Cash Back Credit Cards How to Earn Cash Rewards

How do cash back credit cards work?

Credit cards only work as hard as you. That’s why learning to use them the correct way makes such an impact in your life. Many believe credit cards are dangerous, but it’s the users who are dangerous. If you know how to use your credit card properly, you make it work for you rather than allowing it control of your life. Now is the time to learn how to make your credit card work for you to pay you for making everyday purchases. Everyone enjoys earning cash back for making everyday purchases. Learn how cash back credit cards work.

Learn how Cash back credit cards work and help cardholders earn cash rewards.

What is a Cash Back Credit Card?

Perhaps you already know what a cash back card is, and maybe you don’t. Many people are familiar with reward cards such as those that offer airline miles or hotel points for every dollar spent. Cash back cards work like this. Cash back credit cards offer you cash for every dollar you spend rather than miles or points. Most cash back cards offer 1% cash back for every dollar spent, but there are those that offer more. If you want to get paid to shop, this is the best way to go about earning a little money doing what you already do so well.

How do Cash Back Credit Cards Work?

There are several types of cash back cards on the market. Each is unique to its company and its own standards, but most work similarly. Each card company chooses a percentage of cash back to offer cardholders for each dollar they spend. One might offer 1% cash back for every dollar spent. Some offer 2% cash back, others offer 1.5% cash back. Some even offer cash back at a flat rate for most purchases and a much higher rate for other purchases.

For example, some cards offer rotating rewards programs in which each quarter a new set of stores are introduced. For that quarter, cardholders get 5% or 3% or 2% cash back on every dollar they spend at a location on that list. The list changes quarterly, and it usually includes locations such as gas stations, supermarkets, entertainment, and department stores. There is almost always a cap on the additional cash back you can earn. An offer might allow you to earn 5% cash back on all supermarket purchases up to $1,500 per quarter as an example.

Some cards offer cash back in a unique manner, such as offering 1% cash back for every dollar spent and another 1% cash back on every dollar paid off each month. There are many cards to choose from. It’s finding the right cash back card that makes the difference for consumers.

Redeeming rewards for cash back credit cards is done differently at each card company.

– Use cash back as a statement credit
– Ask for a check in the mail
– Direct deposit
– Buy gift cards with cash back
– Apply cash back toward your mortgage or student loans with some cards

Some credit card companies want you to have a minimum amount of cash back earned before you can claim it. Others do not.

How to Earn Cash Back

As discussed in the previous section, it’s spending money that allows you to earn cash back, but that’s not the only way to earn cash back. Depending on the cash back card you choose to carry, there are other ways to earn cash back. Many offer an upfront cash bonus if you spend a certain amount of money in a specific amount of time. For example, a card company might offer you a chance to earn $100 cash back if you spend $500 on the card in the first three months the card is active.

Some cards offer to match the cash you earn at the end of your first year. If you spend $20,000 on your credit card throughout the year and earn $200 cash back, your card company will match that and provide you with an additional $200 cash back. Other companies allow you to add authorized users to your account. They give you a cash back bonus when that authorized user makes his or her first purchase with the card.

Most cards do not allow you to earn cash back on balance transfers. So cash back cards aren’t the best resource for those looking to transfer balances and not pay them off right away.

How do Credit Card Companies Make Money with Cash Back Credit Cards?

Offering all this cash back to you seems like a good way for credit card companies to lose money. They make money even on those who spend and pay off their card in full each month. There are numerous ways card companies make money off of you and their cards. Paying you a cash back bonus a few times a year isn’t hurting the bottom line.

One of the most profitable aspects of any credit card for an issuer is the fees paid to them by the stores and shops that accept cards. Most stores pay anywhere from 2% to 4% of the balance of each purchase paid for with a card to the credit card company. They also earn money on interest paid by those who choose to carry a balance. There are fees paid to transfer credit card balances. There are fees to pay online or over the phone in some cases, and by those who make late payments.

