You could be making money each time you swipe your card.

If you’ve been paying attention to our blogs, you know that credit cards can be a slippery slope, as each time you swipe yours you’re adding to your debt. Unless you’re paying off the total amount each month, you could also end up paying a lot in interest rates. Knowing these considerations, however, there can definitely be an upside to using your credit card … enter cash-back credit cards.

Below are some of the most common cash-back questions and all you need to know about them.

What are cash-back credit cards?

According to creditcards.com, “cash back is essentially a rebate of a percentage of the purchases you make on the card,” they explain on their website. “With flat-rate cash back credit cards, every purchase earns the same percentage cash back. With category bonus cards and tiered bonus cards, different types of spending earn more cash back.”

This same creditcards.com article explains that “with bank interest rates still low – typical savings account earns a measly 0.06 percent annual yield – the ability to earn even 1 percent on every purchase trumps the best bank interest rates. Your return is even greater with cash back cards offering a flat 1.5 percent, 2 percent or more on every purchase. And unlike the interest on your bank account, cash back comes tax-free.”

What’s the average cash back percentage?

The typical rate is around 1%, though some cash back cards offer a higher percentage for purchases like gas and groceries or pre-set quarterly categories. Keep in mind that there are other ways to benefit from using a credit card, such as travel rewards or discounts at your most frequented places.

When should I redeem cash back?

“Knowing the best time to redeem cash back can help you maximize the amount you receive. At the very least, it can help you avoid letting your hard-earned cash back expire with nothing to show for it,” explains Credit Karma on their website.

Even though there’s not exactly a perfect time to redeem your cash back, you should always consider:

• Most credit cards do have an expiration time for cash back, so make sure you know what yours is and don’t miss it
• Make sure you ask if there is a minimum amount required for redemption
• Find out how you’re getting your cash back. Is it actual points or are you getting rewards, gift cards, and perks?
• Always be sure to read the terms and conditions to ensure you’re getting the most out of your cash-back program

What should I keep in mind?

Even though getting cash back sounds like a great way to spend, this doesn’t mean that you should use your credit card carelessly and just rely on this method for ongoing payments. When using your credit card, keep in mind that:

• Your total amount of debt and the outstanding debt versus your credit limits accounts for 30% of your credit score
• A late payment on your credit report could stay on your credit report for seven years. Click here for more on late payments

What are the best cash-back cards?

Much like everything else in finance, there is hardly ever a “one size fits all” answer for cash back credit cards, as the best one for you will depend on your financial situation, your income, what you’re planning on using your card for and how much you can afford to pay each month as a minimum payment. When shopping around for the best credit card, don’t forget to look at interest rates, monthly payments, rewards and truly think about how this will affect your month-to-month expenses.

As of January 2019, according to CreditCard.com, these were the best cash-back credit cards, but keep in mind this will vary depending on your income, credit score and other factors.

How can you pay off your card faster?

If swiping your credit card has been somewhat of a “hobby” to you for the past few years, it is likely that you’re in a lot of credit card debt and this is also affecting your credit score. Click here to learn about credit card refinancing and why you should consider it if making your minimum monthly payment is a struggle for you.

Are you ready to learn more about credit cards, savings, budget, ng and personal finances? Make sure to follow our blog and learn from experts who will guide your path towards financial freedom.