Is Cash Back Really Saving You Money?

Cash-back credit cards sound like a smart way to save — spend money and get a little back. But is it actually helping your finances, or just encouraging overspending?

The Psychology of Rewards

Credit card companies know that 1–5% cash back feels like a win. But if you’re spending more than you would with cash or debit, that “reward” is just a rebate on overspending. And if you carry a balance, interest charges can wipe out any savings fast.

The Fine Print

Most cards offer higher cash-back rates only in select categories — and those categories aren’t always what you expect. Plus, there are often limits on how much you can earn. So your actual cash back may be far less than advertised!

Are You Actually Saving?

Take a look at your last 12 months of statements:

• How much did you earn in cash back?
• What percentage of your total spending was that?
• Would you have spent less using cash or debit?

A Smarter Way to Use Credit

If you’re using credit cards solely for rewards, pay them off daily or weekly. This helps you:

• Stay aware of your spending
• Avoid surprise bills
• Resist overspending for points

Bottom Line

Cash-back rewards can be a nice perk — but they’re not a financial strategy. If you wouldn’t buy something with cash, don’t let rewards justify the swipe.

Ask yourself: Would I still buy this if I had to pay cash today?
If not, the cash back probably isn’t worth it.