Cash Back

What Is Cash Back?

What Is Cash Back?

Cash back is a rewards benefit that many credit cards offer to cardholders. By taking advantage of it, you’ll receive back a prespecified percentage of certain purchases you make. Many credit card companies will provide higher cash back rates on certain types of purchases, such as airfare, gas, food and more. Cash back is just one way that credit cards offer rewards, as mileage and points are some alternatives.

Before you spend too much money with your credit cards, make sure you have a financial plan in place. Speak with a financial advisor today.

What Is Cash Back?

The most commonly recognized style of cash back is what you have likely seen advertised as cash back credit cards. This specifically refers to earning a certain percentage of your credit card purchases back as cash rewards. However, cash back rates vary widely, as do the categories that they apply to.

You usually won’t see credit card cash back rates higher than 5%, while 1% is the typically minimum you will earn. Cash back categorization is significantly more complex though, with a merchant category code (MCC) system being the main organizing force.

MCCs run the entire cash back industry, as they ultimately decide how each purchase you make is classified. These designations coincide with cash back rates set by the issuer of your card. For example, you could use your card for a $50 dinner at a steakhouse, which has a “restaurant” code. If your card offers a 2% cash back rate on all spending at restaurants, you’d earn $1 cash back.

Familiar alternatives to cash back include point- and mile-based programs, though many cardholders are partial to cash back. Cash back affords cardholders an independence that is ideal, since you can redeem it for nearly anything.

Popular Cash Back Credit Cards

What Is Cash Back?

Discover, American Express, Mastercard and Visa all have cash back rewards credit cards available for prospective cardholders. Each abide by their own set of regulations, though card issuers decide on cash back rates, promotions and bonuses. Chase, Wells Fargo, Citi and Capital One represent some of the most active card issuers on the market today.

Below are a few examples of what you can expect to earn when looking for a cash back credit card:

Cash Back Credit Cards Card Name Cash Back Rates Cash Back Bonus Costco Anywhere Visa Card by Citi 4% cash back on eligible gas up to $7,000 per year, 3% cash back on eligible travel and restaurants, 2% cash back in-store and online with Costco and 1% cash back elsewhere None Bank of America® Cash Rewards credit card 3% cash back in a category of your choosing, 2% cash back at grocery stores and wholesale clubs and 1% cash back on all other purchases (up to a quarterly cap of $2,500 in combined grocery/wholesale club/choice category purchases) $200 bonus cash back for spending at least $1,000 over your first 90 days Capital One® Quicksilver® Cash Rewards Credit Card Unlimited 1.5% cash back everywhere $150 cash back bonus when you spend $500 during your first three months Citi Double Cash Card 1% cash back on your purchases and another 1% cash back when you pay your bill None Capital One® Savor® Cash Rewards Credit Card Unlimited 4% cash back on dining and entertainment, 2% cash back on groceries and 1% cash back elsewhere $300 cash back bonus for $3,000 spent over your first three months TD Cash Visa® Credit Card 3% cash back on dining, 2% cash back at supermarkets and 1% cash back on everything else Earn $150 cash back when spending $500 within the first 90 days (See Terms) USAA Preferred Cash Rewards Visa Signature Unlimited 1.5% cash back on everything None Blue Cash Everyday Card from American Express 3% cash back on up to $6,000/year at U.S. supermarkets (then 1%), 2% cash back at U.S. gas stations and select U.S. department stores and 1% cash back on other purchases $150 bonus cash back for spending $1,000 over your first six months Getting Cash Back at Retailers

What Is Cash Back?

Picture this: you’re buying some groceries on a Sunday morning, but know you’ll need $40 cash to fill up your car with some gas later. You could swipe your debit card at the supermarket and then head over to the ATM. Or you could ask for cash back right from the cashier, eliminating the extra errand.

The above situation represents the alternative definition of cash back. It’s ultimately the use of a cash register as if you were swiping your debit card at the ATM. When you request cash back from a cashier, your bank account will be charged the amount you asked for. This enables the funds to be pulled from your account so the cash can be placed in your hand.

Although this generally only applies to debit cards, there are a few exceptions for credit cards. Discover® allows cardholders to ask for cash back at more than 50 large retail stores without a transaction fee.

Bottom Line

There are many benefits to utilizing credit card rewards programs. But spending money that technically isn’t yours will always involve some level of risk. If you’re in good financial shape, though, cash back and other types of credit card rewards can help you take more vacations, save money on purchases and more.

