With the widespread use of credit card in the cash payment industry, the credit card companies have come up with different types of credit cards that can cater to different groups of people with different needs and lifestyles. Due to the highly competitive market, they are also giving all sorts of rewards and benefits to attract more consumers using their credit card. Hence, choosing the right credit card has become quite a daunting task, especially for those who wish to apply credit card for their very first time.
If you fall into the category of consumers whose main concern is to squeeze every ounce of savings from your credit card transactions, you probably will leap with joy when you come across the existence of cash back credit card. Credit cards have always been regarded as an evil tool deployed by banks to create a population of consumers with accumulating debts and bankruptcy cases. Hence, even when there is such benefit of receiving rebates for credit spending, some credit card holders are still wary of the hidden agenda behind such reward. Nevertheless, cashback credit card can be a means of saving if you use it well enough.
If you decide to apply for a cashback credit card, there are 4 mistakes you should avoid.
#1 Thinking that you are entitled to cash rebates for every transaction
Keep in mind that not every store you go or even purchase you make will give you the cash back as per se. More often than not, you will only have a specific categories of spending such as groceries, fuel, restaurants or entertainment outlets, in which you can only get rebates from the bank. Thus, make sure you know what, when and where you can the cash rebate before spending your credit aimlessly.
#2 Not reading the terms and conditions
This is very common not just in credit card applications, but the scenario happens when the phrase ‘terms and conditions’ applied. Before you sign the deal to agree on getting the card, always have the habit to read through the term and conditions thoroughly. You might think the information stated is trivial and redundant, but you will be taken by surprise if you find out later on that the details of the interest rate charged, minimum spending requirements, annual fees, etc are all transcribed in black and white. Do not get blinded into signing up a card for its free gifts offered during the credit card promotions period.
#2 Not knowing the cash back percentage and whether there is a limit on the cash back amount
As a smart credit card holder, you have to know how much cash back percentage you are offered. Even before you decide upon which bank’s credit card to go for, you should compare the percentage cash back offered by different banks. Then later on, you should check whether there is a limit on the amount of cash rebates you can receive monthly.
#4 Spending more to gain more cash back
If you have the naive thought of spending more to get cash back in return, you should just completely shake off the idea of holding a credit card at once. Credit card users must be wise and independent in the financial management. You would not want to be trapped into a spiraling debt due to overspending the credit limit together with the high interest rate incurred. Take the following situation as an example. When you are spending more, no doubt you might gain more cash rebates. However, what if you can’t afford to pay off your monthly debt, you are going to be charged with an even higher interest rate. To make the matter worse, the cash rebates you have collected are definitely not sufficient to cover the additional charges.
All in all, these are just some of the advice for all credit card holders. Ultimately, every credit card user has to be responsible with his or her financial management. There are still so many benefits of credit cards that can be exploited by the consumers.