The Real Deal on Cash Back and Inflation

You've probably seen the ads. "Get cash back on everything you buy!" They sound too good to be true, but are they? Let's take a closer look at how cash back works and whether or not it's worth it in the long run.

How Cash Back Works

The two most popular forms of cash back offerings are cash back credit cards and cash back apps.

Cash back cards offer a set percentage of cash back on every purchase you make. For example, if you have a card that offers 1% cash back and you spend $100 at the grocery store, you would get $1 back. Sounds great so far, right? Unfortunately, it's not that simple.

First of all, most cash back cards have annual fees ranging from $50 to $100. That means that even if you get $100 in cash back, you're still paying $50-$100 for the privilege. Furthermore, many cards limit the amount of cash back you can earn in bonus categories. For example, a card might offer 5% cash back on groceries up to $1,500 per year. That means that after you spend $1,500 at the grocery store, you'll only get 1% cash back on future purchases. Finally, most cards require you to have good or excellent credit in order to qualify. If your credit isn't great, you probably won't be able to get a cash back card at all.

Similarly, cash back apps work by giving you a percentage of your purchase price back in the form of cash or points that can be redeemed for gift cards or other prizes minus the credit requirements. While the percentage may not seem like much, it can add up over time—especially if you use the app regularly. The number of points you earn will depend on the store where you made the purchase, as well as the amount of money you spend. You can then redeem your points for cashback, gift cards, or other rewards. The best cash back apps also offer bonus points for meeting certain spending thresholds.

Is Cash Back Worth It?

In short, yes...and no. If you are strategic about using a cash back card and you pay your balance in full every month so that you don't incur any interest charges, then cash back can be a great way to save money on everyday purchases. However, if you carrying a balance from month to month or if you frequently find yourself tempted to spend more just to earn more cash back, then a cash back card is probably not the best choice for you.

Cash back apps, on the other hand, are fair game! HOOF It! Rewards takes cash back a step further and protects against inflation by increasing the value of your HOOF Coin tokens over time. So, if you're looking for an easy way to save money, especially for major financial milestones like homeownership, student debt elimination, retirement, and more, be sure to download HOOF It! Rewards today.

Cash back can be a great way to save money on everyday purchases...but only if used responsibly. Be sure to consider all of the costs associated with a cash back card before signing up for one and remember to pay your balance in full every month to avoid interest charges. If you don't want to bother with having one financial emergency wipe out a year's worth of cash back, then HOOF It! Rewards is the best option for you. With responsible use, cash back can be an easy way to put extra money in your pocket each year.