Credit Card Tips

  • Managing your credit cards and any debt you accumulate using them is a major part of your long-term financial outlook. Consider working with a financial advisor to make sure you’re managing your money with your goals for the future in mind. SmartAsset’s free matching tool can connect you with up to three advisors in your area. Get started now.
  • If you’re someone who wants freedom when spending credit card rewards, you may prefer cash back to a points- or mileage-based reward system. However, keep in mind that cash back rates are sometimes less than those in point-centric programs.

Editorial Note: This content is not provided by the credit card issuer. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the issuer.

Advertiser Disclosure: The card offers that appear on this site are from companies from which SmartAsset.com receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). SmartAsset.com does not include all card companies or all card offers available in the marketplace.

Photo credit: ©iStock.com/SIphotography, ©iStock.com/MJ_Prototype, Â©iStock.com/Juanmonino

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Source: smartasset.com

Make the most of an online shopping bonus category

The Bank of America® Cash Rewards credit card made waves in early 2019 when it started offering cardholders the option to earn cash back on online shopping purchases. It’s still one of the only credit cards that rewards online shopping purchases so broadly. However, there are plenty of cards that reward online purchases from specific retailers or types of retailers.

With so many products available online, this can be a very lucrative bonus category. Whether you want to earn cash back on your grocery delivery or on your boutique hauls, you have plenty of credit cards to choose from.

But how exactly does an online shopping bonus category work? By understanding just how this bonus category works and what purchases qualify, you can get more out of your rewards card and boost your earning potential.

See related: The best credit cards for online shopping

How online purchases are identified

When a merchant or card processor sends a transaction to your credit card issuer, it is identified in a few different ways. Each merchant is assigned a merchant category code (varies by card network), to help issuers recognize which category your purchase falls under. But the transaction information is also classified as being made online or in-person.

If a transaction is noted as being made online, your issuer can then check the merchant category code to ensure the purchase meets any restrictions. Then, you receive any bonus points or cash back.

Which purchases count toward an online shopping bonus?

shopping portals offer points or cash back for making purchases at your favorite store through their link. By using one of these sites to make your online purchases, you can earn airline miles, hotel points or cash back on top of credit card rewards.

Pay using a merchant app

If you frequent merchants such as Starbucks that allow you to pay through their app, use this option whenever possible to rack up online shopping bonus category rewards on in-person purchases. You may also double-up on rewards this way by earning both credit card rewards and loyalty points with the retailer.

Use a cash back or rebate program

Cash back programs like Ibotta and Rakuten can help you squeeze every bit of cash back out of a single purchase. Each program works differently, but most allow you to shop online or within a mobile app, where you can browse cash back deals with specific retailers.

If you use your credit card to make a purchase through one of these programs, you can earn cash back twice – once with your credit card issuer and once with the cash back program.

See related: Our guide to the best cash back and rebate apps

Keep a close eye on your card’s terms and conditions

Each issuer has its own set of restrictions for which purchases qualify as online shopping. To make sure you aren’t missing out on rewards, check your credit card’s terms and conditions regularly and note any changes.

Cards that offer an online shopping bonus category

A few cards offer bonus points or cash back on online shopping, including the Bank of America Cash Rewards card.

Bank of America Cash Rewards card
Bank of America® Cash Rewards credit card
Rewards rate
  • 3% cash back on a category of choice (gas, online shopping, dining, travel, drug stores or home improvements and furnishings)
  • 2% cash back on groceries and wholesale club purchases
  • $2,500 combined limit on 2% and 3% categories each quarter
  • 1% cash back on other purchases
Sign-up bonus $200 online cash rewards if you spend $1,000 in first 90 days
Annual fee $0
Estimated yearly rewards value ($1,325 monthly spend) $309

The Bank of America Cash Rewards card also allows cardholders to change their 3 percent bonus category once per calendar month. So if you spend more on online shopping one month, but will spend more on dining the next, you have the flexibility to adapt your rewards as your spending changes.

Bottom line

When it comes to credit card rewards bonus categories, online shopping is one of the most flexible options out there. By understanding which purchases rake in points and cash back, you can get even more out of your card.

See related: How merchant category codes can help you leverage card rewards, Bank of America Cash Rewards cardholders can now choose how they earn rewards

Source: creditcards.com

Best credit cards for Airbnb

Many of us are avoiding travel during the pandemic.

But if you have to shelter in place under quarantine once you get to your destination, wouldn’t you rather do it in an environment that at least seems more within your control?

If the choice is between a hotel where you must trust your experience to a faceless corporation or a local host you can talk to through homestay sites like Airbnb and Vrbo, the latter may be the better option for these times (provided you don’t violate their party guidelines).

