Cash Back Credit Cards Guide

Posted by Nick Niesen on October 29th, 2010

Cash back credit cards are becoming more and more popular these days owing to its attractive cash back option. Cash back reward programs offers a flat percentage rate, generally 1% of purchases, rebated back to the customer in the form of a check at the end of a statement credit or at the end of the year.

Several merchants as well as established department stores offer cash back credit cards to entice its regular customers and new customers to encourage shopping at their stores by charging the purchases with their respective cash back credit cards. The customers who utilize this scheme will get the cash back reward for the total amount of purchases done at the end of a billing statement.

Most of the cash back credit card issuers create their own cash back credit programs. The two most popular types of cash back credit card programs will provide the customers with a credit to their balance card amount whenever the customer makes a purchase with the card. However, the original amount of the cash back reward a customer obtains will depend on the original terms and conditions of the cash back credit card program. This varies from one card issuer to the other and the amount of total purchases made by a customer using the card.

There are several points you need to consider before applying for a cash back credit card. The first step is to determine your spending habits and calculate how much credit is needed for you every month. If you are a frequent shopper and you buy a lot of products from a particular store which offers a cash back program, then obviously, it is a good idea to obtain a cash back credit card.

However, all credit cards offering cash back rewards are not limited to a particular shop. There are several credit card issuers who provide an ordinary MasterCard or Visa credit card which the customers can use at any shop which accepts payments, providing cash back reward offers for goods or services purchased using the credit card. If you are using these types of cash back credit cards, you need not purchase from one specific shop all the time. You can use these cards to purchase products from any store which accepts these credit cards.

Before you apply for any of the cash back credit cards, read the terms and conditions of the card carefully, paying particular attention to any annual fees or hidden charges that you might need to pay for obtaining and using these cards. To obtain cash back benefits, some credit card issuers will require customers to carry forward a card balance from one month to the next. However, often times these types of card offers are not useful as cardholders end up to paying more in higher interest rate charges just for keeping a balance on the card.

So, before applying for any cash back credit card it is a good idea to estimate how much you will spend each month and calculate the cash back benefit you will receive every year. Now, subtract the amount of the annual membership or total fees you will need to pay to obtain the card. The result, if positive, is the net benefit you obtain by using the cash back credit card. If the result is negative, you need to rethink your motivation for needing this type of card. Keep in mind that the best cash back credit card is the one which will help you to secure the most net benefit in cash back rewards less any fees or surcharges that will be incurred.