3 Signs You Should Switch to a Cash Back Card

A cash back card offers perks that other rewards cards can't provide. 

When you sign up for a credit card, you'll want to be sure it offers rewards. After all, there is no reason why you shouldn't get a little financial bonus for using your credit card for your everyday spending since card issuers earn money when you charge things. 

There isn't just one type of rewards card though. Cards can be divided into a few different categories, including those that offer miles or points toward trips or merchandise as well as those that offer cash back. And you don't want to end up with the wrong kind -- otherwise, you won't make the most of the rewards you get. 

So, what's the right choice for you? If you currently have a points or miles card, you'll want to be on the lookout for these three signs that a cash back card might be a better fit. 

1. You want more flexibility with your rewards

If you have a credit card that offers rewards that you must use at certain stores or rewards that you must use for certain kinds of purchases such as airline tickets, you won't have much of a choice about redemption. 

If it turns out you can't take a trip for a few years because of, say, a global pandemic, you'll be largely out of luck and just have to wait to be able to use your rewards to book vacations again.

If you would prefer to be able to do anything you want with your card's rewards, changing to a cash back card is probably your best course of action. When your card issuer simply gives you money back that equals a percentage of your purchases, you can choose to use the money to book trips or shop at specific stores if you want to. But you aren't locked into doing that. If you decide you'd rather do something else with your rewards, that's always an option. 

2. You aren't making use of your current rewards 

If you aren't excited about your card's rewards or if redemption is too complicated, a switch to a cash back card could ensure you get more value out of your card. Even the best rewards program does you little good if you don't actually care to use it. 

Cash back cards generally won't go unused because, after all, everyone likes to get money. You can typically choose to have your cash back delivered as a statement credit so you won't even have to do anything special to get it. Or your card issuer may allow you to deposit it in your bank account or an investment account, which also requires no effort on your part. Once the money is in your account, it should be easy to find something to spend it on. 

3. You want to use your credit card rewards to improve your overall financial situation 

Finally, if you want to use your credit card rewards to invest and grow your wealth, a cash back card is the way to go. If you can have your rewards automatically deposited into savings or an investment account, you won't just squander them but instead can put the money to work for you. Your card rewards can earn returns that, over time, help improve your net worth.

If any of these three signs apply to you, start researching your options for cash back cards today so you can make a switch to a card with a rewards program that actually does something great for you.