Whatever option you choose, credit card issuers now reward homestays with points and cash back in the same way they’ve long doled out rewards for hotels and other travel expenses.

These are the best cards on the market for homestays like Airbnb.

See related: Strategies for planning 2021 travel

Wells Fargo Propel American Express® card: Best no-annual-fee, high rewards option

  • Chase Sapphire Reserve: Best introductory bonus
  • Bank of America® Premium Rewards® credit card: Best for bonus rewards
  • Capital One Venture Rewards Credit Card: Best flat-rate miles card
  • Amazon Prime Rewards Visa Signature card: Best for online shopping
  • Discover it® Miles: Best no-fee option
  • Wells Fargo Propel American Express® card: Best no-annual-fee, high rewards option

    The Wells Fargo Propel American Express card includes arguably one of the highest rates of return on points for some of the most popular redemption categories out there, including homestays like Airbnb and Vrbo.

    The greatest advantages of this card – besides earning 3 points per dollar spent on some popular spending categories – are that there’s no point limit or expiration, no annual fee and no rotating categories that you constantly have to remind yourself to activate. You get three times the points in the relevant categories all the time without restriction, with travel – including all homestays – and transit being one of those prominent categories.

    The card also charges no foreign currency conversion fee, so buying things abroad is less expensive. If that weren’t enough, here’s what you also get:

    • 3 points per dollar spent on travel and transit purchases
    • 3 points per dollar spent on eating out and ordering in
    • 3 points per dollar spent on gas and rideshares
    • 3 points per dollar spent on select streaming services such as Hulu, Netflix, Sirius XM and Spotify Premium
    • 1 point per dollar spent everywhere else
    • No annual fee
    • No points limit or expiration
    • Premium access to presale tickets, offers and protections from American Express
    • 20,000 points when you spend $1,000 in the first three months

    ProudMoney.

    Chase Sapphire Reserve: Best introductory bonus

    Before the Wells Fargo Propel card debuted, Chase Sapphire Reserve was the go-to credit card option for Airbnb fans. It offers a 50,000-point introductory bonus when you spend $4,000 in your first three months of membership. Those points are worth up to $750 when you book travel through Chase Ultimate Rewards.

    Though equipped with fewer spending categories offering 3X points and carrying a large annual fee of $550, the benefits of the Chase Sapphire Reserve card are more specifically geared toward frequent travelers.

    At the same time, that large annual fee is offset by a $300 annual credit that will reimburse any travel expense – including Airbnb. And from June 1, 2020, to June 30, 2021, gas station and grocery store purchases count toward the travel credit.

    Add to that a $100 credit covering the application to Global Entry/TSA Precheck every four years and the annual fee is almost completely offset in the first year.

    Meanwhile, there are even more travel benefits:

    • 50,000 bonus points after you spend $4,000 in the first three months (worth up to $750 in travel)
    • 3 points per dollar spent on travel (excluding purchases covered by the $300 travel credit)
    • 3 points per dollar spent on dining (including delivery and takeout) and travel; $1,000 in grocery purchases, including eligible pick-up and delivery services, from Nov. 1, 2020 to April 30, 2021
    • Complimentary airport lounge access through Priority Pass Select Membership
    • Trip cancellation/interruption insurance
    • Primary car rental insurance
    • Lost luggage reimbursement

    Bank of America® Premium Rewards® credit card: Best for bonus rewards

    While the points per dollar offered by Bank of America Premium Rewards credit card on travel and Airbnb are fewer than the credit cards above, the sign-up bonus and up to $200 in annual statement credits make it a decent option, even with less flexibility on what qualifies as a credit than the credit cards above.

    This card should absolutely move to the top of your list if you are already a Bank of America Preferred Rewards client. That designation automatically increases your return even higher than what the other credit cards above offer on travel and dining – you can get a rewards bonus of up to 75%.

    Combine that with a generous sign-up bonus and the Bank of America Premium Rewards is one of the most potent rewards cards for Preferred Rewards clients.

    The card includes:

    • Introductory bonus: 50,000 points when you spend $3,000 in the first 90 days (worth up to $500 in free travel)
    • 2 points per dollar spent on dining and travel purchases, including Airbnb and Vrbo
    • 1.5 points per dollar spent on everything else
    • Get up to $200 in travel statement credit rewards, including $100 for incidental spending per year and $100 toward a TSA Precheck/Global Entry application every four years
    • No foreign transaction fees
    • Bank of America Preferred Rewards clients earn up to 3.5 points per dollar on travel and dining purchases and up to 2.62 points per dollar on all other purchases
    • $95 annual fee

    Travel loyalty programs offer extended perks in pandemic

    Capital One Venture Rewards Credit Card: Best flat-rate miles option

    The Capital One Venture Rewards Credit Card is remarkably similar to Bank of America’s Premium Rewards card, right down to the $95 annual fee, but without the additional benefits afforded to Bank of America Preferred Rewards clients.

