Rewards and Cash Back

Rewards and Cash Back Credit Cards give you the ability to earn while you spend.  You can earn cash back rebates or rewards points, which can be used for a wide variety of purchases, for every dollar you spend using your credit card.  Some offers reward you for purchasing “necessary items” with up to 5% cash back on certain purchases like gas or groceries.  Typically you will see rewards of 1 – 3% for general purchases.

You will receive the cash back in the form of a rebate which can be spent anywhere. Or if you collect rewards points you can trade your points for a number of different items, pending the participant of the item you desire.

Whatever percentage of rebate you receive from your cash back credit card is the same thing as a discounted sales price.  If you get 3% cash back rebate for all purchases then that is the same as if you were buying that item on sale for 3% off.  At the end of the term you will receive the cash rebate.  You can really rack up  a good amount of rebate if you use the cash back credit card for standard purchases.

Cash Back Credit Card – Things to remember:

  • Sometimes credit companies require you to spend a certain amount of money before a 100% cash back rebate is sent.
  • Some companies put a maximum dollar amount on the cash back you can receive in one year.  Once this figure is reach you will no longer be earning the cash back rewards for using that credit card.
  • Credit Companies my impose restrictions on your cash back rebate if your card remains unused for a certain period of time.
  • Some cards have restrictions on how you can spend the rebate you receive.  Many allow you to spend it just about anywhere.

If you carry a balance from month to month and accrue interest charges on your credit card you may be negating the very “cash back” money you will receive.  If you have spent $1,000 on interest and earn $900 cash back you have just cost yourself $100.

To avoid this it is wise to always pay off the existing balance before your grace period expires and you start collecting interest.   If you pay off the balance twice a month you will typically never incur interest on any of your purchases.

Other Options:

If you are looking for ways to save on travel or business then the Frequent Flyer Credit Card or the Business Credit Card may be best for you.

See the Best Rewards Credit Cards for 2011





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