Can a Cash Back Card Help You Might Inflation?

Inflation is a battle consumers have been fighting particularly hard over the last couple of years. It has forced consumers to think outside the box in order to save money. Can a cash back credit card help you accomplish that goal? Let’s take a look.

How Can a Cash Back Card Help?

You might be wondering how much a cash back card could really help when fighting inflation. An article written by Brett Holzhauer for cnbc.com explains, “Cash-back credit cards operate with the simple premise of rewarding you with a certain amount of money returned to your pocket based on how much you spend on purchases. This happens in one of two ways, either via a flat-rate or through category-based spending.

So, how much could you earn with each type of cash-back credit card? Select calculated the amount of cash the average American consumer could earn back in credit card rewards based on their annual spending. We worked with the location intelligence firm Esri, which provided us with a sample annual spending budget of $22,126. With a flat-rate 2% cash-back card, you could end up with about $444 in cash back in a year, while using a card that operates on category-based spending would make this figure vary based on how much you actually spent.”

While an extra $400 a year might not seem like much, it averages out to around $35 a month. That’s enough to buy a couple extra groceries, go to the movies, or take yourself out on a dinner date. When inflation is so high, it’s silly to say no to any extra cash. Every little bit helps.

Spending your Cash Back

Cash back cards are often overlooked in favor of travel rewards cards with flashy benefits and welcome offers. At a point in time when inflation is weighing so heavily on consumers, opening a cash back card should definitely be considered.

When you’ve had time to earn some money back, what should you do with your cash? You can utilize it in a plethora of ways. You could invest it in order to grow it into a more substantial sum. You could also put it away for retirement. However, if you’re monthly budget is tight, you can always use the extra money as a cushion. The point is- you have options. Deciding what to do with your extra money is a good problem to have!

Things to Consider

While it can definitely put a little extra money in your pocket each year, a cash back credit card might not be the best fit for everyone. You should consider whether your spending habits align with the requirements of a cash back card. Are you frequently making purchases within the cash back categories? Are you okay with paying an annual fee? These are things you have to think about. Additionally, if you’re unable to reasonably or responsibly meet the minimum spending requirements, it might not be a great idea to open a new card. Weigh your options and do extensive research to find which credit cards will help you get the most money back.

Other Tactics

While cash back credit cards are a tool in your arsenal, this can’t be the only way for you to fight inflation. Consider other tactics such as budgeting and scaling back on your spending. Try negotiating your rent or ask your employer for a cost of living raise. Get into the mindset of living on less in order to save money and avoid debt.

It’s also important to keep in mind that you should always use credit cards responsibly. Make sure you’re not signing up for any cards where you can’t afford to meet the minimums. Don’t take on more than you can handle.

When it feels like everything is more expensive these days, it feels good to save a little bit of money on everyday expenses. This is the beauty of a cash back credit card. Used responsibly, it can be a great addition to your money saving arsenal.