Consumers today are given more options when it comes to credit cards. There are cash back credit cards that give away rebates or points equivalent to cash while some credit cards provide bonuses by means of rewards such as free travel, free gas, charity donations, etc. With all these choices, which credit card should you get? To answer this question objectively, let's consider the advantage of both cash back credit cards as well as rewards credit cards.
Cash-back Credit Cards
An advantage of cash back credit cards over rewards credit cards is its flexibility. With a cash back card, you automatically earn a point or a rebate with any type of purchase you make on your card. Of course, the amount of rebate depends on the credit card issuer which can be from 1% to as much as 2% rebate. Despite the low rebate points of cash back credit cards, it gives the card holder the freedom to use the card in any store he prefers and still get points from all his purchases.
Rewards Credit Cards
Rewards credit cards generally give a higher percentage of points for its card holders. Most reward credit cards give as much as 5% from purchases. However, these rebate points are only limited if you make the purchase from a designated affiliate merchant.
For example, if you select a gas rewards credit card, you're only entitled to get rebate points each time your refuel your car from affiliate gas stations. If you use your gas rewards credit card to purchase from other establishments, no points will be counted in your account.
If you have a hotel rewards credit card, you'll earn points whenever you use your card from affiliate hotels and establishments. Usually, you will not get points if your use the card for general purchases. Additionally, you can only redeem the points you've earned from the same companies that have partnership with your credit card.
Weighing Things
Obviously, both types of credit cards can work for your benefit if it matches your lifestyle. If you often shop at a particular store, then why not find a reward credit card that is affiliated with your favorite merchant? Or if you frequently purchase your gas from a particular station, you can also find its affiliated gas reward credit card. If you frequently travel or rent hotel accommodations, why not find a hotel or airline reward credit card that has partnership with your favorite airline or hotel as well?
If you use your credit card for different purposes or if you usually purchase from different stores then perhaps a cash back credit card will be a better choice for you. Even if it gives lower points, you still get points for all your purchases and it also allows you to redeem your points from any store you prefer.
Lastly, it is important to remember that both cash back credit cards and rewards credit card may come with higher interest. Also, bear in mind that most reward credit cards disqualify those who have outstanding balances. Thus, whichever type of credit card suits your needs, the advantages you get will still depend on how you use your credit card. By paying off your monthly credit card bills on time, you don't have to worry about being charged with a high interest. On the contrary, if you're in the habit of putting off your monthly payments on your credit card, the cash back points or the credit card rewards you earn may just go to waste.
Cash back credit cards are probably the most honest, direct form of rewards programs available to a consumer. They're convenient for those of us that enjoy direct control over things, or, said differently, for the average controlling type-A personality workaholic in today's world. For example, I'd like to describe to you my lifelong friend Rob, who fits the exact description.
Rob is a software designer. He has his own cubicle among two or three hundred others on the same floor, and works in a wealthy suburb. He wears shirt and tie combinations predetermined each weekend, eats the same thing for lunch in the company cafeteria each day, and has not been on a date in about half a decade. When I surprise him at work, I enjoy moving things on his desk and watching him squirm until he puts them back as they were before.
It just so happens that Rob has recently acquired a cash back credit card. He chose it because he does not have to select from rewards presented to him by the company. He gets to do what he wants with his own rewards. Previously, he had a rewards program that enabled him to amass points from his purchases. It was going well until he had enough to actually buy something, and the credit card company did not have teal shirts, tope ties or even an all-inclusive weekend vacation package to Peoria. Rob, furious that his policy of complete control had been diverted, immediately cancelled his card and avoided credit cards for over a year.
Now Rob gets a percentage of each dollar he spends returned to him in rebate form. He's is free, happy, totally in control and supremely confident he will land a date because now he can use his rewards to get that silk beige shirt with the maroon tie he's been eyeing up for months.
If you identify with Rob at all, it likely means that a cash back credit card would be good for you. If you don't, it's because he is probably a psychologically challenged on some small level, and most people don't want to be aligned with individuals having issues. Nonetheless, a cash back credit card might very well still be good for you anyway, as it is for millions of Americans.
A drawback to cash back cards is that they usually don't carry as substantial a reward as other, issuing company approved, rewards programs do. The conflict is whether you want more of what they have to offer, or a little less of whatever you want.
Myself, I choose the cash back option. The difference in the size of rewards is not enough to sway me away from my freedom of purchase. On top of that, I receive cash back on just about every purchase I make, so the money (no matter how big or small) builds up very fast. That's me, though. Ponder the choice and select what you want in return for nothing but using a card instead of cash.
Both Annette D. Wilson & Derek Lenehan 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.
Annette D. Wilson has sinced written about articles on various topics from Credit Cards, Build Online Business and Credit Cards. Ann Wilson is the head writer of . This resource provides consumers with valuable. Annette D. Wilson's top article generates over 14800 views. to your Favourites.
Derek Lenehan has sinced written about articles on various topics from Credit Cards, Bank of America and Student Credit Cards. Derek Lenehan is majoring in Magazine Journalism at Kent State University and also finds the time to write articles for CompareCC.com. A credit related site. Derek Lenehan's top article generates over 14800 views. to your Favourites.