iQuanti: Are you getting your first credit card? Good choice — credit cards let you build your credit score, delay payments in a pinch and earn rewards.
On that last point, cash back credit cards are among the best kinds for credit card beginners. They're generally a better choice than travel cards if you're just starting.
Below, we'll explain why.
What Are Cash Back Rewards?
Cash back rewards are rewards you can earn for your credit card purchases. You can redeem these for cash, statement credits (to reduce your balance), and shopping.
Cards offer all different kinds of rates and reward structures. Some might earn 5% for rotating categories. Others might offer a flat rate on all purchases.
Some card companies even let you move rewards between cards at the same company.
Why Cashback Rewards Cards Are Great for Beginners
With travel credit cards being such a great deal, what makes cashback rewards cards great for beginners?
Here are a few advantages if you're just starting in the credit card world.
Simplicity
Travel credit card rewards can get a bit complicated. They might have all sorts of different miles rates, exclusions, rules to using perks, and so on.
Cashback rewards tend to be much simpler. When you spend on valid purchases, you rack up points. When you want your money, you redeem them.
The only caveat is that some cards require you to hit a minimum amount of points first. Some also only let you redeem in certain increments.
Despite these exceptions, however, earning and redeeming rewards tend to be fairly simple to understand, and can apply to almost any purchases.
No Annual Fees
Annual fees can be quite an annoyance. Every year, many cards charge you a fee (and add it to your balance) for the privilege of having the card.
Some of these cards charge much higher fees, such as hundreds of dollars.
The good thing is these are usually only on travel credit cards and high-level cashback cards. Card companies charge these to help pay for the long list of benefits these advanced cards offer.
Entry-level cashback cards tend to have no annual fees, saving you money each year.
Options with Easy Approval
As a credit card beginner, you may not have much of a credit score or history, if any.
Luckily, many card companies design cash back cards for people at varying stages of their credit journeys — all the way to the beginner level.
That means plenty of these cards are easy to get approved for despite a short or nonexistent credit history.
Start with a Cashback Card
Travel rewards cards can indeed save you a ton of money on vacations over time. However, simply earning and redeeming your rewards — let alone using the other perks — gets confusing for first-time cardholders.
Cash back cards tend to be much simpler and easier to get approved for, yet offer great cash back reward rates.
Eventually, when you get the hang of managing credit card rewards, you'll find it easy to branch out and add other cards to your wallet.
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Original Source: Why Cash Back Rewards Are Perfect for Credit Card Beginners
