start spending again. We will argue that, by careful planning and juggling of plastic, you can take advantage of the loss leader, and create handsome cash profits for yourself.
We’ll introduce a simple, step-by-step procedure to take advantage of 1%, 5% and other money back cards.
1% cash back credit cards – get one for as a fall back card for all purchases
Getting 1% of your money back is not high for today standards. However, as we will see, higher cashbacks are usually time limited, so they can only be used from time to time. In times when these cards do not give the 5% cash back, it is convenient to get an 1% (or so) reward card that gives you money back on ALL purchases.
Suggestion: Get one 1% cash back card as a fall back. You will never earn less than one percent.
5% cash back credit cards – get massive money back on everyday purchases
Discover, Chase, and other cards have adopted the 5% cash back in rotating categories. Every three months, you sign up for the reward by logging into your account online. Then, for the entire quarter, you receive your money back in the amount of 5% on all purchases in dedicated categories. These categories can include groceries, gasoline, clothes, travel, and drugstore purchases too.
So research the online offers and apply for up to four of such 5% discount cards. With a little luck, you will be able to save 5% off some everyday categories every single month of the year.
Suggestion: Get 2 or more of 5% cash back rewards credit cards in rotating categories.
Finally, do pay with cash sometimes!
Since merchants are paying 2%-3% to their merchant account provider, usually the bank, for the privilege of being able to accept credit cards, you can do the following trick on occasion. Always have some cash on hand wherever you go. Then, when you particularly like the merchant, either because they provide excellent service, serve excellent food, or simply are there for you when you need them, consider paying cash. This will effectively increase the tip that you give by 2%-3% automatically. Plus the merchant will get cash right away, and there will be no need for them to wait for the payment from the bank.
