Having a cash back balance of $300 with a credit card that has a $2000 balance is a fortunate situation to be in. Cash back rewards are an attractive feature offered by many credit card companies to encourage customer loyalty and spending. This feature allows cardholders to earn a certain percentage of their purchases back as cash rewards, which can then be used to reduce their credit card balance or be redeemed for other rewards.
With a cash back balance of $300, you have accumulated a decent amount of rewards. It’s important to understand how cash back rewards work and how you can make the most of them to benefit your financial situation.
First, it is essential to be aware of how your credit card’s cash back program functions. Each credit card has its own specific terms and conditions, so it’s necessary to familiarize yourself with the details of your particular card. These details will include the percentage of cash back you can earn on your purchases, any limitations or restrictions, and how the cash back is credited to your account.
In your case, it seems that your credit card offers a cash back program where you have earned $300 in cash back rewards. This means that you have accumulated this amount over a period of time through eligible purchases. It’s worth noting that the percentage of cash back you earn varies depending on your specific credit card. Some cards offer a flat cash back rate on all purchases, while others provide different rates for various spending categories like groceries, gas, dining, or travel.
Now that you have $300 in cash back rewards, you have a few options for how you can utilize this money. One option is to apply the cash back towards your credit card balance. This can help reduce your outstanding debt and save you money on interest charges. In your case, where you have a credit card balance of $2000, applying the $300 cash back balance would bring the outstanding balance down to $1700.
Another option is to redeem the cash back rewards for other rewards offered by your credit card company. Some popular redemption options include gift cards, merchandise, travel bookings, or even donations to charity. Before redeeming your cash back, it’s essential to evaluate the value of each redemption option. Sometimes, redeeming for merchandise or travel can offer a higher value in terms of money saved compared to redeeming for gift cards or cash.
It’s worth mentioning that some credit cards also offer the option to deposit the cash back into a linked bank account or as a statement credit. With a statement credit, the cash back amount is deducted from your credit card balance, reducing the amount you owe. Depositing the cash back into your bank account allows you to utilize the funds as you wish, without any limitations imposed by your credit card company.
To make the most of your cash back rewards, you should also consider the earning potential of your credit card. If your current card provides a low cash back rate or limited earning potential, it might be beneficial to explore other credit card options that offer higher rewards on your spending habits. By doing so, you can maximize your rewards and potentially earn even more cash back on your purchases.
Furthermore, it’s important to maintain a responsible approach to credit card usage while enjoying the benefits of cash back rewards. Carrying a credit card balance can lead to accruing interest charges, which can outweigh the benefits gained from cash back rewards. It’s advisable to pay off your credit card balance in full each month to avoid interest charges and maximize the value of your rewards.
In conclusion, having a cash back balance of $300 with a credit card that has a $2000 balance provides you with an opportunity to improve your financial situation. By understanding the terms and conditions of your credit card’s cash back program, you can make informed decisions on how to utilize your rewards. Considering options like applying the cash back to reduce your credit card balance, redeeming for other rewards, or depositing the cash back into your bank account are all worthwhile choices to consider. Additionally, evaluating the earning potential of your current credit card and maintaining responsible credit card usage can help you make the most of your cash back rewards and ultimately improve your financial well-being.
>Would you put that cash back balance towards paying off the card?
Yes, pay your credit card. What else are you going to do with a $300 worth of points?
It’s a small difference in dollars (since I pay mine off monthly), but I always withdraw my cash back to my bank account and then pay my bill, vs just paying the balance with the cash back directly, because I get 1% cash back when I pay my bill, but using the cash back balance towards the bill doesn’t count towards this.
The most important thing for you, though, is just getting that $2k paid off! The specifics of the cash back game can come later.
Get a statement credit for the $300. Depending on your card agreement this may or may not be used as your minimum payment requirement. So make sure you still make a minimum payment for the month if it doesn’t.