    However, Capital One Venture Rewards offers 2 points per dollar spent on every purchase, not just travel and dining.

    • Earn 60,000 travel miles after you spend $3,000 in purchases in the first three months – equaling $600 in travel credit
    • Earn 2 miles per dollar spent on every purchase, every day
    • Points can be redeemed for statement credit on travel purchases, including Airbnb
    • $95 annual fee
    • No foreign transaction fees

    Amazon Prime Rewards Visa Signature card: Best for online shopping

    You may be wondering why the Amazon Prime Rewards Visa Signature card is on a list highlighting the best credit cards for AirBnb, Vrbo and other homestays.

    Shouldn’t this card be limited to the “best credit cards for online shopping” list? Not when Amazon offers Airbnb gift cards and the Amazon Prime Rewards card gives you 5% cash back on Amazon.com purchases as long as you have a Prime membership, which essentially acts as the annual fee ($119).

    Just purchase an AirBnb gift card from Amazon with the card, and it’s as if you are getting 5% cash back for your AirBnb stay when you apply the gift card towards it. It’s the highest rate on this list, Amazon or not.

    You’ll receive the following additional benefits:

    • 5% cash back on Whole Foods and Amazon purchases (with Prime membership)
    • 2% cash back on purchases at drugstores, gas stations and restaurants
    • 1% cash back on all other purchases
    • A $100 Amazon gift card upon credit card application approval
    • No foreign transaction fees
    • $500,000 travel accident insurance
    • $3,000 per passenger lost luggage reimbursement
    • Baggage delay insurance of up to $100 a day for three days
    • Extended warranty coverage for an additional year

    See related: How to pay off Amazon purchases over time

    Discover it® Miles: Best no-fee option

    Though the points per dollar on this card are lower than any other credit card on the list, Discover it Miles gives you much more freedom in how you can manage your points and account.

    You can redeem miles in any amount, your miles don’t expire even if you close your account and 1% of your miles can be converted directly into cash for your bank account.

    Discover it Miles offers:

    • 1.5 miles for every dollar spent on every purchase (matched at the end of the first year)
    • Points can be redeemed for statement credit on travel expenses, including Airbnb, gas stations and restaurants.
    • Miles can be converted into cash at rate of 1 cent per mile and transferred directly into your bank account
    • Redeem miles in any amount
    • Miles never expire and you don’t lose them even when you close your account
    • No late payment fee or penalty APR on your first late payment, up to $40 thereafter
    • No foreign transaction fees
    • No annual fee
    • 0% APR on purchases for 14 months (11.99% to 22.99% variable APR after that)

    creditcards.com

    What credit card should I get?

    One of the questions I’m asked the most is, “Which credit card should I get?”

    There’s not a one-size-fits-all answer, but here’s how to narrow it down:

    Which credit card to choose if you carry a balance 

    If you’re in credit card debt, then you need to prioritize your interest rate over rewards. The average credit card charges 16.05%. It doesn’t make sense to pay interest just to earn 1%, 2% or 3% in cash back or travel points.

    If you have credit card debt, forget about rewards for now. You can avoid interest for up to 18 months with the right balance transfer card. And some card issuers (especially credit unions) charge ongoing (non-promotional) rates as low as the 6%-9% range. Don’t chase rewards if you’re revolving a balance.

    If you have credit card debt, I recommend these cards:

    • Citi Simplicity® Card*: 18-month 0% intro balance transfer offer; transfers must be completed in the first four months; 3% balance transfer fee ($5 minimum); 0% introductory purchase APR for 18 months; regular variable APR of 14.74%-24.74%
    • Wells Fargo Cash Wise Visa® card: 15-month 0% intro balance transfer offer on qualifying balance transfers; intro balance transfer fee of 3% or $5 (whichever is greater); transfers must be made within 120 days to qualify for intro offer; 0% intro purchase APR for 15 months; regular variable APR of 14.49%-24.99%; regular balance transfer fee of 5% or $5 (whichever is greater)
    • BankAmericard® credit card: 12-billing-cycle 0% intro APR balance transfer offer; must complete the transfer within 60 days of opening the account; 3% or $10 transfer fee, whichever is greater; introductory 0% purchase APR for 12 billing cycles; regular variable APR of 12.99-22.99% on purchases and balance transfers

    See related: Balance transfer cards with no transfer fee

    Which card to pick if you don’t have any credit card debt 

    Now we’re on to the fun stuff! The key questions at this juncture focus on how much effort you want to put in, how you spend your money and what you want to get out of your rewards.

