There are currently many credit cards in the Canadian market that offer a cash back benefit.
Cash back essentially means money back. It is a system in which you receive a percentage of your cash back as a reward anytime you make a purchase.
Remember that cash back is not an incentive to overspend. Instead, it would be best if you thought of cash back as a savings instead of spending more than you would have otherwise.
In this article, we will explore four benefits of cash back credit cards. Check it out.
1. Exciting Welcome Bonuses
Most cash-back cards will offer you a decent welcome bonus if you spend a minimum amount within the first few months. The bonus may be worth a few hundred dollars.
One sign-up bonus worth considering is Scotia Momentum® VISA* Infinite card which offers 10% cash back on all purchases for the first three months (up to $2,000 in total purchases). Getting a little more money back from your spending could be easy if you normally spend that much over three months.
2. Cash rewards
The ability to accumulate rewards is one of the numerous advantages of cash back credit cards. Each cash-back credit card has its own rewards program, but they all provide the same simple, clear benefit: cash back for every dollar spent. Some cards, such as Amex SimplyCash, give flat-rate rewards, such as 2% back on all purchases. Others, such as the CIBC Dividend Visa Card, offer 3% cash back on certain categories like gas or grocery. And on all other purchases, you’ll get 1% cash back.
3. Most have no annual fee
Most of the best cash-back credit cards don’t have an annual fee. That means you can keep the card open without paying a fee even if you decide to switch to another card in the future. This is important since a longer credit history can help you improve your credit score. Premium credit cards have appealing perks, but they also have hefty annual fees. As a result, these cards are only worthwhile if you use their benefits regularly. On the other hand, cash-back cards allow you to maximize your spending without having to pay a large annual fee.
4. Other perks
Some cash back credit cards include features that can help you protect your purchases or save money. National Bank mycredit Mastercard®, for example, provides protection for your mobile phone: New mobile devices purchased with your card, as well as phone subscriptions paid for with your card or by automated transfers from your mycredit account, are covered for up to two years against theft or damage. These features aren’t available on all cards. Read your card’s benefits guide for a detailed breakdown.
In conclusion
Cash back credit cards can be a good option if you pay your credit card balance in full every month. This is due to the fact that you are being compensated for spending what you would have spent regardless.
You should never spend more than you can afford only to get more cash back. Because, you risk accruing interest if you overspend and go into debt, which could offset the benefits of this perk.