Card Companies that Offer Cash Back Credit Cards Earn Profits With Merchant Fees

A credit card company can make a lot of money from people who earn significant cash back and still pay off their balances in full. Say for example a consumer has a card and spends $30,000 per year on the card paid in full at the end of each month. There is not one cent of interest paid, and the company still earns money from that consumer. If every purchase the customer makes requires at 2% fee paid to the credit card company, that’s at least $600 per year in fees for one card. If the fee is higher for some merchants, it’s even more.

Should You Apply for a Cash Back Credit Card?

The answer is yes. You should apply for a cash back credit card. However, don’t apply for one unless you can make it work for you. You can even earn free travel with cash back cards.

– Pay the balance in full each month
– Pay for everything with your card so you can earn as much cash back as possible
– Take advantage of special offers

Find the card that works best for you. There is even a secured cash back card and a cash back card for students. Don’t assume a card that pays 1.5% cash back on all purchases is a less profitable card than one that offers 1% on all purchases but 5% on special purchases. Depending on your spending habits, the flat rate might be more profitable. The key to making money with a cash back card is to pay the bill in full each month. Any outstanding balance you owe is going to sit there unavailable for you, which limits your cash back earnings.

2017 Best Cash Back Cards

Always Pay Cash Back Credit Cards in Full

It’s also helpful to use your card for everything. Pay your bills with your credit card. Use it for gas, groceries, the utility bill, and anything else you buy or pay for each month. Use the cash you normally use to pay for these items to pay your credit card bill at the end of the month. You avoid going into debt while simultaneously getting paid for making purchases you make regularly. Imagine getting paid for paying your utilities each month and take advantage of that ability.

When you pay fees with a cash back credit card, you lose money. Your cash back is spent on late fees, over limit fees, and even interest. This isn’t earning money. It’s paying money to the creditor that’s rightfully yours. Using this card correctly is where you benefit the most from a cash back credit card.

Use Cash Back Credit Cards and Earn Cash Back Reward Benefits

It’s important consumers understand using a credit card is not a bad thing. Misusing it is a bad thing. If you use your card correctly, you’re able to earn money and still maintain a lifestyle free of debt. Getting paid to go to the supermarket and pay your electric bill is a nice side income. This cash back reward is perfect to cash in at Christmas when that big bill arrives. You now know how to make cash back credit cards work for you. It’s time now to find the one that complements your lifestyle.


Medical Credit Card – Benefits and Risks of Medical Credit

Benefits and Risks of a Medical Credit Card

From time to time, many people find themselves facing an unexpected medical bill. If you’re at all strapped for cash, you may find the offer of a medical credit card to be tempting. Medical credit cards can be a valuable tool if you understand how they work. However, if you don’t know how these cards work and when interest is charged, you may find yourself in financial trouble. And if you do determine that a medical credit card is the best option for you, setting and sticking to a payment plan is an important step.

Doctor discussing the option of a medical credit card with patient.

Your doctor will discuss the benefits and risks of using a medical credit card. Ask your physician if he or she offers a payment plan for medical services.

What is a Medical Credit Card?

A medical credit card works similarly to many other credit cards. It is designed specifically to be used to pay for medical procedures. It can’t be used for other purchases. Part of the allure of these cards is that you can often apply for them right in your doctor’s office. Many applicants get approved right there. Medical credit cards are appealing to those who are facing a medical emergency they can’t immediately afford.

For those who find themselves facing unexpected medical bills, taking out a medical credit card can ensure that they get the care that they need right away. Additionally, many veterinary offices accept Care Credit and other medical cards, making them useful for pet medical needs.

Patients repay a medical credit card debt just as they would with any other credit card. They make a payment each month. Medical credit cards offer patients the option of gradually repaying an expensive medical bill, rather than forcing them to find a way to pay the entire bill up front.

How Does the Promotional Period Work?

One thing that sets Care Credit and other medical credit cards apart from regular credit cards is the fact that they include a promotional period. In particular, Care Credit offers a promotional period of six months to two years. During the time of the promotional period, the patient pays no interest. If the patient repays the entire card balance by the end of the promotional period, the interest is waived.

However, many people do not read the fine print of the promotional period. During this period, interest on the balance is still accruing. While the accumulated interest is ultimately waived for those who pay the whole balance on time, those who do not pay the balance in full by the end of the period still must pay interest. And they aren’t just paying the interest that continues to accumulate – those who don’t pay everything by the end of the period have to pay back interest as well. The interest charged on medical credit cards is usually higher than the interest rates of other credit cards.

