You probably receive lots of credit card offers. But how do you determine the best one for you?
Nearly every card comes with a set of rewards and benefits. These can range from low interest rates to cash back to rewards points to money saved for college. When choosing a card, you want to get the one that will pay the biggest return for you and your family. Determining what that means will help you decide which credit card to get.
In many cases, a cash back credit card with no annual fee will ultimately give you the greatest flexibility. Here’s what you need to know about this type of card.
What Does “No Annual Fee” Mean?
Credit card companies make money by charging fees and interest. One common fee is an annual fee, which is a yearly charge for having the credit card account open. The amount of an annual fee can range widely.
Some credit cards that have a low Annual Percentage Rate (APR) may come with an annual fee. An annual fee guarantees that the credit card company makes money, even if the cardholder pays off their monthly account balances and accrues little to no interest.
To save yourself money, look for a credit card with no annual fee. That way you don’t have to pay anything to hold the card and don’t have to worry about paying an extra charge each year.
Finding a Card with No Annual Fee
You want a card that won’t charge you an annual fee, whether it’s your first, fifth, or tenth year holding the card. So, where do you find a credit card with no annual fee? A good place to look for credit cards with no annual fees is at a credit union. Because credit unions are focused on saving their members money, you’ll often find credit cards with lower APRs and no annual fees at these financial institutions.
What is a Cash Back Credit Card?
A cash back credit card is exactly what it sounds like. You get money back from your credit card company or financial institution on purchases. Generally, it’s a percentage of each purchase that is returned to you in rewards.
For example, those who have our Founder’s Card receive at least 1.5% cash rewards* on every purchase. Say you pay $5,000 for a new refrigerator and dishwasher for your kitchen. You can earn $75 back on that purchase with a 1.5% cash reward.
Can You Earn More Cash Back Rewards?
A great credit card will allow you the chance to earn even higher cash back rewards when you meet certain requirements. For instance, with the Founder’s Card, you get 2% cash rewards if you also:
- Have qualifying monthly direct deposits totaling at least $500
- Have PSECU checking
Let’s circle back to your kitchen purchases. If you spent $5,000 on those appliances, you would earn $100 in cash back with the higher percentage of reward.
A Chance to Earn with Everyday Purchases
Cash rewards credit cards provide a smart way to earn money back on things you would buy anyway. For instance, you have to buy groceries. If you have a family of four, you can easily spend $1,000 each month on those groceries. With a credit card that pays you 2% cash back, you will earn $20 back each month when you charge those groceries — and that adds up to $240 each year, or nearly a quarter of your monthly grocery budget.
Of course, you must remember to pay off that credit card balance regularly to avoid accumulating debt. Careful budgeters will do this so they don’t lose those cash rewards to monthly interest fees.
Why Choose Cash Back Over Other Credit Card Rewards?
The simplest answer is cash back rewards offer the greatest flexibility. When you take rewards in another manner, such as frequent flyer miles or money that goes toward college, you may face restrictions as to when and where you can use them. With cash back rewards, you receive the money quickly, and you can use it how you choose.
Get a Cash Rewards Credit Card with No Annual Fee From PSECU
PSECU offers members a credit card with no annual fee that also rewards you every time you use it. In addition, those rewards never expire. Contact us to learn more about the Founder’s Card, and find more tips on saving money on our WalletWorks page.
*You can earn 1.5% cash rewards on purchases. You can earn 2% cash rewards on purchases if you maintain a PSECU checking account and qualifying monthly direct deposit(s) of at least $500. See the Visa® Founder’s Card and Visa® Alumni Rewards Card Rewards Program Terms and Conditions for full details.