Before deciding on a credit card it is always advisable to shop around and compare various cards so as to find the one that is right for you. Cash back credit cards are normally issued to users with good credit rating. These cards are in actuality reward cards; the user is rewarded with cash and other rebates for using the card.
To be able to make an informed decision on which cash back credit card is best for you, you need to understand three basic features of the card: what percentage of the amount spend is rebated as cash, are some category of spending rated higher than others and how to receive the awards.
Other features to look for when comparing cash back credit cards are APR (Annual Percentage Rate), percentage cash back reward, are you locked in to making purchases at select places to earn reward, annual fees, finance changes to name a few.
Some banks make it easy to understand how they calculate cash back rewards by using a flat percent of your spending, others have a more complicated system. For those cards that offer a flat rate, they may only specify that x % credit is applied on purchases of certain items such as fuel and y% on others items such as drugs.
Other institutions use a tiered system to calculate cash back rewards. With this system points are awarded based on how much is spent, for example tier one may stipulate that for spending of $50 up to $500, 1% cash back is given, for $1000 to $2500, 5% cash back is paid.
How you receive your cash back is important to card holders. Some person want back actual cash while others don’t mind credit statements. With actual cash, after a certain cash rebate has accrued a check is sent in that amount. For credit statement, your outstanding balance is debited with the cash rebate, that is, you do not receive any actual cash, it is used to pay part of your balance.
Ultimately, cash back cards are best suited to those who pay off their balances monthly.
If you are considering applying for a cash back credit card, you need to be sure to take a close look at all of the options available to you. You might think all cash back credit cards are the same. After all, all of them result in money in your pocket, right? Well, not exactly. Yes, you will earn money with any cash back credit card you select. But, just how much money you earn and how you earn the money in the first place may vary.
When It All Began
Cash back credit cards made their first splash when AT&T Universal offered its card, which was free of annual fees. This fact alone was fairly new to the credit card world. To top it off, they offered cash back on all purchases made with the card, with the earned rewards going toward paying off the cardholder's phone bill.
Soon after AT&T's revolutionary cash back credit card, the Discover Card started offering a special cash back credit card that provided cardholders with cash back at the end of the year. From here, credit cards evolved to offering outstanding cash back incentives of up to 5% of the purchases made with the card. Although Discover Card is still considered to be one of the best cash back credit cards by many people, Visa and MasterCard also have several cash back credit cards of their own to offer. In today's market, which is very competitive, credit card companies view the money they give to their customers as a business expenditure necessary to get clients and to maintain them.
Analyze Spending Habits
When it comes to choosing a cash back credit card, you should first analyze your spending habits. First of all, you should never use a cash back credit card if you are unable to pay off the balance in full at the end of each billing cycle. Cash back credit cards have a higher interest rate than credit cards without special rewards and incentives. Therefore, carrying a balance on your cash back credit card will result in high finance charges, which will negate the money you earn.
Decide What You Want to Earn
When selecting a cash back credit card, you also need to consider what type of reward you want to receive. If you would rather earn points, which can be exchanged later for goods or services, and airline miles, you need to get a reward credit card. If, however, you are interested in receiving cold, hard cash, then a cash back credit card is right for you.
At the same time, not all cash back credit cards operate the same. If you want a no hassles check to be automatically mailed to you, then be sure to choose a card that does just that. Some cash back credit cards require you to keep an eye on your own rewards and to request a check when the balance reaches a certain threshold. Or, you might want to consider a cash back credit card that simply uses the money you earn to help pay off your credit card balance. This type of credit card does not require any work on your part and can be a much simpler option and a better choice for those that don't have time to spend monitoring the rewards from their credit card.
Fees
You also need to consider any fees that might be associated with the cash back credit cards you are looking at. If there are annual fees or monthly fees, chances are that you will not earn enough cash back to make the card worthwhile. The best cash back credit cards have no hidden fees and offer a high percentage of return.
Both Eric Wasselman & Robert Alan 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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