Cash rebate credit cards are just one of the many types of credit cards offering rewards. The credit card companies are in great competition for business and by offering rewards they hope people will choose their card over another. Cash rebate cards are considered the best of the reward cars because they actually pay cash as a reward for using them. Everyone loves getting money and the credit card companies have realized that offering cash rebate credit cards are a very good way to lure customers to choose their credit card.
The first cash rebate credit cards were offered by Discover. Discover's ‘Cashback' program rewarded consumers for the purchases made on their Discover card by letting them earn actual money back. Once other companies saw the popularity Discover gained form this program they begin to offer their own cash rebate credit cards.
Cash rebate credit cards work by figuring a percentage of each purchase made into the cash rebate. Of course, the credit card company is not going to give a person back the amount they spent, but rather they figure a percentage and that is the actual rebate. Some cards have teamed up with certain companies so that purchases made form these companies offer a higher cash rebate percentage. This not only benefit's the credit card company, but also those stores they team up with as people are more likely to shop there because they get more cash back on those purchases.
Cash rebate credit cards seem like a great idea and many people have gotten them simply for the reward. However, they are still a credit card and that fact can sometimes be overlooked. It is often tempting to use the card just to get the reward which can lead to overspending. This is especially true when it comes to partnership between a credit card company and a store. A person may shop at that certain store just to get the higher reward percentage, but they might lose out. For example, a person buys socks from the credit card partner vendor for $4 and they get a higher rebate percentage which equals $1, which make the final cost $3.
The problem is that they could have shopped at a different store and gotten the socks for $3 with a lower rebate percentage which equals $.30, which makes the final cost $2.70. They ended up spending more, even with the higher rebate percentage. This type of shopping for rewards is what leads to problems with this type of card. This is the reason that getting a cash rebate credit card requires good credit. These cards are very selective and a person should have a good credit rating in order to be approved.
Cash rebate credit cards can be a nice way to earn some money back on spending. However, the bottom line is that a person needs to think about how much they are spending, not about how big the reward they get will be. This will help a person to use their cash rebate credit card responsibly.
Best Rebate Credit Card
With gas prices still very high, people want to save some money at the pump. Gas rebate credit cards are becoming a very popular alternative. The average gas rebate credit card can save you up to five percent on gas purchases. If you're not careful with your credit card use, a gas station credit card could make you pay more for your gas.
Misleading Gas Credit Card Applications
Before applying for any credit card, read the terms and conditions. Most gas credit cards claim high cash back percentages, but there is usually a catch. Here are some examples:
? cash rebates limited to one gas station company
? high cash rebates only during an introductory period of usually 6 to 12 months
? a monthly or annual limit on how much cash back you can earn
? a tier structure with varying cash back percentages depending on spending
The credit card companies are very careful with their marketing wording. A cash back percentage is usually quoted as ?up to 5% cash back?. Once they say ?up to?, you know you won't get that high cash back all the time. So know what you are applying for to prevent disappointment.
Keeping a Balance Will Blow Your Cash Rebates
With any credit card, if you only make the minimum payment and keep a balance, you will pay interest charges. Over time these interest charges could cost a lot more than any cash rebates you earn. Try to only use your credit card as much as you can afford to pay off next month. This can be difficult to adjust to for some people. Suddenly they are paying for everything with their credit card to earn more cash back. Meanwhile it seems as if their bank account is unaffected. This could lead to impulsive spending. Before they know it, their bank account is empty and a big credit card bill shows up. Then the interest charges add up. This is how credit card companies can afford to offer cash back. Ideally you should keep track of your credit card spending and keep that much cash aside as money already spent.
Gas Rebate Credit Cards Offering Rewards Other Than Cash Back
If you are trying to save money with a gas credit card, choose your credit card rewards carefully. You could earn airline rewards on your gasoline purchases, but they cost more money in the end. Airline rewards would likely only cover a portion of you or your family's airline tickets. Then factor in vacation expenses and lost wages. Other gas station reward credit cards offer gift certificates. Again it usually only covers part of the purchase and it is something you wouldn't normally buy. To really save with gas credit cards, apply for a gas credit card that offers cash rebates as checks or statement credit.
Why Are Gas Rebate Credit Cards Still So Popular?
Gas prices are a major economic factor. We hear about gas price fluctuation in the news. The credit card companies are aware of this concern. Nearly every gas station company has its own credit card and many of them are heavily marketed. Despite some reward limitations, many of these gas rebate credit cards are very good deals.
If you spend a lot of money on gasoline, a gas rebate credit card can get you the cheapest gas prices. A gas rebate credit card used responsibly could save hundreds on dollars off your gas bill each year. Ensure you are familiar with your credit card rewards program details though. Pay off your credit card each month and avoid interest charges. Compare credit card offers carefully and read the fine print.
Both Morgan Hamilton & Jeremy Biberdorf are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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