Cash back credit cards allow you to save money on every purchase. While some credit cards only offer 1% cash back on each purchase, other cards offer unlimited 2% cash back plus additional cash back for certain spending categories.
Boomers stand to save the most since they spend more money than millennials and Gen Z consumers. While you won’t earn life-changing cash back from any individual purchase, they all add up. It’s entirely possible for boomers to save more than $1,000 each year if they use a top-notch cash back credit card.
While each person has different spending preferences, looking at the average spending habits among boomers will shed greater light on how much you can save.
How Much Does the Average Boomer Spend
According to Smart Asset, the average boomer spends $63,325 per year. Spending varies across key spending categories. These are some of the highlights:
- Clothing and apparel: $1,289 per year
- Food: $5,112 per year
- Gas: $3,306.53
- Travel: $6,600
- Housing: $21,273
- Entertainment: $3,476
- Health care: $6,594
Boomers spend more on travel than other generations because they are older and have more money to spend. Housing, travel, health care, and food are among the top expenses for boomers.
How Much Can You Receive with a 1% Cash Back Credit Card
It’s easy to find credit cards that offer unlimited 1% cash back on all purchases. You can even find secured credit cards that offer this perk.
Since the average boomer spends $63,325 per year, the average boomer will receive $633.25 in cash back each year. Some cards offer additional cash back for specific spending categories. For instance, earning 3% cash back on gas nets the average boomer an additional $99.20 per year. The same boomer would have only received $33.07 back from a 1% cash back rate.
How Much Can You Receive with a 2% Cash Back Credit Card
Some cash back credit cards offer unlimited 2% cash back on all purchases, doubling how much you earn from every purchase. Unlimited 2% cash back cards are straightforward since you typically don’t have to worry about some spending categories being more rewarding than others.
Going back to the $63,325 figure, the average boomer would receive $1,266.50 from a 2% cash back credit card. It’s important to note that you aren’t making any additional purchases to receive $1,266.50 instead of $633.25.
That’s why it’s worth the effort to compare credit card options and see which one aligns with your spending habits. A higher cash back rate gives you more rewards on the same purchases.
What to Consider Before Getting a Cash Back Credit Card
There are a few things to keep in mind when comparing cash back credit cards and determining which one is right for you. For any credit card, it’s good to check the annual fee, APR, and other costs associated with the card. Intro APR and welcome bonuses are also useful, but they shouldn’t be the decisive factors.
It’s also important to assess whether you want a simplified experience or prefer to open multiple credit cards with elevated cash back for certain spending categories. For instance, a credit card with unlimited 2% cash back on every purchase is pretty straightforward. You don’t have to think about whether you’re making more cash back with one spending category over another.
However, there are other credit cards that offer up to 5% cash back for certain types of purchases. These same cards usually offer unlimited 1% cash back on all other purchases, which is why you need multiple credit cards to capitalize on cards with elevated cash back categories.
You may want to wait on applying for a new credit card if you plan to take out a mortgage or another significant loan in a few months. A new credit card application will trigger a hard credit check, which will temporarily hurt your score. It’s optimal to open a credit card if you don’t plan to take out a significant loan within the next 12 months.
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