    Some people treat credit card rewards like a game. It’s fun for them, and they spend time looking for the best deals and juggling multiple cards. Yet about three-quarters of credit card holders prefer simplicity and would rather use the same card or two as widely as possible, we found in an August 2019 survey.

    You won’t get the best rewards with that approach, but you can still do pretty well. Here are my favorite flat-rate cash back cards:

    • Alliant Visa Signature Card: 2.5% cash back on every purchase with a $99 annual fee (waived your first year)
    • Citi® Double Cash Card: Essentially 2% cash back on everything (technically 1% when you buy and 1% when you pay it off); no annual fee

    If you make more than $20,000 in credit card charges in a typical year, the Alliant Credit Union Visa Signature is a better bet despite the annual fee.

    Which card to pick if you’re willing to put in a little work to earn better rewards 

    Dividing your spending among multiple cards is the best way to reap higher returns. At this stage, you need to consider how you spend your money. Different cards incentivize different types of spending (e.g., travel, restaurants, groceries, entertainment).

    You also need to think about your desired redemption. Cash back has the broadest appeal (after all, who couldn’t use a little more cash?), although travel rewards are usually the most valuable. Some 49% of U.S. adults have at least one cash back card, 20% have an airline or hotel rewards card and 19% have a general travel rewards card, our research shows.

    Chase Sapphire Reserve, the American Express® Gold Card, the Citi Premier® Card and the Capital One Venture Rewards Credit Card).

    Each of these issuers has more than a dozen airline and hotel transfer partners, plus you can book an even wider variety of flights and hotels directly through the card companies. These programs provide tons of flexibility, and in terms of cents per point, they generally offer higher returns than cash back cards.

    Parting advice

    As you can see, picking the right credit card for you is an individual decision. I’ll leave you with two more thoughts:

    You’re doing well as long as you’re avoiding credit card debt and redeeming rewards for something that’s valuable to you.

    Not everyone wants to fly to the Maldives in first-class and stay in an overwater bungalow. Even if it yields fewer cents per point, a free flight to grandma’s house or cash back on everyday purchases could make more sense for your particular situation.

    You should absolutely consider sign-up bonuses when evaluating credit cards, but don’t lose sight of the fact that your credit card strategy should be a long-term pursuit. Especially if you’re new to credit, focus on ongoing value rather than card churning.

    * Information about Citi Simplicity has been collected independently by CreditCards.com. The issuers did not provide the details, nor are they responsible for their accuracy.

    Source: creditcards.com

    Amazon Prime Card offering new Whole Foods card art, limited-time bonus

    On Jan. 20, 2021, Chase announced a new card art option for the Amazon Prime Rewards Visa Signature card featuring Whole Foods Market and added a limited-time sign-up bonus offer for those who prefer to shop at Whole Foods in-store.

    Amazon has become a leader in grocery shopping during the pandemic, with consumers avoiding grocery stores due to health safety concerns – not to mention the convenience of shopping from a web browser. Amazon Prime members can enjoy speedy free delivery, as well as get access to online shopping at Whole Foods Market and special member deals when shopping in-store.

    They can also count on extra savings if they carry the Amazon Prime Rewards card from Chase – or if they’re looking to apply in the next few weeks.

    Here’s what you need to know.

    Amazon Prime Rewards Visa Signature card

    Amazon Prime Card Whole Foods

    Our rating: 3.8 out of 5
    Score required: Good to excellent
    Type of card: Cash back
    Spending categories: Amazon, Whole Foods, restaurants, gas stations, drug stores

    • 5% back on Amazon.com and Whole Foods purchases
    • 2% back on restaurant, gas station and drug store purchases
    • 1% back on other purchases
    • $70 Amazon.com gift card upon approval or $100 statement credit after spending $100 at Whole Foods in first 2 months
    • No annual fee

    Our take: While the Amazon Prime Rewards card offers excellent cash back on Amazon and Whole Food purchases, it might not be the best choice for customers who don’t currently have a Prime membership and aren’t looking to subscribe.

    A new Whole Foods card design and limited-time offer

    Chase introduced a new card design option for new Amazon Prime Rewards cardholders, featuring Whole Foods Market art. New cardmembers with an eligible Prime membership can choose the new design when they apply for the card. If you’re an existing cardholder and would like to switch to the new design option, you can call in to request a new card after Jan. 22, 2021.