Of course, if the card is used to cover a relatively small bill, paying some back interest might not be a big deal. For those who use the card to cover large expenditures, it can be financially devastating. While the situation might sound alarming, there are steps you can take to avoid having to pay interest on a medical credit card. If the card can be paid off before the promotional period ends, it can be a helpful payment option. But for those who can’t pay the balance in full in that time, the financial consequences can potentially be damaging.

How Can You Avoid Paying Significant Interest?

While it may sound risky to take out a medical card at all, these cards only become a financial risk if you are unable to pay them in full before the promotional period’s end. To make sure you do this, it’s important to strategize ways to avoid having to pay interest. Below are some of the strategies you can use to avoid paying significant interest (or any interest) on a medical credit card.

Work Out a Plan With Your Doctor’s Office

Many doctor’s offices will allow you to set up a payment plan to cover your bill. This is especially true if it is for a very expensive procedure. Many of these plans do not accumulate interest. If your doctor’s office or hospital has this plan available, this is likely the best way to cover your bill. Use the money you saved in an emergency fund to pay down the bill. If your doctor does not offer payment plans, then Care Credit, or another medical credit card may be the next best option.

Plan Out How Much You’ll Pay Each Month

If a medical credit card is the best available option, it’s important to plan out how you will pay down the debt. While most card manufacturers have an established minimum payment, paying only the minimum amount often is not enough to avoid paying interest. Make sure you first know the length of the promotional period. Then, you can plan out how much to pay each month to cover the amount in full.

Generally speaking, it’s wise to plan to have the card paid off in advance of the promotional period. This way, you have room in case of a financial setback or other issues that get in the way of your payment ability. Because the amount of interest you have to pay can be very significant if you miss the promotional period. It’s vital to make sure you stay on track.

Set Up a Monthly Bank Draft

You can make monthly payments individually. Automatic bank drafts are a good choice in case you forget about a payment. You can adjust how much you want to pay each month. This way, you won’t have to worry about remembering to make on-time payments. You also can change the monthly amount you pay in case your financial situation changes.

In short, medical credit cards can be extremely valuable if you find yourself with an unexpected medical bill. By staying vigilant and making sure you don’t get stuck paying back interest, you can reap the benefits of the cards while experiencing few downsides. Plan, pay off the card in advance of the deadline. You then won’t have to be concerned with paying massive amounts of interest.


Emergency Funds – How do You Start an Emergency Fund?

Emergency Funds Why are They Needed?

Emergency Funds – Think back to the last time you needed more cash than you had. How did that feel? Were you a little (or a lot) panicked? How do You Start an Emergency Fund?

According to Business Insider, most of us have the same two big money fears: that we spend too much and save too little. Most people also say they know they should be doing exactly the opposite. However, it can feel impossible to switch the pattern around.

The modern Western mentality also struggles with impatience. A little is too little, and only a lot right now is good enough. This mentality is the big enemy of the effort to save. In this article, we will address the why, how and how much of starting your emergency fund.

How do you start an emergency fund? A man inside a flooded house calling to gain access to emergency funds.

Why do you need an emergency fund?

A better question might be “why wouldn’t you need an emergency fund?” No matter how carefully you plan for the future, life always has a few wildcards. As well, as soon as you start a family, all financial bets sometimes seem like they fly right out the window! Common money mistakes of people in their twenties are not having emergency funds.

But there are also greater forces at work that could impact your finances in ways you couldn’t begin to control. Examples include the global political landscape, the weather, your loved ones’ health and the national economy.

The moral of this exercise for most people tends to be: it is never a bad idea to sock away a bit of extra cash in savings.

How do You Start an Emergency Fund?

The one good and cool thing about emergency funds is this – they can be fun! This is part of the psychology behind why games are so popular. We keep score, watch the points add up, feel that adrenaline rush when we win. Fun, right?

This holds true whether you are playing against yourself or someone else. An emergency fund can be like a game in this respect. If you like to do things in groups, ask a few of your friends to join in with you. Each week, you can set new goals and compare your progress. This also can help with accountability.

