Are You Getting The Best Deal on Your Cash-Back Credit Card?

By Lynnette Khalfani-Cox, The Money Coach®

With so many credit cards to choose from, how do you know if you’re getting the best deal on your rewards card, especially a credit card promising cash-back benefits? While there may be no one credit card that’s right for everyone, there are ways you can get the biggest bang for your buck with a cash-back card that fits your specific circumstances.

Here are three questions you should ask yourself, along with tips to know if your cash-back credit card is competitive in today’s environment.

#1: Have you shopped around for a better credit card deal within the last year?

Interest rates continue to tick upward and can cause banks, credit unions and other credit card issuers to offer low rates to entice new customers and keep existing clients.

But that’s not all.

Credit card providers may also dangle juicy cash-back rewards or special cash sign-up bonuses to win over new customers. So if  the last time you got a credit card was more than a year ago, chances are you’re not only paying a higher rate than you should, you’re probably not getting the biggest and best cash incentives now being offered.

Most cash back cards give you cash or statement credits ranging from 1% to about 5% of your spending. The higher the cash back amount the better. Depending on your needs and spending patterns, a good cash-back credit card is well worth carrying in your wallet. If you’re an average spender, that card can easily net you $300 to $500 each year. Bigger spenders can earn a lot more.

#2: Is it easy or realistic for you to earn cash rewards?

You don’t want a cash-back card that makes you jump through a ridiculous number of hoops just to sign up for or qualify for the cash reward.

So stay away from cards that:

  • Require too much time and effort to get your cash back.
  • Impose excessive spending requirements, or only give cash back based on random, unrealistic categories for which you’re not likely to have normal or recurring charges.

Focus instead on cash-back credit cards that give you rewards, money or statement credits based on spending that you already do and have frequently done in the past. That’s the best way to ensure that a cash-back card will truly pay off for you.

#3: Have you received a cash-back sign-up bonus or other cash incentive from your credit card issuer?

Financial services firms often devote most of their marketing efforts to customer acquisition. That’s just one reason it pays to shop around and be aware of the latest credit card offers. It doesn’t mean that you can’t still be loyal to a particular institution, especially if it continues to reward you for your ongoing business. Remember, loyalty is a two-way street.

We’ve all heard the expression: “What have you done for me lately?” If you feel that way about the plastic in your wallet, or the organization that issued it, now is a good time to search for a better credit card offer.

In summary: If you can’t answer yes to each of these three questions, you most likely can benefit from getting a new cash-back credit card.

Drawbacks to Know

In case you’re wondering, cash-back credit cards do have a few disadvantages.

One downside is that while certain cards can boast a higher rewards rate, sometimes as much as 5% or so of your spending, you’d be hard-pressed to find an across-the-board cash-back card offering unlimited cash back at those levels. Instead, you’ll have to use your card for specific spending categories or with rotating categories.

Additionally, cash-back credit cards sometimes impose limits on the amount of cash you can earn in a given time period. So that’s something to keep in mind when calculating your potential cash rewards in any given year. Instead, choose a cash-back card that rewards you for common expenses, such as grocery shopping or gas. In this way, you’ll be earning cold, hard dollars just for doing spending you were going to do anyway.

Finally, many cards have annual, balance transfer and foreign transaction fees so be sure to look for those that don’t.


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Extra Credit provides general information to help improve our Member’s financial lives. Every situation is different, so please contact us for guidance on your specific needs. The advice provided in Extra Credit is not intended to serve as a substitute for speaking to a loan representative, financial advisor, or GreenPath Financial Wellness counselor who can help tailor a solution for you.

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