    If you frequently shop at Whole Foods in-store, the new limited-time introductory offer can also be exciting news for you. Through March 3, 2021, new Amazon Prime Rewards Visa cardholders can earn a $100 statement credit after spending $100 in Whole Foods Market stores in the first two months from account opening. Alternatively, they can still choose the standard $70 Amazon gift card offer as a sign-up bonus.

    Considering the standard bonus is lower, the new temporary offer might be a better deal. On the other hand, if you avoid shopping in-store or normally use Amazon Fresh for buying groceries, the gift card might make more sense for you.

    Should I start shopping at Whole Foods if I have an Amazon credit card?

    If you already shop at Whole Foods, the 5% back with the Amazon Prime Rewards Signature Visa and 10% off specially marked items is a good deal. The discounts, though, don’t make Whole Foods cheaper than other grocery stores.

    In fact, according to a study from 2019, Whole Foods remains the most expensive grocery store with its prices at 34% above Walmart, which was reported to have the lowest prices overall. If your goal is to save on groceries, Whole Foods is evidently not the best option – even if you carry the Amazon Prime card.

    Other cards to consider

    The Amazon Prime Card isn’t the only option you should consider if you often shop on Amazon or at Whole Foods.

    See related: Which is the best card to use on Amazon.com purchases?

    For instance, with the Chase Amazon.com Rewards Visa card, you can get a $50 Amazon gift card upon approval and earn 3% on Amazon and Whole Foods purchases, 2% percent at restaurants, gas stations and drugstores and 1% on all else. If you don’t have a Prime membership and aren’t looking to subscribe, this is a good option, since the card doesn’t require for a cardholder to be a member.

    If you do have a membership and shop on Amazon a lot, the Amazon Prime card is a better deal. With 5% for purchases made at Whole Foods and on Amazon, 2% at restaurants, gas stations and drugstores and 1% on all else, this card is hard to beat for Amazon and Whole Foods lovers.

    If you’re looking for a card to buy groceries, consider the Blue Cash Preferred® Card from American Express that could save you more than with the Amazon Prime Visa at Whole Foods. Why? Blue Cash Preferred cardholders earn 6% cash back at U.S. supermarkets (up to $6,000 in purchases per year, then 1%).

    See related: Best credit cards for grocery shopping

    Bottom line

    Now you can stack your rewards at Whole Foods, earning cash back and the limited-time bonus with the Amazon Prime Card, and you can get extra savings from the loyalty program. Whether it makes sense to shop at Whole Foods, even with rewards cards and the loyalty program, is up to you.

    Source: creditcards.com

    Stacking up deals to max out cash back, points on holiday shopping

    It’s shopping season, and millions of us who aren’t out shopping in stores right now are sitting in front of our computers buying out the internet. It doesn’t matter if you’re shopping for groceries or gifts – if shopping is on your to-do list this month, you’re in luck.

    With retail stores scrambling for shoppers, the cash-back craze gone wild and banks offering up to 10 points per dollar on some purchases to entice consumers to use their credit cards, the opportunities for stacking deals upon deals has reached fever pitch.

    Right now, there are more stackable offers for online shopping than I’ve ever seen in all my years of points wrangling. There are so many offers, in fact, that some days I find myself in shopping paralysis trying to decide which credit card to pair with which offer and accompanying points or cash back portal to get the best return. These are the good kinds of 2020 problems that put money back into your pocket.

    See related: Not traveling anytime soon? Here’s what do to with your points and miles

    Getting started with deal-stacking

    If you’ve never heard of deal stacking, it’s just a fancy term for using multiple coupons or deals to maximize your savings or earnings on one purchase. In the travel-rewards world, we also like to call it the double or triple dip.

    Getting started with deal stacking is as easy as considering each and every one of these three steps or ‘stacks’ anytime you make a credit card purchase.

    Stack 1: Check for credit card offers and register if needed

    Always choose the card that will earn the most points per dollar spent in your purchase category. And don’t forget to register for any special offers from your credit card to earn bonus points or discounts. These offers are usually easy to find by logging into your credit card account.

    Stack 2: Shop using cash back- or points-earning portals

    Before you buy online, always access the online store via a shopping portal like Ibotta or Rakutan rewards if you’re looking for cash back. If you’re collecting points, try the portal of your favorite airline, hotel group or bank program.

    A tool like Cash Back Monitor can help you decide which portal will offer you the best return for each purchase you’re planning to make.

    Stack 3: Scan your receipts for more rewards

    After you make your purchase, scan your receipt into an app like Fetch Rewards or CoinOut to accrue points that can be turned into gift cards for more shopping – and even more savings.