But you can also easily create your own motivation. Some people like to keep wall charts or graphs. Others prefer to allow themselves to spend a little after they’ve saved up to certain benchmarks.

So first, identify your umbrella goal. Next, decide what your motivation will be daily and weekly – how will you track and celebrate your progress?

Simple Ways to Save Money to Make Emergency Funds Grow

Once you have those two aspects figured out, Nerd Wallet offers these simple ideas you can implement right away to get started saving towards your emergency fund goals:

Collect all the spare change you can find. Go to the bank and get some change rolls. Count up what you have, roll it up and deposit it into your savings account.

Collect $1 & $5 bills. When your collection outgrows the box you store it in, count it up and deposit it into your savings account.

Set up a regular bank auto draft. First, link your checking and saving accounts. Next, decide if you want to draft to your savings account daily, weekly or monthly. Finally, set the amount of the auto draft.

Use an app like Digit to help you save. Digit uses its own in-house algorithm to withdraw small amounts based on your spending patterns. The app holds what it withdraws for you in savings until you ask for withdrawal.

Sell what you don’t need or use. eBay, Amazon, Craig’s List and even the old-fashioned garage sale are all great ways to jump-start your emergency fund.

How much money should be in emergency funds?

First, you need to recruit your mind to your cause by convincing it that a little savings can add up to a lot of savings. Here is an example:

Save and Invest points out that if you decided to put $20 into your emergency fund each week, you would save over $1,000 in one year. Not bad!

If you don’t think you can afford $20 a week, or if weekly savings sounds too daunting, start with a monthly savings goal.

But here, many people honestly don’t know what they can save, and if this describes you, your first step is to back up and look at your monthly budget (expenses and income). Taking the time to chart out what you spend and what you earn is a real education! You will notice where you can cut back to fuel your emergency fund savings goal.

Often the first question new savers have “what should my emergency fund goal be?” Financial experts advise savings aiming to save enough to have three to six months of fixed living expenses. Fixed living expenses can include these types of expenses: rent/mortgage, cellular service, utilities, car note, car insurance, groceries.

So if your budget tells you that you need $2,500 for basic fixed expenses each month, that is where you start. Multiply $2,500 by 3 to get your 3-month savings goal: $7,500. Then multiply $7,500 by 2 to get your 6-month savings goal: $15,000.

What is a Real Emergency???

Look up the word “emergency” and you will see descriptive terms like “dangerous,” “expected, “serious” and similar others.

But sometimes it is easier to figure out what an emergency truly is by realizing what it is not. Not having cable television service, while irritating, is not an actual emergency. Not taking a vacation every year is not an emergency. Also, not having the latest technology is not an emergency.

Conversely, a flooded-out car or home is an emergency. Having no air conditioning in 100-degree heat is an emergency. A sick child is an emergency.

Where do I put my emergency fund?

Here, Money Crashers emphasizes keeping your emergency fund savings “highly liquid.”

This means you should put these funds in a place where you can access them quickly. “Quickly” means within 24 to 48 hours, if not sooner.

The very best way to keep your funds liquid is to put them in a savings account. Specifically, you want to choose a savings account that allows immediate, same-day withdrawals with no holds.

Starting an emergency fund may sound daunting at first, but once you get going, you may just discover you love it! You feel more secure, stronger, safer, more responsible and educated about your finances. Best of all, you don’t have to worry if you need money in a hurry.


Store Credit Card: Should I Have Retail Store Credit Cards?

Should I open a store credit card?

“Would you like to save 15% on your purchase today?” If you shop at chain stores often, you’ve undoubtedly been asked this question. Most of us have been offered the opportunity to apply for a store credit card. In fact, many of us have experienced this frequently. Today, CreditFast evaluates the pros and cons of opening a retail store credit card account.

