Cash back Credit Cards Where is the Money?

When considering a reward credit card, most people prefer to get a cash back credit card. This is because, cash back credit cards provide more options and flexibility for the card holder. While not everyone frequently travels and not everyone drives his own car, cash back cards have become more popular than Frequent Flyer Miles credit cards and Gas Rewards credit cards.

Cash back credit cards give card holders their incentive in terms of cash or money points. Each time the card holder makes a purchase, the purchase amount has a corresponding cash amount that can be used to make new purchases or pay other bills. For this reason, anyone can be an ideal candidate for a cash back card.

Making the Choice

Every credit card issuer offers its own cash back program. Obviously, each cash back credit card also has its own terms and conditions to follow. Knowing this, everyone is advised to take their time in researching about these terms and comparing each credit card from the other.

Today, you can find review sites that are exclusively dedicated to providing reliable credit card reviews for consumers. Usually, these sites are categorized according to the type of credit card you’re looking for. For instance, if you’re looking for a cash back credit card, you should check out the page that is focused on reviews about the different cash back cards in the market. Through these review sites, comparing credit cards become easier. Once you’ve narrowed down your choices, based on the reviews you’ve read from the site, then you can start visiting the credit card’s official website for further examination.

Not all about the APR

One of the first things you need to check on is the APR or in the Annual Percentage Rate. Since most reward credit cards are accompanied with high interest, you’ll want to search for one with the lowest or most reasonable rate. Still, the interest rate is not the only cost associated with your credit card.

Don’t focus your attention the cash back card’s interest rate alone. Some credit cards may offer an incredibly low interest rate as part of its introductory offer but the other costs and charges can take you by surprise. Always check on the exact cost of all fees that you’ll be paying. For instance, how much is the annual fee? Is it reasonable enough or would you be paying for an expensive activation fee every year? How much are the penalty charges? Don’t forget to examine each fee that comes with your card and make sure that all fees are reasonable.

Earning and Redemption

Okay, so you’ve checked on the fees and costs. You’ve checked on features. Everything sounds great. But have you checked on the rules of the rewards? Are you clearly aware of the procedures on how you can earn points? What about the steps in claiming the rewards? Is there an expiration period or blackout date on your card? Remember to take your time in studying the regulations of the credit card’s reward system before making your decision.

One of the most popular credit card reward programs available today is the cash back credit card. These will give you a cash rebate every time you make a purchase. The best cash back credit cards appeal to many and would even include no annual fees and a 0% interest APR for up to 15 months. Imagine taking an instant discount every time you make a purchase on your cash back credit cards. Depending on where you shop, those savings could add up to a considerable sum.

Cash Back

The most basic benefit from a cash back credit card is your rebate from every purchase. Most companies give a 1% rebate on all purchases. However, some programs will give up to a 5% rebate on such purchases as groceries, drug store purchases, and especially gasoline. You have to spend these amounts of money anyway, so why not get a rebate for it? However, there are savings beyond what we have mentioned here.

Savings

Here is an example. Let’s say that, over a month, you spend $500 at the grocery store, $100 at the pharmacy, and $150 filling up your car with gas. Your total spending during this month would be $750. If you get 5% back for these sorts of purchases from your best cash back credit card, you can save $37.50. If you had to spend this much every month, you would have saved $450. In other words, you’ve saved half of one month’s expenses over the course of an entire year, and just because you chose to benefit from a cash back credit card.

$450 is pretty cool….but should I really switch?

You would not be able to notice the slight difference of 1% or even a 5% on your cash back credit card; but over a period, your cash back credit cards could actually make you money… increasing your nest egg incrementally. In a way, every time you buy groceries, you are putting money into your savings.

If you can pay your balance off every month, and do not need a zero or low interest rate card, cash back credit cards can work for you. Your cash back would even cover your interest payments – let the poor money managers pay you. If you do not pay your balance off, your rebate can go toward paying down your existing balance, so that less of that has to come out of your own pocket. Make sure that you read the fine printings, because fees for late payment and going over the limit could be steep.

The first cash back credit card was issued about 15 years ago. The program was very simple – 1% of your purchases were rebated back to the customer at the end of each year of membership by check, or by a credit to the account.

Now there are quite a few different types of cash back credit card programs. Some offer a simple percentage on all purchases, some give a higher premium for different categories of purchases. Some programs deposit your rebates directly into your bank account, while others retracts it from your credit, or send you a check once your rebate amount reaches a certain dollar level. Pay attention to the more complex ones, as it can be confusing to track your rebates by expenditure.

A cash back credit cards could not make you wealthy – after all, you are only getting back an infinitesimal amount of the money you spend, so this can never be a source of revenue. However, since everyone has to spend money for everything from the necessities of life to the luxuries, it makes sense to maximize the return on that spending as much as possible. Cash back credit cards give you a chance to earn back some of the money you spend, and to put that money to use elsewhere in your financial picture.