    Deal-stacking in practice

    My friend Angel Trinh over at Pennywise Traveler is a rock star on deal-stacking and loves to share tutorials on her stacking successes. Because points-stacking is best explained through example, here’s how she’s stacking up deals for her Amazon purchases this month using her American Express® Gold Card.

    Putting into practice the first stacking principle, when Trinh checked her American Express Gold Card account this month, she saw that she was targeted with an offer to earn 8 Membership Rewards points per dollar on Amazon purchases (up to 3,000 points). She registered her card for the offer, then set out to spend $375 – the amount it would take to max out the bonus to earn the full 3,000 points.

    “For American Express, the best way to maximize deal stacking and to save money is to add AmEx offers to your account,” Trinh explains. “You can add a maximum of 100 offers to your account for discounts.”

    Privacy Policy

    In checking out, Trinh acted on this offer and opted to pay 1 Membership Reward point (a single cent) towards the cost of the items in her cart. Even though this was a single cent, it triggered a 10% discount on her full purchase! This offer added an additional savings of $37 back on the $375 spent to max out her 8x American Express offer – stacked on top of the 3,000 Membership Rewards points already earned.

    After maxing out points and saving 10% using steps one and two, Trinh’s final deal-stack for her Amazon shopping was to check for additional cash back returns using Fetch Rewards.

    Because Amazon receipts are only digital, no physical scanning is even required. You simply link your Amazon account to Fetch Rewards, and after you’ve completed your online shopping, use the app to trigger an automatic scan for your Amazon receipts. The number of points earned varies based on what you’ve purchased and from which store and allows you to cash out your accrued earnings with gift cards.

    Bottom Line

    Deal-stacking is easy to start, not too hard to master and can certainly help you put more money back in your pocket – while also putting presents under the Christmas tree this year. Happy holiday shopping!

    Source: creditcards.com

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    Can you send money with a credit card?

    Sending cash to friends and family? Before you reach for that credit card, grab a calculator. It’s time to do a little math.

    With most everything you purchase online or through apps, credit cards have the edge. With plastic, you have chargeback rights. If you’re overcharged or receive the wrong item, broken merchandise or nothing at all, your card issuer will make it right. And if you use a rewards card, you collect points or miles, too. Win-win.

    But it’s different story when you’re sending money through peer-to-peer platforms. Many of them (like Google Pay, Popmoney and Zelle), don’t allow consumers to use a credit card to send cash.

    Others (like Cash App, PayPal and Venmo), allow credit cards but also charge a fee for the privilege – often about 3%.

    See related: How to choose a P2P payment service

    The hidden costs of using credit cards to send money

    Choose a credit card to send money and you might also end up paying additional fees to your card issuer. That’s because the combination of some peer-to-peer apps with certain cards are coded as cash advances, rather than purchases.

    For many cards, that cash advance code triggers a higher interest rate that kicks in the moment you make the transaction, as well as a separate cash advance fee that’s often $10 or 5% of the transaction – whichever is higher. (Currently, the average interest rate for cash advances is 24.8%, while the average APR for purchases is 16.05%.)

    So the combination of peer-to-peer service fees, credit card cash advance fees and that higher interest rate (with no grace period) could make sending a few hundred dollars a bit more costly than you’d planned.

    No chargeback rights with credit cards

    The real kicker: Unlike other venues, you don’t have chargeback rights when you use credit cards to make peer-to-peer money transfers.

    When you present your credit card in an online or brick-and-mortar store, there’s a merchant involved – and the law provides chargeback rights for your protection in case you don’t get what you were promised in the deal. But in a peer-to-peer money transfer, there’s no merchant, so currently the laws don’t give consumers any chargeback rights, says Christina Tetreault, manager of financial policy for Consumer Reports.

    “The chargeback right requires a merchant,” says Tetreault. “One of the hoops a consumer has to jump through is to try and work it out with the merchant.”

    If you use a peer-to-peer service and send the wrong amount or send the money to the wrong person, most platforms advise that the only way to get it back is to contact the recipient and ask them to return it. And that’s often the same whether you use a credit card, debit card, bank account or funded account on the platform.

    “Be doubly sure when you’re sending the money that you’re putting in the correct information,” says John Breyault, vice president of public policy, telecommunications and fraud for the National Consumers League. “It’s still a buyer beware world when it comes to peer-to-peer.”

    The solution

    If you’re sending money and want to use a credit card, it pays to do a little sleuthing first. Check out the peer-to-peer site. Does it allow users to send money with a credit card? If so what, if any, fees does it charge?

