One of the most popular types of Credit Cards in the market today is the Cash Back Credit Card – because who doesn’t want to spend money and also get some money back in the bargain? If you get back reward points, you have to go through the rewards redemption process and hope that you are able to get something that you actually want, when you redeem. But if it comes back to you as money that you can use for just about anything, isn’t that a wonderful card to own?

How do Cash Back Credit Cards work?

When you use a Cash Back Credit Card, you earn a cash reward instead of reward points or air miles. You can earn anywhere between 1% and 6% of your spending, depending on the bank that has issued your Cash Back Credit Card. It also depends on where you use the card and the type of Cash Back Credit Card you have.

What are the types of Cash Back Credit Cards in the market today?
There are three basic types of Cash Back Credit Cards in the market today –

Flat-rate Cash Back Credit Card
As the name suggests, these Flat-rate Cash Back Credit Cards pay the same rate of cash on everything. The simplest type of cash back credit cards, the Flat-rate Cash Back Credit Card pays the same rate regardless of the category of spending. This kind of card is great for people whose spending is not restricted to any specific category, but is distributed across all of them. This kind of card has one rewards rate and you earn a certain amount on everything that you buy.

Tiered Cash Back Credit Card
As opposed to a Flat-rate Cash Back Credit Card, a Tiered Cash Back Credit Card offers multiple cashback rates. There is a standard cash back rate on some kind of purchases and they offer what is called “Accelerated Rewards” on certain categories. Accelerated rewards cards are nothing but the cash or points or miles that you earn above the base reward rate. Usually, accelerated rewards categories include gas, groceries, dining, entertainment and travel.

To illustrate, this kind of Tiered Cash Back Credit Card can offer 3% on gas, 2% on groceries and a flat 1% on everything else.

So this basically means that you will get cash back at different rates for different categories. This kind of card is great for those who spend big in certain categories. May be you eat out a lot. Or spend a lot on fuel. Or you have a large family and spend a lot on groceries. So it makes sense to get a card that gives you accelerated rewards on such categories. The key to getting the most out of a card like that is by checking the categories that get you accelerated rewards and then using your card to pay for those spends.

Bonus Category Cash Rewards Cards
A Bonus Category Cash Back Credit Card offers higher rewards rates or cash back rates for certain categories during certain times This keeps changing at set intervals – say every quarter or so. And it pays a flat rate on every other category spends. To get the most out of a card like that, you need to keep an eye on any literature that your bank might send you where it will tell you when the changes occur and what exactly those changes will be.
Now that you know the three basic types, apply for a cash back credit card that suits your lifestyle and your spending patterns, so that you get more cash as you spend more on certain categories.

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