How to maximize your cash back credit card for everyday spending

It's not hard to guess what makes cash back credit cards so popular. When you pay with a cash back credit card, you get money back with every eligible purchase. Spend money, get money—what's not to like?

Plus, instead of worrying about complicated travel or retail rewards, cash back provides a simple reward. 

While collecting cash back rewards is generally straightforward, there are still ways to maximize your earnings. From knowing when to cash out, to keeping several cards in your wallet, to picking the right categories with your Tangerine Credit Card, this guide provides smart tips to ensure you’re not leaving money on the table. 

What are cash back credit card rewards?

Cash back is a type of reward consumers get when making regular, everyday credit card purchases. Instead of accumulating points or miles, cash back cards let you build up dollars and cents. 

Flat-rate cash-back rewards

Flat-rate cash back cards give you a set percentage back on all purchases, regardless of the spending category (groceries, dining out, etc.), making these cards easy to use without a strategy for your spending. They’re ideal for individuals seeking straightforward rewards and a steady return.

Category-based cash-back rewards

Category-based cards offer set cash back rates for specific types of purchases. For example, you might earn 2% cash back on groceries, 1% on recurring bills, and 0.5% on all other purchases. While the card issuer usually predetermines the categories with higher rates, with the Tangerine World Mastercard you get unlimited cash back in up to three categories of your choice¹.

Welcome offers on cash-back credit cards

Many cash back cards offer attractive welcome bonuses to motivate consumers to apply. These offers tend to change often but they typically offer a bonus cashback earn rate for the first few months with a limit on how much cash back you can earn. This is a great way to kick-start your rewards.

Everyday spending categories to prioritize

You may be able to maximize your cash back credit card for everyday spending on essentials like groceries, gas and recurring bills with some quick adjustments.

Align your spending with bonus categories, if you have them

Understanding exactly what your card offers can be beneficial, since many cash back cards provide higher earning rates in specific categories. For example, if your card offers more cash back on groceries or public transit, it makes sense to direct those types of everyday expenses to your card.

If you have more than one cash back card and they offer different earning rates on specific spending categories, then you'll probably want to pay with the card that provides the highest return at each merchant. 

Change your categories along with your spending habits

If you have a cash back credit card with customizable categories like Tangerine's World Mastercard, keep an eye on your spending to ensure you're making the most of these categories. As your spending habits change, you may want to change your categories. Tangerine Credit Card Clients can easily make the change on the website or app every 90 days.

Move regular payments to your cash back card

A way to significantly increase your cash back rewards is to consider switching any automatic payments, such as your mobile phone, internet, or streaming services, from your bank account to your credit card—that is, assuming your card gives you money back for recurring bill payments. This ensures that you'll have a regular and predictable stream of charges on your card every month. (If you have a Tangerine Credit Card, be sure to adjust your cash-back categories accordingly.)

It's also important to remember that unless you pay your credit card bill on time and in full, any cash back you earn may be offset by interest charges.

Timing your purchases for maximum rewards

Being strategic when you spend can also help you earn more cash back. Here are some tips to help you maximize your spending:

• Consider welcome offers: Some cash back credit cards have generous welcome offers , such as those for the Tangerine World Mastercard^®. 
• Shop during sales: Back-to-school, Black Friday and the winter holidays are prime times for retailers to offer sales. Use your cash back card during these periods to get some money back from your regular spending.
• Review your reward categories: Cards like Tangerine’s let you choose or update your reward categories. It can be helpful to review these categories from time to time to ensure you are getting the best bang for your buck. 
• Use cash back sites: Websites such as Rakuten, Great Canadian Rebates and Swagbucks offer cash back when you shop through their links at participating merchants. If you pay for those purchases with your cash back card, you might be able to stack the rewards.

What can you save towards with cash back?

Before considering what you can do with any cash back rewards, it’s worth thinking about how much cash back you could earn. Try out Tangerine's cash-back calculator to find out what you could be earning with a Tangerine Credit Card.

Here are some things you could do with that extra cash:

• Pay down debt: If you’re carrying any high interest debt, such as credit card debt, using your cash back to pay that down will lower the amount of interest you pay.
• Top up your emergency fund: Many experts advise setting aside three to six months of expenses in a savings account in case unforeseen circumstances occur, such as a job loss, medical expenses, or car repairs. You could set up your savings account so that your earned cash back is directly deposited into it.
• Invest it: Consider transferring any cash back that comes into your account every month to your Tax-Free Savings Account (TFSA) or registered retirement savings plan (RRSP, called an RSP at Tangerine) for short- or long-term investing.
• Fund a goal: Any cash back can be put towards a treat such as travel or a nice meal. 
• Apply it towards your credit card balance: Immediately applying any cash back earned to your credit card bill, if your card doesn't do that automatically, will reduce how much you owe each month.
• Save it for holiday spending: Dedicating your cash back towards holiday spending ensures you have extra funds for December.

Protecting your credit while earning rewards

Smarter spending can help you maximize your cash back rewards; however, if you don’t keep track of things, spending could also lead to debt, a lower credit score, or even late fees. Here are some tips to protect yourself while earning rewards with a credit card and possibly improve your credit score.   

• Pay your bills in full and on time: This ensures you don’t incur any interest charges. 
• Set up auto-payments: You can opt into automatic bill payments so you never miss a due date.
• Keep your credit utilization ratio low: Your credit utilization ratio refers to the percentage of your total credit limit that you're using. Keeping this ratio below 30% could have a positive impact on your credit score.
• Check your statements regularly: Review your bill each month to check for any fraudulent charges. If you see something suspicious, report it immediately. 
• Use your credit card’s mobile banking app: Many banks offer apps with features that help you manage your credit cards. For example, with a Tangerine Card, you can use Orange Alerts to receive reminders about upcoming bill due dates.

Get the most from your cash back without the stress

Cash back credit cards can provide a low-effort way to earn rewards through everyday spending. You may be able to increase how much cash back you earn with a few simple adjustments. Keep in mind that it’s essential to stay within your budget to avoid overspending.

If you’re looking for a no annual fee cash back credit card that lets you pick your own categories to maximize your cash back, check out Tangerine’s cash back cards now.

¹ Tangerine Clients can unlock a third Money-Back Category by having cash-back Rewards deposited in a Tangerine Savings Account.