Cash Back Credit Cards offer you a percentage of c ash back for purchases you make using the card. There are a lot of different benefits cash back credit cards can offer in Australia and some cards are better for some than others, so it’s important to understand how they work so you can maximize your rewards.
What are Cash Back Credit Cards?
While you don’t often see credit cards around in Australia, you can still find Cash Back Credit Cards that come with great benefits. Cash Back Credit Cards are simply what they sound like, they offer a percentage cash back for purchases made using the card. While other credit cards often offer rewards based on earning points, cash back cards allow you more freedom since you earn back cash to use anywhere you please. Different cash back cards will offer different rates on various categories, so it’s important to take your time to research which card will be the best for you and your spending habits.
When applying for a new cash back card, you’ll want to consider the following:
Annual Fees: A lot of cards will charge an annual fee and this can be a deal breaker for some people. But you may be able to find a card with the same cash back rates but with lower or no annual fees. If you don’t think you’ll use your cash back card a lot or don’t think you can spend that much money, paying a hefty annual fee may just not be worth the rewards the card comes with. You might just end up paying more for the card instead of getting more cash back.
Welcome Bonuses: This is another great perk when you sign up for a new credit card. To get you to sign up, a lot of cards will offer you some type of welcome bonus, such as getting $200 back after you spend $1000 within the first 3 months of signing up. Keep this in mind so you can max out your benefits.
How You Spend: Depending on what you spend your money on, you can maximize the benefits of a cash back card. Some cash back cards are geared towards world travelers, so they may give you steeper cash back rates for spending on flights or travel. Other cards may be more practical for everyday purchases, such as higher rates for shopping at supermarkets or retail stores. It’s important for you to think about your spending habits and pick a card that will benefit you the most. Not all cards are best suited for everyone.
Pay On Time: While credit cards come with a lot of benefits, you must be responsible and pay your bills on time. Different cash back cards will charge varying interest rates if you do not pay off your bill in full and on time [2]. This is a slippery slope and you can end up owing the bank more money than the cash back rewards for using the card can ever offer you. It can end up not being worth it to have the card at all. You should regularly check your credit card statement and think about setting up automatic payments so you won’t ever be behind on your bills.
We’ve also included some cash back cards that we have found to be the best in the country. Here are our top 3 picks:
1. Virgin Money Low Rate Credit Card
This card comes with one of the best welcome offers you’ll find in Australia. In the first 3 months of signing up, you will receive 10% cashback on purchases (capped at $100). It also has one of the lowest credit card interest rates of 11.99% p.a., and has a low annual fee of $49. Another perk is it’s easy eligibility requirements. All you need is to have a minimum income of $35,000 and be an Australian resident who is over 18.
2. ING Direct Orange One Platinum Credit Card
One of our favorites because it offers 1% cashback, capped at $30 per month, and also has a decent interest rate of 16.99% p.a. Also if you are a world traveler, this card is perfect for you. You’ll get complimentary international travel insurance and don’t have to pay foreign transaction fees as long as you deposit $1000 per month and make over 5 purchases with the card.
3. Citi Rewards Classic Credit Card
Another cash back card with a great welcome bonus of 5% cashback (up to $1000) within the first 3 months of signing up. You’ll also 1 point per $1 spent on eligible domestic purchases up to $5000 per statement period. Also if you enjoy eating out at restaurants, this card gives you the unique perk of $35 to spend on your favorite bottle of wine at partnered restaurants. Simply let the restaurant know you’ll be paying with your Citi Rewards Classic Card.
Cash back credit cards can really come with a lot of benefits, and you may as well be earning back some cash on the purchases you need to make anyways. But it’s important to remember to take some time to research different cards and understand all the benefits (along with the restrictions) before applying. If you apply too often, it’ll hurt your credit standing, and banks will be less likely to approve you.
Resources:
1. https://mozo.com.au/credit-cards/guides/cash-back-credit-cards-unveiled/84
2. https://www.creditcardcompare.com.au/cash-back-credit-cards.php
3. https://mozo.com.au/rewards-credit-cards
4. https://mozo.com.au/rewards-credit-cards/guides/reward-programs-the-ultimate-guide
