If you are looking for a way to reduce your APR, you might be considering a cash back credit card. These cards allow you to receive a percentage of the money you spend back in your account, typically in the form of statement credits.
The amount of cash back you can receive varies widely depending on the type of card you choose. Some cards offer a statement credit, while others let you redeem your rewards for merchandise, discounted travel packages, or a paper check.
To qualify for cash back, you usually must spend a minimum amount on your new card during the first few months. You may be able to find a card with an annual fee that offers a sign-up bonus to compensate for it. However, the value of this bonus may be lost if you carry a balance on your card after the initial spending is complete. In addition, you may be responsible for paying taxes on your cash back.
Many cash back cards also offer rotating bonus categories. These include gas stations, groceries, and other categories. For example, the Chase Freedom Rewards card will provide 3% cash back on gas, 6% cash back on U.S. supermarket purchases, and 1% cash back on other eligible purchases.
Other cash back credit cards will allow you to earn a higher rewards rate based on the specific issuer. If you’re looking for a card that fits your lifestyle and spending habits, it’s important to compare the different types of cash back credit cards before making your decision.