On the surface, cashback credit cards seem awesome. If you get back a little money back on purchases you’re making anyway, how could that be a bad thing? However, the psychology behind the way these cards are marketed sometimes makes it so you spend more than you intended, or even rack up debt. 

Doing either of those things could wipe out any savings made many times over. So, how do you use a cash back credit card and avoid these pitfalls? 

Don’t be tempted to spend more than you normally would 

This seems like a no-brainer, but it’s incredible how the idea of getting more cashback can influence some consumers to spend more money than they normally would. If you’re using one of these cards, it’s important to realize that you should really be using it as you’d use a normal debit or credit card. 

If possible, keep the idea of cashback at the back of your mind as you shop, and just enjoy the feeling when the bonuses come in (often in the form of credit or rewards points) 

One particular danger to watch out for is having to meet a certain yearly minimum spend to receive any cashback Whenever you’re applying for any of these cards, take a few minutes to estimate your yearly spending to see whether any minimum spend could be met without extra purchasing. For example, consider what you’re able to buy with the card (many household bills, grocery stores, gas stations, and other everyday expenses are common examples, but rent isn’t). 

Then, work out if you’ll spend that yearly minimum on those purchases. Not all cards have a minimum spend, but some of the higher reward ones do, so it’s important to see if you’ll easily reach those minimums without being tempted to spend extra. 

Always pay off your balance in full each month 

Having a credit card and paying off the balance in full when your bill arrives each month can be a fantastic way of building up your credit score. If you’re thinking of applying for a mortgage or other loan in the future, but Currently have a bad credit history, this can really help. Credit agencies love to see that you can be trusted to borrow money and then pay it all back quickly. 

That said, it’s important to never treat a credit card as a way to spend more money than you have. It sounds simple, but it’s surprising how many people consider it a kind of bonus that never really needs repaying, aside from the monthly minimum. If you have that mindset, you will not 

only wipe out any potential savings made with the cashback offer, but also potentially get yourself into debt and harm your credit rating 

So, use a credit card for your groceries and other essentials as you normally would, and if you can afford big purchases and were planning to buy them anyway, that’s another great way to get more cashback. Credit cards can often be used on airfare, for example. 

Plus, many credit cards include some type of insurance on purchases, so check out the details and be aware of those benefits too. Just never carry a balance from month to month, and use the included app or other spending tool to keep an eye on your purchasing and stay within sensible limits. 

Use the card wherever you can 

Keep in mind that a credit card should never be a reason to spend more than you normally would. But when you do head to the store or shop online, make it a habit to use the cashback card. 

For your favorite online retailers, change your preferred payment method to the card. Keep it at the front of your cards in your purse or wallet too, so you don’t forget to swipe that card at the register. 

Just bear in mind that you’ll always need to stay within your credit limit to avoid paying heavy fees. When you receive your card, you should be made aware of the limit you can spend without incurring fines. Pay off your balance in full every month and you’ll never spend a penny on interest or charges.

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