    On some platforms (PayPal is one), you could see similar fees for using a debit card – while sending from a bank account or funded account on the platform is free.

    The good news is that many peer-to-peer platforms clearly disclose it when there’s an extra charge to use a credit card, says Tetreault. With Venmo, for example, you’ll get a pop-up message.

    Harder to decipher: Will credit card transactions on the platform be treated as a cash advance? If your preferred platform doesn’t post this information, you might need to contact customer service. (And how quickly and easily you get an answer can tell you a lot, too.)

    Ask your card issuer the same question: Are peer-to-peer money transfers on the platform you’ve chosen treated as a cash advance? If they are, what’s the interest rate, and what’s the cash advance fee?

    “What I would suggest is to ask that question, via email, of your financial institution,” says Tetreault. “It may be in their FAQs. And you want to save that email. If you have it in writing, if there’s an issue later, you’re better positioned to contest that fee.”

    But “the hard truth is you may not be able to find out ahead of time,” she says.

    Another solution: Opt to use a credit card issued by a credit union.

    “With credit unions, the APR is usually the same” for purchases and cash advances, says John Bratsakis, president and CEO of the Maryland and District of Columbia Credit Union Association.

    Likewise, with American Express cards you pay your regular interest rate and no cash advance fees on peer-to-peer transfers, says Elizabeth Crosta, vice president of public affairs for American Express.

    And credit cards from U.S. Bank register peer-to-peer money transfers as regular purchases – with no cash advance fees or cash advance APRs, says Rick Rothacker, spokesperson for the bank.

    See related: How do credit card APRs work?

    What’s your reason for using a credit card?

    Take a good look at the reason you’re using a credit card, too. If you want chargeback rights, that’s not an option. If you’re doing it for the rewards, will the value of those points or miles be eaten up by extra fees or a higher interest rate you have to pay to use the card?

    And if you’re using a card because you don’t have the cash, that might be a good reason to rethink the idea of sending money in the first place.

    That’s a huge red flag, says Bruce McClary, vice president of public relations at the National Foundation for Credit Counseling.

    “The need to convert credit into cash is what really gets my attention – because that hints at a lack of savings,” he said. “It’s a reality a lot of people are facing, especially now.”

    Cash advances aren’t as expensive or risky as payday loans and car title loans, but they should be among your last resorts. If you’re looking for short-term relief, you could ask your credit card issuer for help, or find out if you qualify for a personal loan. You could also borrow from a family member or trusted friend, but be wary of the potential relationship toll if you can’t pay them back.

    Getting cash from credit cards

    Fifty-two percent of Americans report that the pandemic has damaged their finances, according to a recent survey by the NFCC. More than a fifth of those had to tap savings for everyday expenses, while 16% increased their credit card spending.

    And that’s a sign of financial stress, says McClary. “It means that, in some situations, they have run out of savings.”

    There are ways you can use your card to get cash, though.

    Cashing in rewards

    Some rewards cards from issuers such as Chase, Bank of America and US Bank let you deposit cash-back rewards directly to your bank account.

    And Wells Fargo also will let you deposit its Go Far Rewards directly into another Wells Fargo customer’s account, says Sarah DuBois, spokesperson for the bank.

    Gift cards

    Many credit cards let you convert rewards into retail gift cards. So a pile of points can help a friend or family member buy much-needed groceries or a few holiday presents.

    Or simply “buy a gift card for someone,” says Bratsakis.

    Retailer-specific gift cards and gift cards issued through local and regional retail associations and malls often come with no fees – meaning every dollar you spend goes toward your gift.

    Convenience checks

    While you can get a cash advance or use convenience checks from your card issuer, both those options often come with fees and higher interest rates. Not a smart money move, especially in the current economy.

    While some lenders may offer convenience checks with deferred interest, that’s not the same as “no interest,” says Bratsakis. Also, if you don’t pay the loan in full, will you owe the full interest retroactively?

    “That’s where consumers have to be careful,” he says. With a convenience check or even a cash advance, “that’s usually where consumers can get themselves into trouble if they can’t pay it off and get hit with deferred interest.”

    See related: What is deferred interest?

    Bottom line

    When it comes to peer-to-peer payments, cash really is king. You can then put it into a funded account with the money transfer platform or your bank account. And most peer-to-peer platforms let you do this for free.

    “The safest way to use these services is to send money person-to-person and be diligent about getting all the details correct so it doesn’t go to the wrong person,” says Tetreault.

    Only send to people you trust and know in real life, she says. “And before sending money make sure you understand what, if any, fees you might incur.”

    Source: creditcards.com

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