Cash Back Credit Card Offers
Credit card companies have been using rewards programs to attract applicants for over 20 years. Cash back programs are among the most popular of all rewards offerings. Believe it or not, these programs effect you regardless of if you even carry a credit card yourself. In today's world of plastic purchasing, it will benefit you to know more about these offers and how to use them to your advantage.
Cash Back Basics
Cash back credit cards are a type of rewards card that pay out in cash. A cash reward is very enticing to many consumers because it can be used for anything, as opposed to rewards that are limited to a specific category like airline travel.
Cardholders accumulate bonus cash by using their credit cards for purchases. Most companies offer cash back at a set rate (for example 1%) of all purchases made. Many companies also offer increased payout rates (for example 3%) for purchases in specific categories like gas, or groceries. Some companies cash back reward programs have rotating purchase categories that earn you higher payouts.
The cash bonus that you have accumulated is usually reported on your monthly statement, or can be viewed online. Cash rewards are paid out on request, and can usually be delivered by check, or in the form of a deposit to your credit card account.
Effects on Retail Prices
Like it or not, the use of rewards credit cards is effecting the prices you pay for everyday purchases. Most retailers are forced to raise their prices a crossed the board to pay for processing fees charged by the credit card companies. This means you are paying a higher prices regardless of your choice to use or not use a credit card at all. Of course, the best way to combat these higher prices is to use a cashback credit card. The bonus rewards that you earn will help to offset the higher prices you are paying.
Choosing a Cash Back Card
Choosing any credit card offer can be confusing, and cashback cards are no exception. Most importantly you should compare offers online. This will allow you to weigh the terms of each card against each other rather than on a one-by-one basis as applications arrive in your mailbox.
Don't forget to compare offers based on your personal needs. For example, if you pay your bill in full each month, you look for programs with the highest percentage payout regardless of the interest rate. If, on the other hand, you tend to carry a balance, you will place more importance on the cards interest rate, and less on the payout percentage.
DO THE MATH!
When considering the merits of an offer that requires an annual fee, do a quick calculation to determine if paying the fee is worthwhile based on your expected use of the card. Take for example, a cash back credit card that pays a 1% cash bonus on all purchases and charges a $200 annual fee. If you expect to make $10,000 in purchases in a year, the annual fee of $200 will eclipse your $100 reward. If, however, you expect to make $50,000 in purchases, your reward of $500 will exceed the annual fee by $300.
Conclusion
Cash back credit cards reward you for using your card to make purchases. Your already paying higher prices everywhere you shop because retails are raising prices to help pay credit card processing fees. Using a rewards card is an easy way to help maximize your spending power.
