How a cashback credit card works

If you're searching the market for a cashback credit card you might be asking yourself some of the following questions...

It's nice to get a little something back now and again, especially when we spend money. As its name suggests, a cashback credit card can give you money back when you make certain purchases.

What's on offer?

There are a variety of cards available so take your time to do some research. Some cards may offer a 0% cashback on purchases over a specific period of time, often up to a maximum amount spent per month, others may offer a particular cashback value in pounds per month when a minimum amount is spent in a specific store.

Some cards may restrict you to certain purchases only so check if the card enables you to get cashback on the items you plan to spend on.

What is an introductory cashback rate?

Some cards might offer a higher rate for a certain time limit, which will then revert to a lower rate once the initial period has passed. There may be some terms and conditions attached to the introductory rate so you will also want to check these. For example, you may need to make minimum payments and stay within your credit limit.

What is the long-term cashback rate?

Similarly, schemes can go down to a lower cashback rate once the introductory period ends. This rate is the long-term cashback rate.

Is there an annual fee?

There are cards which come with an annual fee. Providers are required to inform you of this upfront – but you should always check . Some annual fees are sometimes waived on the first year of having the card so this is another aspect to look out for.

Will you be able to pay off the monthly balance to justify the reward?

Getting money back on your spend might seem appealing – but work out whether you believe you will spend enough to justify the reward. Also work out whether you will be able to pay off the balance each month, otherwise the interest charged could outweigh any gain. You might want to set up a direct debit to pay off the balance each month in case you forget.

And finally

Give yourself time to read all the terms and conditions so that you can you make sure you choose the right card for you.

This Money Matters post aims to be informative and engaging. Though it may include tips and information, it does not constitute advice and should not be used as a basis for any financial decisions. IrishSavings accepts no responsibility for the opinions and views of external contributors and the content of external websites included within this post. Some links may take you to another IrishSavings page. All information in this post was correct at date of publication.