Store Credit Card: Woman Reviewing the Pros and Cons of Retail Store Credit Cards

Store Credit Card Pros:

  • The most common, most obvious benefit of opening a store credit card is the discount on initial purchases. Some retail stores will even sweeten the deal by offering a promotional APR for a set period. If you are making a major purchase, a store credit card could potentially save you a fairly substantial amount of money.
  • Many store cards allow you to earn rewards or other perks. For example, you might earn one reward point for every dollar you spend at the store or earn a percentage of your purchase price toward future purchases. Stores may also offer cardholders special perks like exclusive coupons, free shipping for online orders, complimentary gift wrapping, free alterations, or access to secret sales. These benefits are yours as long as you keep your account open.
  • Retail store cards often have lower credit approval requirements than other credit cards. When used carefully, a retail store credit card can be a good way to begin building or rebuilding your credit history.

Store Credit Card Cons:

  • The interest rates for store cards are usually higher than the rates of other credit cards. Consumers with average credit can find a credit card offer with a standard APR of around 15%-20%. Store credit card standard APR rates are often 25%-30%. Because of this, you’ll want to be sure you don’t carry a balance on your store card.
  • Retail store credit cards are usually one-size-fits-all. If you’re in the market for a general credit card, you have some choices. You can select a card based on its travel rewards, cash back incentives, or low fees. Those with above-average credit can usually find a general credit card that will reward their strong credit history with a low APR. A store card will usually provide only one standard APR and one set of rewards options.
  • Many store credit cards can only be used at the retail chain that issues the card. However, this is not true in all cases. Some retail stores offer a co-branded Visa or MasterCard, which can be used virtually anywhere in the world. Be sure to ask the sales associate about this detail if you’re considering applying for store credit.
  • A store card may hurt your average credit if not used carefully. Store cards tend to have relatively small credit limits. This sometimes means it’s easy to spend a large percentage of your approved credit. Credit bureaus reward consumers whose debt-to-credit ratio is low. In addition to hurting your credit utilization ratio, applying for a store credit card is likely to create a hard inquiry on your credit report. Credit bureaus will penalize you for multiple hard inquiries in short periods of time. Therefore, you shouldn’t apply for store credit cards very frequently.

The Verdict on Retail Store Credit

Should you apply for a retail store credit card? It depends on a variety of factors.

Retail store credit cards are a great option if you are making a major purchase, you haven’t recently applied for other credit, and you regularly shop at the store. Let’s say you need to buy a major appliance or expensive holiday gifts for $1,000. You will save $150 on your $1,000 purchase by applying for store credit. Also, you may also benefit from a special 0% introductory APR, allowing you to pay off the balance interest-free over a few months. You may continue to receive rewards, coupons, or other perks after you have paid the balance. If you haven’t recently applied for other credit and reduce your balance quickly, you should also be able to do this without hurting your credit score.

A store credit card may also be a good choice if you have bad credit or a limited credit history.

You can improve your credit by being approved for the card, making small purchases, and paying them off each month. However, there are also other credit card options that allow you to do the same thing with more flexibility. A secured credit card is more widely accepted than your store card. (If you want to consider this alternative, our editor recommends investigating the Capital One® Secured MasterCard® or The Discover it® Secured Credit Card.) Weigh the options. Some exploring or rebuilding credit feel that the lack of flexibility associated with store cards helps them better control their spending habits.

You might want to steer clear of store credit card applications if you think you’ll be tempted to spend more than you would if you weren’t a cardholder. There is a reason that almost every retail chain offers a store credit card. Consumers tend to show more loyalty to and spend more money at retailers where they have store credit. As we mentioned previously, the interest rates on store cards are higher than average, and the credit limits are lower than average. Overspending and carrying a balance could hurt both your bottom line and your credit score. If you are seriously tempted to spend above your means because you apply for a store credit card, you should avoid it.

CreditFast Tip: Use the Shopping Cart Trick.

There’s a variety of retail store credit cards you can apply for using the Shopping Cart Trick. Issued by Comenity Bank, get approved with less than perfect and limited credit histories. When done correctly you can apply for a store credit card without a hard pull appearing on your credit report.

Overall, the Credit Fast team recommends applying for store credit cards if you’re making a major purchase at a store that you shop at regularly. As with every credit card option, it’s important that you use your store credit responsibly. Spend only what you can afford. Pay down your balance as quickly as possible, and watch your credit score continue to improve.



