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What is a flat-rate cash back credit card?

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    With so many options out there, it can be hard to distinguish the between various kinds of credit cards. Ideally, you want to pick one that fits well with your lifestyle.

    If you’re looking for an easier way to get the most out of your purchases (without fixating too much on earning points, eating at certain dining locations, etc.) a flat-rate cash back credit card may be a good option for you.

    This type of card comes with a fixed rate to earn cash back on generally every purchase.

    In this article, you’ll learn about:

    • How flat-rate cards work
    • The difference between flat-rate cards and bonus category cards
    • The benefits of a flat-rate cash back card

    How do flat-rate cards work?

    Flat-rate cash back cards can generally be used on any purchase to earn cash-back—they do not have to be at a specific location, store, etc. However, check your card’s terms and conditions in case there are any exclusions, such as for cash advances or balance transfers.

    Whenever you make a purchase with the card, you’ll get a percentage back on that purchase. For example, if you were to purchase a new chair for your apartment that costs $250, a flat-rate cash back card that comes with 1.5% cash back will give you back $3.75 (generally at the end of the billing cycle).

    The available ways to redeem your rewards could differ depending on the terms of the card. These ways include, but are not limited to:

    • Receiving a statement credit (where you apply the amount of cash back towards your card’s balance)
    • Transferring the amount to a bank account

    Some cards require a minimum amount of rewards in order to redeem them. You’ll want to review your card’s terms to see if there is a minimum redemption amount, as well as the details of when you can get your funds.

    Some flat-rate cash back credit cards come with no annual fee — but be sure to check with the terms and conditions of your specific card to be sure of the costs associated with using that card (for example, late fees).

    Difference between flat-rate cards vs. bonus category cards

    If you’re on the fence about which card to get, you might be wondering how flat-rate cards differ from other rewards cards, like bonus category cards.

    Cards with bonus rewards categories give you rewards on certain categories of purchases. For example, a card that has bonus categories could earn rewards for purchases made when you eat at specific restaurants, fly on specific airlines or on specific streaming services.

    Flat-rate cards, on the other hand, earn you a certain percentage (generally around 1-2%) on just about any purchase. It doesn’t have to be a specific category in order for you to earn cash back.

    If you spend a good amount on specific categories or enjoy dining out, a card that earns in bonus categories could work well for you because you may be able to earn a higher percent back on those purchases than you could with a flat-rate card. For example, if you spend a lot on groceries, you could use a card that earns you a higher percent cash back on purchases made at grocery stores. Flat-rate cards, however, come with a fixed earn rate. You may make any purchase and still get cash back, but that amount is fixed regardless of the category spend.

    Benefits of flat-rate cash back cards

    With a flat-rate cash back credit card, you don’t have to think much about which purchase you need to make in order to reap the benefits. You can have a consistent stream of cash back and predict the amount easily given the percent is a fixed rate. Unlike some other cards that may only be used at certain locations or have a different rewards system, flat-rate cash back is generally eligible for all your purchases. You won’t need to track or think about the specifics of your spending in order to get your cash back.

    The bottom line

    If you want to consistently earn cash back on purchases that you make without worrying about where you’re making them, a flat-rate cash back credit card may work well for you. Keep in mind that every card is different and that you should review the terms and conditions.

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