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Did you know that a credit card with a low APR isn't always the best card to use for your purchases? If you shop around carefully, you can find credit cards that will help you save money, earn gifts and get discounts on the things you want and need to buy? Cashback deals are designed to offer you rewards for your loyalty issued by a particular company. Here's how to get the most out of using cashback options. - Pick the best credit card right from the start. Before you even apply for a cashback card, do a little digging to find the best option for you. It's not always the one that offers the highest cashback amount, or the one with the lowest APR - it depends a great deal on how you use your credit card. - Choose a cashback credit card that gives you cash back on the purchases you're likely to make. The latest trend with card companies is to encourage what they call micropurchases - purchases of less than £5. That means that they're offering cash back on your purchases at corner stores, petrol stations and supermarkets to get you to use their cards to pay for your purchases there. When you're shopping for a cashback credit card, check which purchases will pay you cash back. If they'll pay you to buy on plastic at the stores you already shop, it's a card you want in your wallet. - The very best credit card will have both a low APR and a high cash back scheme. Those are rare, though. Most of the time, you'll have to choose between the two. If you have to choose between the two, pick a card with a good cash back scheme, and be certain to pay off the balance every month. - Don't mix and match your purchases. Keep your long term and your immediate purchases on separate credit cards. The only way that a cashback credit card makes sense is if you're not paying interest on a carried balance, because the interest that you pay will always be more than the cash back that you get. You don't want to be paying interest for months on last week's groceries or cup of coffee. If you mix and match your purchases on one card, you'll end up paying interest that builds your balance instead of paying it off. - Decide how you'd rather get your cash back. The different card companies offer different payment schemes for your cash back. The options keep changing, but the most common are: a) a lump sum payment once a year mailed to you as a cheque or a gift card b) a lump sum payment once a year credited to your account c) running discounts credited to your account immediately Realistically, getting one or two pence credited to your balance every time you make a purchase is the option that makes the most financial sense. You get the use of that money immediately because it reduces your credit card balance. If you end up carrying a balance, it's a few pence less that you're paying interest on. Practically, though, lump sum payments are more likely to be useful to you. Choose the one that works best for you. - Check comparison sites frequently for the best cashback deals. Card companies are constantly updating and changing the deals that they offer. The best cashback credit card today may not be the best one tomorrow. Keep you eye out for good deals to come along. - Pay off your full balance each month. We said it before, but it bears repeating. Don't carry a balance on your cashback credit card. There's no sense building up interest charges that cost you more than you'll save by using it.
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