Money Mistakes in Your Twenties Avoid Money Problems

Avoid Money Mistakes in Your Twenties

People in their 20s often neglect responsibility and sound financial practices. You want to explore, enjoy and live with minimal to no thoughts to your spending habits. While this can bring memories, you are also spending money on stuff you don’t need and investing in things that will never produce any returns. Your 20s is the perfect time to start thinking about how to save money for the future. You need to equip yourself with the right education or skill. Start planning your life and have a budget for everything you want to do. If you miss your goal now, it might be difficult for you to regain it in the future. These are common money mistakes and money problems you will want to avoid in your twenties.

Young woman in her twenties is frustrated over money mistakes and money problems.

Ways to Avoid Money Mistakes and Money Problem in your Twenties

Not Setting Up Financial Goals

Almost every major step you take in your life will involve spending money. You need to write down your goals, what you would like to achieve in the next ten years, and figure out how you are going to fund it. Also, this will inspire you to save towards your projects. Failing to have financial goals today will make it difficult for you to progress in the future when your responsibilities begin to compound.

You Don’t Have an Emergency Fund

Your parents may not always be there to protect you and help you achieve your dreams. One of the worst money mistakes you can make is not to have an emergency fund. Your emergency fund is your life companion and savior that will be there for you when you suddenly fall ill, lose your job, have an unexpected baby on the way, or incur unplanned expenses.

It can be challenging to plan for an emergency fund and successfully build it. Some of the best tips to make it grow is to chart monthly income and expenses. Have a goal and stick to it, take is slow, treat it like a bill, and use it only for emergencies.

You Are Not Saving For Retirement

Young people think that saving for retirement is only for grown and working class people. Retirement seems like a distant and irrelevant goal when you are in your 20s, and many individuals who are currently victims of a financial mess once used their age as an excuse not to save. Saving for retirement in your 20s lessens the financial pressures of having to allocate too large contributions to retirement accounts in your later years.

Saving for retirement in your 20s is easy. To succeed you need to create a budget that includes priorities, automate your savings, think deep before you make any investment decisions, get out of debt, take advantage of free money and benefits, and control your spending.

Relying On Your Credit Card All the Time

Credit cards give you the opportunity to buy anything you like now and pay later. As a young person, you should know that paying back credit card debts is harder than you think. Those large balances and high-interest rates will kill your credit score and put you and on an unfortunate path.

Do you want a stable financial future? Avoid credit card debt entirely. Learn how to live within your means and don’t copy anyone’s lifestyle. If you already have credit card debts then start a repayment plan right now. Reprioritize your budget by categorizing your spending. Furthermore, take advantage of any available low balance transfer rate to divert money out of credit cards with high-interest rate and target one debt at a time.

Buying Luxury That You Can’t Afford

You want to be the coolest person in town by driving the latest car, wearing the nicest designer fashion materials and going to the biggest parties. All of these lifestyle choices costs money and is making you broke gradually. Train yourself to buy only things that fit into your budget or have a way of increasing your income and reducing your spending.

Also, avoid going on vacations or buying expensive jewelry. Eat in moderate restaurants, avoid purchasing expensive gadgets and electronics that have no real values and live in a modest and affordable apartment.

You Won’t Negotiate Your Salary

Employers will always want to ensure they take advantage of the situation to benefit their end. Try and negotiate your salary. Your salary is the most important element when it comes to saving, budgeting, planning and creating ideas that will guide your future. Don’t be afraid to ask for what you want and don’t be greedy either. The worst anyone can tell you is “no.”

Also, Before going for the interview, research salary averages to justify your position. Young people who are already employed should focus on what a raise will do for them. Share your performance records, schedule a time to discuss the issue and practice your presentation before you go in. Whatever happens, always remain professional.

Money Problems Can Arise When You Trust On Others to Care for Your Finances

Many young people are guilty of this. Depending on friends, family, and loved ones for your finances may not only leave you disappointed but can destroy a very vital relationship if you borrow money and cannot pay back.

Lastly, you have a great future ahead of you. Don’t ruin it by making money mistakes that will leave you in debt for most of your adult life. Before you start spending your salary, have a plan and budget designed to help you make the most practical decisions.

Credit Cards for Bad Credit