Cash Back Credit Cards - Cash or Con?

Posted by Nick Niesen on October 29th, 2010

Does a cash back credit card actually pay money in the long run, or is it just another term for advanced cash? Yes, you can actually get cash back for using a cash back credit card. However, you need to carefully research and investigate all the cards available to ensure that you apply for only the best cash back credit cards. In addition, in order for your cash back profits to not be eaten up by interest charges, it is wisest to pay off your balances every month to maximize the amount of cash back rather than larger amounts of cash paid out in interest charges and account fees.

How Much Cash Will You Actually Get Back?

The actual cash back is usually a percentage of your total purchases for one year or a specified time period. Sometimes there will be an offer to double your cash back percentage over a certain time frame. You will also find other offers for higher percentages for purchases at supermarkets, drugstores and gas stations. The actual percentage of cash back varies from 0.5% to 6.0%, depending on the cash back credit card and their policy on percentage for the type of items purchased.

Interest Paid Versus Amount Of Cash Back

With cash back percentages ranging from 0.5% to 6% and some interest rates averaging 15.9% and up, you can quickly see how important it is that you are careful of the actual ratio of your cash back percentage and your interest rate charged. You should also be aware of any hidden fees that will eat up your cash back profits. Needless to say, keeping your account paid each month will also be very important in actually profiting from a cash back credit card.

Loopholes In Getting Your Cash Back

There may be loopholes in your Cash Back Credit Cards contract/rules that you need to be aware of. Careful research prior to selecting a card will help to ensure you get the best cash back credit card available. Also, being aware of these rules will help you from possibly losing cash back that you would have been entitled to otherwise.

Some cash back credit cards offer their higher percentage only up to a certain amount, for example, 2% cash back on the first $2,000 and then switch to a lower cash back percentage of 0.5%.

Returned purchases are usually ineligible for inclusion in the calculations for your cash back bonus.

Your cash back might also be affected by poor account activity, such as overdue payments, requests for longer time for repayment, suspected fraud, or returned mail. In these cases, the cash back credit card company may have the option of applying your cash back to any account balance in lieu of mailing you a check.

Accounts that have been closed, bankruptcy started, overdue payments, possible fraud activity may also have an impact on whether or not you get a cash back payment,

Finally, many cash back credit card companies also state in their contracts that they can change the relevant percentages, make changes in the cash back program itself, and even cancel/withdraw the cash back award from your credit card program by just giving you written notice. It is very important that you research thoroughly and read the fine print to get the best cash back card available.

Conclusion:

Ultimately whether or not you actually receive cash back is up to you. You are the one who needs to research and investigate which are the best cash back credit cards available. Remember that it is not only the percentage of cash they are offering you, but the interest rate they will be charging you on loans, if their interest rates can be changed, their cash back rulesdo they have loopholes to not pay you the cash back that you thought you were earning. Also, probably most important of all, you are the one who determines if you pay off your cash back credit card every month and avoid the high interest rates, additional late fees and penalties. Yes, cash back for credit cards is a real option, but ultimately it is your choices and actions that will determine if it is really cash in your pocket or a credit card companys pocket. Only you have the power to find and use correctly the best cash back credit cards for yourself.