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As a credit card holder, picking the right credit card can have a huge impact on your personal and business finances. 2% cash back credit cards can help reduce your spending and put some money back in your pocket. 2% cash back cards work by giving you 2% of your spendings back in cash, 1% when you make your purchase and the other 1% when you pay your balance. As someone who is trying to stay on top of their finances, here’s what you need to know before you get a 2% cash back card.
Annual Fees
Unlike many other credit cards, 2% cash back cards oftentimes come with an annual fee. Think of the annual fee as a payment for the benefits you receive with the card. As a crafty finance expert, you should check whether there is an annual fee and calculate whether the fees outweigh the benefits. If you have good cash flow management, or if you prefer to pay with check or debit card, the annual fees may be more than the benefit you receive. However, if you are a heavy credit card user, your benefits may far outstrip the cost. Annual fees usually range from $25-500. Credit card companies may offer a promotional year with no fee, so check the fine print.
Rotating Categories
Depending on what card you have, you may have extra limitations known as rotating categories. Not all cards offer 2% back on all your purchases, you may only get cash back on certain purchases such as groceries, gas, or restaurants. On the flip side, you may receive extra cash back rewards based on the time of year or the category you’re purchasing in. As a finance adept, you should always factor whether a card has rotating categories before picking your card. If your card has rotating categories, you should check often so that you can take advantage of the extra rewards.
Spending Minimums
Before you get all excited at the thought of getting money back, you need to figure out if you’ll even qualify for that reward. 2% cash back cards may come with a minimum spending limit that you must surpass to get your bonus. Spending limits can range anywhere from $25-1000. There may be time limits on when you have to spend this amount by. If you habitually pay by credit card, you’ll probably find yourself hitting the minimum without much effort. If you’re used to companies that don’t accept credit cards, you can hit the minimums by paying for daily expenses such as your groceries and bills. As long as you can pay your balance on time, you’ll be profiting by getting cash back and building your credit.
Signing Bonus
With all of the limitations on cash back cards, credit card companies offer incentives to sign up. Several companies offer a sizable signing bonus during the first few months to a year. Signing bonuses range from $100-200, usually after hitting a spending limit in the first 3 months. The other model of bonus offered is a cash back match from the company. This can be extremely favorable, especially if the match is unlimited. When considering what card you want, consider whether you want quick cash or more cash in the long run.
Bonus Categories
Everyone likes extra! Extra food, extra gifts, especially when that extra comes free. Your lifestyle is important and life is too short for procrastination. You should find a credit card that best caters to your interests. Lots of credit cards specifically come with favorable terms of spending in certain categories such as travel, restaurants, supermarkets. In addition to cash back, you may be able to earn points or lower interest rates. Financial management need not be boring, make your interests make money for you.
Handling your finances and paying off balances can be a real drag. It’s a real load off your mind when you’re able to put money back into your pocket. Don’t stress, find the best 2% cash back card for your situation and starting earning money on your spending.
