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During normal times, I’d suggest having a no-frills emergency credit card with a low annual percentage rate. You need a solid emergency fund, too, of course. But it would seem prudent to have an emergency card as a backup.

Well, these are far from normal times. Many Americans are living on reduced salaries or on unemployment benefits due to the pandemic. So I’m temporarily adjusting my emergency credit card rules.

If you’re going through a money crisis, think about using a cash back credit card as your official emergency card. In many cases, you’ll get a 0% introductory rate on purchases, which can last between 12 and 21 months. That’s like getting an interest-free loan for a year or more.

What Is the Best Cash Back Credit Card?

Just so you know, there’s no definitive answer to that question. The best cash back rewards card for you might not be the best card for your neighbor.

To find your best credit card, you need to analyze your spending patterns. No, you don’t need to learn Excel. I just want you to review line items in your budget so you know where you spend the most money on life’s essentials.

Some of the best cash back cards offer a flat rate on rewards. For instance, the Chase Freedom Unlimited credit card gives you 1.5% cash back across the board for purchases. If you don’t want to keep track of categories, this might be a good choice for you.

The Chase Freedom credit card is a little different. You get 5% cash back on up to $1,500 in categories that rotate every quarter. The categories include everyday expenses, such as gas station and grocery store purchases. You get 1% on all other purchases.

The rotating rewards tend to reflect what consumers are currently interested in, too. Right now, the Chase Freedom card offers 5% cash back on groceries, gym memberships and streaming services, such as Netflix, Hulu and Disney+. We might not be going to the gym yet, but many of us are enjoying streaming services right now. You do have to sign up online every quarter to get the bonus categories. So a little bit of effort is required.

With the Wells Fargo Visa Signature Card, you get five points per dollar spent on up to $12,500 on gas, groceries and drugstore purchases for the first six months. If you make a lot of purchases in these categories, you can earn $625 in six months ($12,500 x .05 = $625).

There’s a cash back card out there that can help you save money right now. Plus, if you use it for an emergency, you get cash back on the dollar value of your emergency.

Should You Pay an Annual Fee?

Well, that depends. Many people are spending huge amounts on groceries. Some are cooking for health reasons, but some are also still isolating or trying to save money during the COVID-19 pandemic.

OK, now let’s say you’re spending way more than usual. It might be worth it to get the Blue Cash Preferred Card from American Express, which offers 6% cash back on groceries on up to $6,000 annually. You just want to make sure that the rewards outweigh the cost of the annual fee – $95 in the case of this card.

Additional Perks of Cash Back Credit Cards

Many of the credit cards that offer cash back rewards have terrific sign-up bonuses. With the Blue Cash Preferred Card, you can earn a $250 statement credit if you spend $1,000 within the first three months. Note: American Express’ website says that due to the impact of COVID-19, some cardholders will receive an additional three months to earn the bonus. But you need to clarify this when you apply for a credit card.

Use this card for everyday expenses and you won’t have issues spending $1,000 pretty quickly. You’ll get rewards on the money spent, plus the $250 statement credit. Wouldn’t that be nice?

Another benefit of using your “emergency” card frequently is that, otherwise, issuers might close your account if it’s inactive for too long. I’ve heard from consumers who have recently experienced this. Lenders are getting worried about extending too much credit right now, so keep that in mind.

A Warning for Those Who Don’t Have Good Credit Scores

If you have awesome credit, you can get a decent APR with a cash back card. However, these cards often have APR ranges. For instance, the Blue Cash Everyday Card from American Express has an APR of between 12.99% and 23.99%.

A 12.99% APR is excellent, but if you get an APR of more than 20%, you need to avoid putting large expenses on this card unless you can pay it off each month or during the 15-month 0% APR introductory period.

Carrying a balance will result in debt quickly. For you, I suggest looking into a personal loan if you run into a financial crisis that requires large amounts of cash quickly. You won’t get a 0% interest rate, but you’ll probably get a rate that’s better than 20%.


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