What Are The Benefits Of Using A 5% Cash Back Credit Card?

If you think about what type of credit card you want to use, between cash back, travel rewards, or store-branded cards, you must think long and hard about the benefits. In the case of cash back cards, there are quite literally dozens, if not hundreds, of options you can choose from, and they’re currently the most popular option.

Among the choices is that of the 5% cash back credit card, which offers you rotating categories every quarter. A common choice for most people to have in their wallet, very few cards offer this perk, but the ones that do have loyal followings thanks to the high cash back percentage.

How Does 5% Work?

If you’re looking at the benefits of a 5% cash back credit card, you are not alone, as the same question was posed on Quora. It’s reasonable to wonder how a 5% cash back card might differ from any other option.

First and foremost, it’s important to know that there isn’t any credit card that gives you 5% cash back on all of your purchases. Instead, cards like the Discover it or Chase Freedom Flex offer 5% back on rotating categories. At best, you can earn up to $1,500 cash back each quarter in combined purchases from each category.

These categories will rotate every three months, and it’s up to the credit card holder to activate them. However, once you do, you generally find extra bonuses from Amazon, grocery stores, hardware stores, gas stations, restaurants, and many other common purchase options.

What Are The Benefits?

As far as the benefits go, cards that offer 5% cash back on quarterly categories are not all that different from other cards. While there is an earning cap on the 5% card format, there is no limit on the 1% cash back percentage you can earn on all other purchases. In other words, your cash back earnings are mostly unlimited, but the extra bonus has limitations.

If you look at a credit card like the Chase Freedom Flex, you get a host of benefits beyond the annual bonus. You can get a $200 bonus with no annual fee if you spend $500 in our first three months. In addition, you can find a host of other benefits that make the card well worth having in your pocket.

These benefits include cell phone protection, where the credit card will give you up to $800 per claim if your phone is stolen or damaged. In addition, you can get extended warranty protection for up to 12 months, which essentially gives you a two-year warranty on your brand-new iPhone.

You also get benefits like extended purchase protection for up to 120 days after you purchase something. Travel and emergency assistance, trip cancellation, and car rental benefits are just a teaser of the benefits you can get with a card offering 5% cash back.

Other Options

Alternatively, there is one more way you can take advantage of a 5% cash back credit card, which is with something like the US Bank Cash+ Visa Signature Card. Instead of rotating categories, you can earn 5% cash back or up to $2,000 each quarter on two categories of your choosing. In other words, instead of the bank forcing the category on you, you can choose the category.

Do you frequently shop at a grocery store and spend hundreds per month? Activate grocery as one of your categories and watch the cash back bonuses roll in. The same goes for restaurants and dining, or gas, two other high-spending categories you might choose every quarter that you can take advantage of while earning other discounts with the 1% and 2% cash back bonus this card offers.

The bottom line is that you have plenty of opportunities to take advantage of 5% cash back every month, which couldn’t be easier. You just have to pick a credit card, sign up, and let the rewards come to you.

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