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  Why a Cash Back Credit Card?


WHY A CASH BACK CREDIT CARD

OVERVIEW
Cash back credit cards offer the most flexible and user friendly rewards program. Their benefit can be precisely measured and expectations of reward can be confidently set.

THE UPSIDE
Without getting into the individual credit cards and their relative quirks, the typical cash back credit card offers a long term annual reward of 1-2% of total yearly spending. This reward will be available to you without changing anything - except the credit card you hold. There is no need to change your spending habits, stores and, in most cases, your annual interest rate. Some of these cards give the added benefit of increased pay outs of 2-3% for certain types of spending such as groceries, gasoline or home improvements and hardware. Some give increased rewards for carrying a minimum balance. If you typically carry a balance this can help offset credit card interest costs.

Compared to other types of credit card rewards such as travel, gift cards or individual items from a reward catalogue, consider the benefits of a cash back card.

  • Many of the flight or travel rewards include blackout dates and specific conditions of travel. Redeeming this reward might also encourage you to spend more than you'd planned by bringing a companion or booking a hotel. Even if you were planing on traveling anyway, you could buy an airline ticket with your cash back credit card rewards.
  • Gift card rewards restrict you to shopping at a specific merchant. With a credit card cash back reward you can shop anywhere.
  • Many of the gift catalogs offered by reward cards are filled with overpriced luxury items most of us would never purchase with "our own money". While there's nothing wrong with the occassional luxury purchase, especially if it seems "free", your credit card cash back reward could be used for anything - including more practical items.

THE DOWNSIDE
We would be remiss if we didn't give a downside, but this downside isn't that bad. Many of the cash back credit cards require you to request your cash back payment and only pay once a year at the end of the year by check. Many of these credit cards also have a yearly maximum reward of $500.00. It would be nice if they just discounted everything you bought or put a deposit on your credit card once a month, but most don't offer that option.

TIPS
It should also be noted that although many of the popular cash back cards advertise a cash back rate higher than what we've mentioned above, the reality is that most of these advertised rates are introductory or tied to specific conditions that will not be easily maximized. Count on 1% and consider everything else an unexpected bonus.

Be sure to evaluate all options before choosing a Cash Back Credit Card Provider.


Let us help you find top cash back credit card from a top credit card provider.