There is no such thing as a food credit card, but many people do like to use their credit card as a way to manage and keep track of their grocery budget. If you have a cash back credit card that pays back more for grocery purchases you can get a percentage of their grocery budget back. These refunds will stretch the grocery budget even further.
There are various form of reward based cards that may help your manage your finances. However, every card is not right for everyone. Visit the Suze Orman website for more information on saving and and using credit cards within your budget.
How do you earn cash back with this type of card?
The way a cash back credit card works is fairly simple. The cardholder uses their card to make purchases and they will earn a certain percentage of the money they spend back. Certain cards offer more cash back on some purchases than others do. Most of these credit cards offer 1% cash back for all purchases. The cardholder usually has to reach a minimum cash back amount before the refund is issued, usually $50 to $100.
While all of these cards offer a different percentage back on different purchases they work pretty much the same. The main way these credit cards differ is in how they issue the cash back refunds. Most of the cards apply refunds directly to the card’s balance. If the cardholder has a high balance it will be reduced instantly, which will make the cardholder’s monthly payments less. Having lower monthly payments means more cash in the cardholder’s pocket, which means they will have more money on hand for groceries.
A less common, but more sought after refund option is when the credit card provider mails the refund directly to the cardholder as a check. With this option, the cardholder can spend their refund however they want.
Why is this type of credit card so popular?
These cash back credit cards are meant for people with higher credit scores. Only people with a history of responsible credit card use can qualify for this particular form of rewards card. Having this type of card is a way for the cardholder to get something back for being so responsible when many people have such a hard time with credit cards.
Someone with an average credit score might be able to get a cash back card, but they should expect to have higher interest rate. If they have the card for an extended period of time and show they are a trustworthy cardholder, they could have their interest rate lowered.
What is an example of a good cash back credit card?
Capital One offers a great cash back credit card named the Cash Rewards card. This card in particular is a great choice for someone that is hoping to stretch his or her grocery budget as far as possible. The cardholder will earn 2% cash back on all grocery purchases. They will also earn 2%cash back on all gas purchases. All other purchases made with this card will earn the cardholder 1% cash back and there is no limit to how much they can earn.
The Cash Rewards card has an introductory interest rate of zero percent for the first six months the account is opened. After this special period has expired, the cardholder will have an interest rate anywhere between 17.9% and 22.9%. This same interest rate will also apply to balance transfers. The interest rate for cash advances is a bit higher at 24.9%.
Like many cash back credit cards, there is a penalty annual percentage rate for this card. A penalty interest rate raises the cardholder’s current, lower interest rate if they go over their credit limit, make a late payment, or have a payment returned. It is very important for a cardholder to be aware of the consequences; in this case, it is a 29.4% interest rate.
While there is no fee for balance transfers or foreign transactions there is a $39 annual fee. There is also a 3% cash advance fee with a minimum fee requirement of $10. The fee for making a payment late or having a payment returned is $35. The fee for going over the credit limit is a little less at $29.
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