Cashback and rewards

Training 335 minutescashback rewards

You are 36 with two kids, and the family spends $2,000 a month by card, $500 of it on groceries. Your card pays 1% on everything. Your neighbors praise a new card: 5% on groceries, 1% on the rest, $95 a year fee.

Training goal: Collect cashback, do not pay for it

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Situation

1. You compare the two cards. Which one?

Stay at 1%: card fees are a waste
Open three more cards with different cashback
Switch to the 5% grocery card

2. A store message: "Spend $150 more and get $15 cashback."

Top up to the threshold, it is $15
Buy only what was planned
Top up with things you buy anyway: detergent, soap

3. A rough month: the card shows $2,000 due, and you have $3,000 saved. The bank offers the minimum payment.

Pay it all off from savings
Pay the minimum, cashback still comes in
Stop using the card, leave the balance

4. You have 4,500 points: $45 to your account or a catalog blender. It costs $80 in stores, and your old one still works.

Take the blender, it costs $80
Leave the points to pile up
$45 in cash to the savings account

What you will learn

Count the net: rewards minus card fees.
Interest eats cashback. Pay the full balance every month.
Take rewards as cash, as goods only what you would buy anyway.

Your real-life step

Check how much cashback came in this year and how much went out in card fees.

Questions and answers

What is cashback?

It is a refund of part of the purchase, usually 1 to 5%, as money or points. The bank pays it from the fee it charges the store.

Is a cashback card with an annual fee worth it?

Yes, if your yearly rewards clearly exceed the fee. Count it on your real spending, not the ad.

Is cashback better than points or miles?

Cash is simpler and more flexible. Miles win only for frequent travelers who know how to redeem them.

▶ Play this training Track your budget in Hanimani

More trainings in this module

Numbers are illustrative. A game, not financial advice.