Cash back credit cards are great for those who pay off their balances every month and don't require a super-low interest rate. For the reward seeker who wants cold hard cash in exchange for his or her credit card loyalty, cash back credit cards pay you cash back or rebate a percentage of the money that you have spent on your credit card. Cash back credit card offers may all appear the same, however, in reality there are many different types of cash back credit cards so it pays to do a little homework before you choose your cash back credit card. Also, if you own or plan on applying for a cash back credit card know what percentage is earned on purchases, what spending categories are rewarded at higher rates and the method by which rewards are delivered to the customer.
Cash back credit cards began about 15 years ago and are very popular. The first cash back credit cards were issued by Discover and were rather simple, offering a flat percentage rate (typically 1% of purchases) rebated back to the customer in the form of a check at the end of the year or a statement credit.
Now there are many different types of cash back credit card offers out there. Some are simple others are rather complex to keep track of. Simple cash back credit card offers calculate the flat rate against all spending (or different rates for cerain category puchases, as in the case of the Citi Dividend Platinum Select Card) and show the earned amount on each month's billing statement. The consumer may call to order a check once the amount reaches $100. However, the more complex programs can be confusing since the banks rarely show which purchase amounts earned cash back at which rate. A single earned amount is generally reported on statements or is available upon request of the reward check.
Cash back rebates are not always presented to the customer in the form of a check but also as a statement credit. Some credit card companies that provide statement credit probably find it to be the easiest delivery process since it is electronic but may not be as satisfying for you since it is reflected as a reduction on your outstanding balance. Other credit card companies will mail you a check, either on an annual basis or once you have hit a dollar earnings threshold of $25, $50 or $100. In the previous years reward checks were automatically mailed, however, now it seems more common for the cash back credit card issuer to require the card members to order their reward check. This requirement means increased profits for the issuer when consumers fail to collect their earned rewards so it's important to remain active and monitor your earnings, either online or by calling your credit card company.
At the end of the day cash back credit cards will not make you rich but it is really a nice feature of the market that you can get paid several hundred dollars per year to use a no annual fee credit card. It certainly beats being in debt and paying interest! |
