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Avoid These Common Cash Back Credit Card Mistakes

Hey everyone, my name is Joshua Rodriguez and, thank you for joining me for my debut post here on Your Daily Finance! I was honored when I received the email from Thomas asking me to write a piece on credit cards for you guys today.

Since the first email, we have worked out a bi-weekly post here every other Thursday. Every post will be about credit cards in one way or another so, if you’ve got any questions or concerns regarding credit cards in any way, shoot me an email at Joshua@CNAFinance.com and, I may write a post just for you! OK now, let’s get to the cash back credit cards and mistakes you should work to avoid….

Just in case you are not quite familiar with them yet, cash back credit cards are exactly what they sound like. They are credit cards that give you the opportunity to earn cash back with every purchase you make.

This simple concept seems like it really couldn’t be too dangerous right? Wrong! Cash back credit cards, when used improperly can be your fast pass to credit card hardship programs or worse! That being said, here are the most common mistakes consumers make when using them and, what you can do to avoid them! Below common credit card mistakes:

Mistake #1: Turning Cash Back Into A Competitive Game

OK, I admit, I’ve been guilty of this in the past. Of course, I’m not anymore but, I’ve gotta tell it how it is. Anyway, in an office setting, employees tend to get to know each other well enough to talk about just about anything. I’ve had the office cash back rewards account comparison. In doing so, cash back becomes a game in some ways. So, what’s so bad about that?

We’ve been taught all of our lives that if we’re going to play, we have to give it our all, or not at all. It’s been ingrained into us that the higher our points are, the better the turn out can be. The only problem with that is, in this game, to earn the points, you have to create debt. Losing sight of your balance for even one month could have a snowball effect on the way you look at and use your credit cards.

How To Avoid This Mistake

Well, it’s pretty simple, talk about your earned points but, don’t be competitive about it. Also, come up with a monthly credit card spending budget that you can afford to pay off each and every month and make sure that you stick to your budget. In doing so, you will earn as much cash back as possible without going into monthly debt!

Mistake #2: Poor Credit Card Comparisons

Because cash back credit cards are categorized under one big umbrella, many consumers are under the false misconception that all cash back credit cards offer pretty much the same thing at pretty much the same price. Unfortunately, that’s not necessarily the case.

I can’t tell you how many times I’ve heard something like “I saw 5% cash back and figured, sign me up. I did realize it was only on the first $200 I spent and the interest rates were so high.”.

How To Avoid This Mistake

When you’re in the market for a new cash back credit card, remember that they are not all the same. Start out by combing the market and making a list of the offers that seem appealing to you. Then, read the terms and conditions for each of the offers you’re interested in.

Take notes about what you liked and didn’t like with regards to rewards programs, interest rates, promotions and fees. Now, based on your needs, choose the best offer for you. This fairly simple process can save a lot of hair pulling aggravation in the future.

Final Thoughts

Cash back credit cards aren’t bad credit cards. As a matter of fact, I use them quite often and make a few bucks a month because of it. But, using them properly is key. If you’ve never had a cash back credit card in the past, make sure to do a little research on how they work and how you should use them before actually getting one. Trust me, it’s better to prepare and win than to go in unknowing and lose big!

Thanks For Reading!

Thanks for taking the time to swing by and read my post. I hope you’ve enjoyed it! If you have any questions, concerns, comments or, you just want to have a friendly debate, please feel free to leave me a comment below!


  1. I love cash back credit cards but I’ve really been into travel rewards cards lately. Either way, it’s basically free money if you play by the rules =)

    • Hey Holly, thanks for your comment. I love cash back too but, if I find rewards I can get more use out of, I go with those. Sounds like you follow the same ideas as me! By the way, it’s been a while since we chatted. How’s Club Thrifty going?

  2. I love my cash back card. I prefer my rewards cards though, that get me free flights. There are definitely ways to ruin your experience!

  3. I’ve definitely had the thoughts before where I think it’s cool to spend more on something because of the cash back. Then like 2 seconds later I realize how stupid that is. I’ve got a Fidelity Amex that’s 2% cash back on everything with no limits. I love it.

  4. Great post! I’ve started using certain cards for cash back purchases to get the most bang for my buck. Like for example, I have a PenFed card that always gives 5% back on gas (on every statement, no minimum to meet) so I always use that card for gas purchases. But then for groceries, I use a different cash back card so I always maximize my return.

    • Hey Tara, thanks for your comment. It’s good to use different cards for different purchases depending on the rewards structure. Just keep an eye on how having multiple cards is affecting your credit. With too many, it could have a negative impact.

  5. I don’t travel much so I prefer cash back rewards. I haven’t been using my rewards credit card as much lately though.

  6. I’m a big fan of cash back cards. I don’t see it as a competition though, I just buy I what I normally buy. As for the caps for 5% categories, the one I have has $250 caps (gas and supermarket) but I don’t spend much over that…plus I would have bought that anyway. I don’t care about the interest because I pay my balance in full.

  7. I’ve never had a cash back credit card but I have a cash back current account that gives cash back on utility and tax bills, that I would pay anyway so that is pretty cool. With the credit card I think I would spend more to reach the limit or something.

