A very popular option these days is the credit card that gives you cash back on some of the purchases you make. A couple of credit cards are even giving back as much as 5-10%. But before you go out and get one of these for yourself, there are some things you should know about first. This article will give you some tips on how to make the right choice in order to get the best cash back credit cards.
The first thing that you need to remember is that the credit card company is a business. Of course - you knew that. But what that means is that they are not giving you all that it may seem. They are doing it because money can be made from it - one way or another. Their financial planners have looked long and hard at how to offer one thing that looks like a real good deal, and still makes them money - lots of it.
The temptation is to look at the percentage promised, and to make a decision based only on that. This is just what they wanted you to do. In most cases, the higher the percentage offered means that they are simply getting their money back from other charges. Here are some things to look at when deciding on your cash back credit card.
The Standard Rate of Interest
This is the amount of interest you will pay if you do not pay off the balance each month. It can vary anywhere between about 12% all the way to 32%. Many of the higher paying cash back credit cards have the higher interest on them. So if you do not plan on paying the balance every month, for sure you will want to take note of this figure.
Balance Needed To Qualify For Cash Back
Some cash back credit cards have the stipulation on them that you need to carry a balance on the card in order to qualify for the reward. A neat little thing they tucked in there somewhere to take back what they give. Watch out for this one. If you are paying 23% interest on the balance, and they are paying you 5% - are you really coming out ahead? No, not really. The way to get that best cash back credit card is to make sure that you have both a low interest card, and also can pay it off each month - and still get the rewards, too!
The Cash Back Cap
Some cards have a maximum amount of cash that you can receive in a year - called a cap. This could be good for you if you do not make purchases that would bring you over the cap amount. But if you do make a lot of purchases, then you will want to get your cash back credit card without a cap.
Items That Qualify For Cash Back
Many of the cash back credit cards will only give you cash back for food, medicines, and gas. Other cards have different percentages that apply to these things, and then another percentage, usually 1%, that will go toward other purchases you make.
Percentage Needed For That Level Of Cash Back
Some cards have different levels of purchases needed in order to get the full percentage of cash back that was promised. For instance, on a 5% cash back credit card, you may only receive 2% if you buy less than $1,000 per month. Then, another 1% might be added for purchases totaling up to $2,499, and the full 5% may be given only on purchases that exceed that amount.
The best cash back credit cards are the ones that will benefit you the most in your particular situation. A card that is good for someone else may not be the best for you. It would be a good idea to figure out just how much of what type of item you purchase (Especially food, medicine, and gas) each month, and how much you might put on a particular cash back credit card before you make your final decision. Then, by careful consumer comparison - you should be able to find your best cash back credit cards.
If you know what to look for and where to look, finding the best cash back credit cards doesn't have to become mission impossible. When you're looking for the best credit cards available, you need to know exactly what you should be looking for. Fortunately, the best cash back credit cards have seven things in common:
1. Reasonable Interest Rates
The best cash back credit cards offer reasonable interest rates. Notice I did not say "low" interest rates, because rewards credit cards usually carry a higher interest rate than your typical low-interest credit cards. That being said, there's no reason to pay more than you have to and you should be able to keep your interest rate at about 11 or 12 percent.
2. No Annual Fee
The best cash back credit cards never charge an annual fee. If you apply for a cash back credit card with an annual fee, there is no guarantee that your rewards will even equal that annual fee (depending on how much you charge each month). Instead of gaining money in the form of a cash back reward, you're losing money because of that annual fee.
3. No Reward Limits
Many cash back credit cards put a limit on the amount of money you can get back on an annual or even monthly basis. The best cash back credit cards, however, have no limit on the rewards you can earn.
Before applying for any particular cash back credit card, make sure there will be no limit set on reward amounts.
4. Beyond the One Percent
It used to be that most cash back credit cards offered a one-percent cash back bonus and that was it. Nowadays, perks associated with the best cash back credit cards can go well beyond just a one-percent reward.
Depending which cash back credit card you carry, you can get up to five percent back on certain purchases, as well as other perks, such as unlimited purchase protection, extended warranties and rental car insurance.
5. Travel and Gas Perks
Some of the best cash back credit cards also offer airline miles, which is great if you travel a lot. Some offer a higher rewards level on gas purchases (often 5%). If you travel or drive a lot, these perks could make one card a lot more appealing than another to you.
6. Introductory Interest Offers
In addition to charging a reasonable interest rate, the best cash back credit cards also extend a zero-percent introductory offer. When looking for the best credit cards to apply for, look for ones that offer zero-percent interest for at least six to twelve months.
7. Finding What Works For You
Before applying for any credit card, always evaluate what's most important to you. If you pay off your balance in full each month, you'll want a card that offers the highest reward amount, regardless of interest rate. If you travel a lot, you'll want a card that offers miles or travel perks in addition to a cash back bonus. By evaluating your specific situation, you'll be able to determine which of the best cash back credit cards is right for you.
Both Robert Alan & Max Anderson 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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