The concept of cash back is simple; get a percentage of your spending back as a credit on your statement. As opposed to mileage rewards, which can be frustrating to actually redeem, cash back rewards are a more immediate discount on your purchases.

There are so many options in cash back credit cards that it can be difficult to choose the right one for you. In their simplest form, cash back cards offer the same percentage back on all purchases, typically 1%. However, there may be a cap on the total cash back amount. However, there are cards that offer 1.5% back and no limit on the amount of cash back that you can earn.

Things get a bit more complicated with cards that offer a cash back percentage based on the category of spending. These cards may offer 2% or 3% on groceries or gas. Here it is common to have a quarterly limit on the cash back received in the special categories. Typically, all other purchases earn cash back at a lower rate, say 1%, and may or may not be subject to a quarterly cap. Of course, some cards are more generous than others offering a whopping 6% back on groceries and 3% back on gas.

Other cards may have rotating categories that earn extra cash back. To get the most from these cards, you have to keep up with category changes and in some cases even register quarterly to get the rewards. Of course, if you don’t remember to register or if one quarter’s categories aren’t relevant to you, then you won’t be getting the benefit from the card that you expected. One strategy is to delay purchases such as home improvement until that category is in the rotation.

So what’s the bottom line? Check the cash back limits, and if your monthly purchases are high, be sure to find a card with no cap on the amount of cash back that you can earn. Know your spending, and look for a card where the categories for bonus cash back are most in line with your spending habits. Know yourself and whether you are likely to keep up with a card that has rotating categories and requires you to register quarterly. Of course, don’t forget to take into account the other fees such as the APR and annual fee on the card when evaluating which card is best for you.

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