Cash Back Credit Card Advice

What is a Cash Back Credit Card?

Companies usually pay a percentage of the transaction amount when they receive credit card payments, in commission to their bank or merchant services provider, which they share with the cardholder by giving benefits such as points, airmiles, or a monetary amount. The monetary amount is known as cash back, and cash back credit card holders receive between 0.5% and 2% of their net expenditure as an annual rebate. This can be credited to the credit account, or paid to the cardholder by cheque or other means. To put it simply, in cash back programs, the bank calculates the flat rate (about 1% of purchases) against all spending, or different rates for certain category purchases, and prints the earned amount on each month's billing statement. Once a certain amount is reached, the cardholder can call to order a check.

Cash back credit programs include three main elements –

1. A percentage earned on purchases,
2. Spending in certain categories sometimes being rewarded at higher rates and
3. The method by which rewards are delivered to the customers.

Things to remember when applying for a Cash Back Credit Card:

1. Interest Rates: Since cash back credit cards charge higher interest rates than other credit cards, they can be too costly for those do not pay off their balance in whole each month.

2. Annual Fee: Most cash back credit card programs do not charge an annual fee. So, look for a company that does not charge an annual membership fee, and save a few hundred dollars.

3. Point System: Evaluate the point system each cash back card uses to reward its cardholders. For those who use their credit cards frequently, a cash back credit card that has no limit on the number of points you can earn in a year may be more practical, than cash back cards that offer a higher number of points for each dollar spent, but with limits to the number of points you can earn annually.

4. Gift Certificates: Some cash back card companies offer option of rebates in the form of gift certificates or gift cards, instead of cash (or both). Consider such offers because if luck favors you, you may earn double the cash back with the certificates.

5. Rebate Points: Rebate Points are liable to expire within a certain period of given time. Always claim your rebate before it expires to avoid losing your earned points, and choose a company that gives you enough time to claim your rewards.

6. Additional Cards: If you do not want the hassle of another inquiry into your credit history, which can result in a bad credit score, do not apply for additional cards pointlessly.

Examples of Cash Back Credit Cards:

Blue Cash from American Express:

* Up to 5% Cash Back with Unlimited Cash Rewards
* Earn unlimited cash back
* 0% Intro APR
* Low balance transfer rate — 4.99% fixed APR for the life of the balance
* No Annual Fee

Capital One No Hassle CashSM Rewards Card

* No limit on the cash rewards you can earn and cash rewards don't expire for the life of your account
* Earn 2% cash back on gas and groceries; 1% on other purchases
* No annual membership fee
* Physical Damage, Theft, and Loss Insurance on rental cars
* Extended warranties on what you buy