Credit can be a wonderful thing if you use it right and it's even better when you get paid to use it, as in the case of cash back and reward credit cards. With these cards, you simply use your credit card to make purchases and get incentives in the form of reward points or cash back. These reward points can be used towards free or discounted products and services. With cash back credit cards, you can even (with most cards) donate your cash back to the charity of your choice! Other cards let you deposit your cash back into a savings account for a college fund this can be a great way to start your child's college fund, in fact.

Cash back and reward credit cards seem like a really great deal and if you're a skeptic like me, you're wondering what the catch is. The catch is most likely that you are paying higher interest on these cards in exchange for getting the cash back or reward points.

Cash Back Credit Cards:

A cash back credit card will generally pay you one to two percent cash back on your purchases. You'll get a check in the mail for the cash back your purchases have earned for you. You can spend this cash any way you like. "Cash", of course can take many forms. Discounts on goods like gas or furniture are commonly given as rewards for using these cash back and reward credit cards. Some cards will put the cash towards you balance, this can be used for purchases using your card.

Reward Cards:

Reward credit cards will award you points for purchases that you make, usually somewhere between one and five points per dollar spent. Be careful with these - some will only be redeemable at specific stores which partner with your credit card company, others will only give you reward points for shopping at these same stores; alternately, you might receive less pints for purchases made elsewhere. You will be able to redeem your points for items (usually a limited selection) form the locations which have partnered with them on the rewards program.

However, if the restrictions of the rewards program fit with your needs, there is a big plus to these programs - you will get a better deal in reward points than you will in cash back programs. Reward points are sometimes as high as five percent, compared with the one to two usually seen in cash back credit card programs.

Whether to choose a cash back or reward credit card is entirely up to you. If you use your credit card a lot, you can rack up rewards quickly; of course, this will only help you if you want the items which are covered by the rewards plan. Cash back can also add up, but will not do so at a very fast pace. Do your homework on the companies who offer these programs before making your decision. This way, you can get the cash back or reward credit card which meets your needs.