    • Hey Pauline!! I don’t have one either so we are in the same boat. But seems like I am missing out but I don’t want to max my card to try and get points. It seems to work for others though. Thanks for commenting!

  8. i do love the rewards cards as well, and always try to take advantage. but you certainly have to watch out for yearly fees.

    • I hear those fees can add up! Are they a lot? I see a lot of people getting rewards and have enough to get nice hotels and free flights. Thanks for stopping by Jefferson!

  9. I love cash back cards and my favorite is chase freedom which i use for daily purchases to rack up the cash, As I pay it off monthly so i am not worried either. Nice post Josh and good tips to avoid mistakes

    • Hey Rita I hear a lot about the Chase Freedom card. I only have CapOne and Amex but I dont think either are cash back cards. Joshua does have some great tips and advice on these issues though. Thanks for stopping by and commenting.

  10. I like my cash back card for groceries, gas, etc. that I would buy, anyway, but agree it defeats the purpose if you incur debt and interest charges.

    • Hey Anna thanks for stopping by! I have to agree with you 100% if you are just going to get in debt and interest charges it just doesn’t make sense.

  11. This is a good summary of the cards and some pitfalls. I get the impression that the card companies often get the last laugh, though. If the rewards cards cause even a slight increase in your spending than you “normally” would with, say, cash, you come out behind. The rub is trying to determine what you might spend without the cards. It’s very hard to tease out their impact on spending behaviors, but research suggests we are not as immune to their effects as we might think.

    • These cash back cards are intended for transactors (people who pay the balance in full each month). The cash back encourages people to shift from other forms of payment to generate interchange revenues for the issuer.

      You don’t have to increase spending the get the rewards. Just change your form of payment, and pay the bill in full every month.

      • Hey Kevin! Thanks for stopping by. I really get your point on the intention but I don’t think that most credit cards go out of the way to explain this when they promote the cards. I know its our own fault be we both probably know most people are not good with credit in general so the to think that most of them would be smart is an understatement.

    • DonebyForty I too feel like credit card companies never do anything thats going to allow them to lose. For every 1 person like Joshua there may be 50+ that miss up on how to really do the cash back card properly. Remember is all apart of the marketing and helping them make money. Thanks for the comment DBF!!

  12. Great post Joshua! It’s been a long time I haven’t travel due to my busy schedule. Hope to have cash back card soon.

    • SuburbanFinance thanks for stopping by and I agree Joshua did a great post for us here at YDF. I wish I was traveling more as well. I have plans to start traveling alot this year.

  13. Jim Lloyd Espiritu

    Thank you for this nice post. I do have the tendency to be competitive in comparing my cash back rewards with my other co workers. I will definitely make that same mistake again.

    • Jim you are welcome and thanks for stopping by! I guess being competitive can be a good and bad thing with those cash back points/rewards. I’ve never had to worry about it as I don’t have any cash back cards though.

  14. I love cash back, but I do tend to spend a little more because I know I will get a rebate back on what I spend. I wonder if it really does lead to higher spending that I otherwise would.

    • FMM I think thats one of the things I would be worried about. Especially with the wifey. I don’t want her spending out of her normal habits just to get rewards. If so you just end up spending money you would have never spent in the first place and that means the credit card company is winning and we never want that!!! Thanks for stopping by.

  15. Mistake #1 is a huge one that I think affects a lot of people. So easy to get excited about the cash back offers and try to get more and more of them. Unfortunately sometimes it leads to more spending!

    • DC I would agree even though I don’t even have a cash back card. I know how a lot of people are with money and things like Groupon. They buy just because they think they are getting over on the companies and the companies are the ones winning. Thanks for stopping by!!! Still waiting on the new site design!

  16. I also used to make the mistake of making it too much of a game!

  17. Thanks for the post, Joshua! I think a lot of people could benefit from this information. Ironically, at my job we seem to have competitions to see who can save the most money on services! A coworker is renovating his home, and constantly brags about how much money he has saved, so I countered with the $500 savings we just found for our home insurance. Now this is a competition I’d like to win! :)

    Are cash-back credit cards your favorite type, or do you think other rewards cards can be more beneficial sometimes?

    • My thoughts as well Alexandra!! I think a lot of people can benefit from the information that Joshua provides. Nothing like a little friendly competition just don’t lose while trying to win.

      I’ll let Joshua answer the second part since I don’t have cash back credit card or any other rewards card. Thanks for visiting and commenting!

  18. I prefer my cash back card. It allows me to use the money for anything, whereas rewards cards have limitations on them.

  19. Heck I don’t have any of them Troy but I like the idea behind the cash back vs rewards. What if they don’t have anything you want to get then you would be stuck with points and nothing to get.

  20. I used to have 1% cash back on my debit card which was pretty amazing since I used it all the time for bills and other necessities. I think I earned more interest on what I spent than on my savings account for a while there. I’m with everyone else, though—rewards are my favorite!

    • Hey FemmeFrugality I am with you on this one. The wifey and I get more money from the Keep The Change on our accounts then we do from our actual savings account. Go figure. I dont have anyr rewards cards.

  21. Nice article! I knew a guy a while back who got into a lot of debt trying to get cash back. Its simply not worth the effort!

    • Thanks Brett! Glad you stopped by and like the post. You gotta know your limits. Some people cross the lines and it can cause trouble.