Cashback when you spend on a credit card sounds like a dream, doesn’t it? Cashback credit cards sound like a dream for some people, as they pay you to spend. They’re a good way of profiting from everyday purchases, but require discipline – making money on your purchases is great as long as you remember not to end up paying back more in interest!
Cashback credit cards are perfect for those who pay off their balance in full each month and would like to get a little extra out of their credit card. The concept of the card is that you, the customer, receive a percentage of the price of every purchase you make in cashback. Standard cashback percentages are generally up to 1%, but many providers offer introductory periods at rates as high as 3%.
The idea of free money is obviously appealing, but it’s worth making sure that you really will be able to pay off your balance every month in order to benefit from this. If you may carry over a balance, interest will wipe out any profit you have made in a shockingly short space of time. It’s also worth noting that some card providers may cap the amount they pay you back, so as always, study the small print meticulously.
Cashback cards have recently been touted as a more efficient way of giving charitably. They often offer better rates of cashback than charity cards return to their causes, therefore you can give more by donating your cashback (and increasing its value via Gift Aid).
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