Advertisement
retirement

Retirees, Reward Yourself With a Cash Back Card

The holiday season is a good time to pick a card that will reward you with cash back on a percentage of the dollars you spend.

During the holiday season, you’re likely to spend more than usual, buying presents for family and friends, paying for travel, and eating out at restaurants. But in the midst of all that merriment, keep in mind that you can also leverage your credit card to pay yourself back for some of that spending and soften the holiday financial hit.

Cash back credit cards can be used anytime of the year, but the holiday season is a good time to pick a card that will reward you with cash back on a percentage of the dollars you spend, says Ted Rossman, industry analyst at CreditCards.com. Shop for cards that specifically offer rewards for shopping in the fourth quarter of the year, for example, and you could get as much as 5% back on your gift purchases, he says, citing the Chase Freedom Visa and Discover It cash back cards.

Advertisement - Article continues below

Cash back cards aren’t as complicated as some travel rewards cards, Rossman says. Older adults, in fact, tend to gravitate to cash back cards more than younger people do, according to research by CreditCards.com. “It’s not that difficult to get a good deal,” he says.

Of course, it’s ideal to pay your credit card balance in full each month. If you can’t, you could be hit with interest rates as high as 17% to 25%, far outweighing any cash-back benefits. When picking the best cash back card for you, carefully compare offers. Think about how you actually spend your money. If your card doesn’t offer cash back for your most frequent category of spending, then your rewards won’t add up to much. “When picking the right credit card, know yourself and what you want out of it,” says Matt Schulz, chief industry analyst at CompareCards.com.

Advertisement
Advertisement - Article continues below

Consider a cash back card that is “super simple,” Rossman says. The Citi Double Cash Mastercard, for example, gives you 2% back on everything—1% when you buy and 1% when you pay it off—and has no annual fee. Alternatively, you could juggle multiple cards that might offer higher rewards in specific categories, such as dining or travel, but getting 2% back on everything is less complicated and still an attractive return.

Find Your Card

Start by reviewing card details at websites such as CreditCards.com, CompareCards.com, Bankrate.com and The Points Guy.

Advertisement - Article continues below

There are a few standouts to consider when it comes to cash back cards. Like Citi’s Double Cash card, Fidelity’s Rewards Visa Signature pays a flat 2% on all purchases. Be aware that you must deposit your card rewards into a Fidelity account, such as your IRA or a 529 college savings account.

PayPal is increasingly accepted as payment online and at many brick and mortar stores, and the PayPal Mastercard pays 2% cash back everywhere you use it, Rossman says. The Capital One Quicksilver Visa gives you 1.5% cash back on everything. If you usually eat out often during the holidays, you could add on to your shopping rewards with the Capital One Savor Rewards Mastercard. You can earn 4% at restaurants, and the $95 annual fee is waived the first year.

Look for signup bonuses, which might be easy to snare if you’re doing a lot of holiday shopping. Chase Freedom, for instance, offers a $150 signup bonus if you spend $500 in the first 90 days. “A lot of this just comes down to maximizing money you would have spent anyway,” Rossman says.

Whatever card you choose, be sure to read the fine print carefully. The Discover It card, for example, pays cash back when you buy online at Walmart.com but not if you purchase from a Wal-Mart store, Rossman says. Other cards may only waive annual fees the first year or have a limit on cash back.

Advertisement

Most Popular

What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020
Tax Changes and Key Amounts for the 2020 Tax Year
tax law

Tax Changes and Key Amounts for the 2020 Tax Year

Americans are facing a long list of tax changes for the 2020 tax year...and it's never too early to start thinking about next year's return.
June 22, 2020
10 Tax Breaks for the Middle Class
tax deductions

10 Tax Breaks for the Middle Class

Tax breaks aren't just for the rich. There are plenty of them that are only available to middle- and low-income Americans.
June 30, 2020

Recommended

For Financially Responsible Kids, Do NOT Do These 3 Things
family savings

For Financially Responsible Kids, Do NOT Do These 3 Things

The key to putting your kids on the right financial path can be boiled down into one sentence.
July 1, 2020
10 Tax Breaks for the Middle Class
tax deductions

10 Tax Breaks for the Middle Class

Tax breaks aren't just for the rich. There are plenty of them that are only available to middle- and low-income Americans.
June 30, 2020
Resources for alternative forms of transportation needed by many older adults
retirement

Resources for alternative forms of transportation needed by many older adults

For many older adults, having an alternative mode of transportation may be the difference between independence and social isolation.
June 29, 2020
The Answers to More RMD Questions
retirement

The Answers to More RMD Questions

The CARES Act made 2020 required minimum distributions optional. But what are your next moves?
June 12, 2020