Cash Rewards Credit Cards are a great way to use your everyday spending to your advantage and although some of the cash back programs have become exceedingly complicated which makes deciding on the right card for your situation a bit confusing, they are certainly worth your time to look into.
The main considerations when it comes to cash rewards or cash back credit cards are where and how the cash back programs are operated, the percentage rate of spending to cash back which are usually around the 1% mark and also what the annual rate of interest is on any outstanding balances.
The cash back programs work by taking a percentage of the commission paid to either the bank or merchant services provider each time you make a purchase and giving that amount back to you, either in a dollar amount, air miles points or card holder points.
To entice more customers into their cash rewards programs the major card providers have raised the percentage of the cash back amount, typically around the 5% mark for purchases made at selected locations which can include grocery stores, pharmacies and gas stations. This increase is usually for a period of six months and after this time the percentage drops back to around one or two percent depending on the particular program.
As always it is important to pay the balance owing on the card when it becomes due as the interest paid on outstanding balances may well exceed the value of any cash back received. If you are finding that it is hard to clear the balance each month it would be a good idea to take a closer look at your spending or change to a credit card that has a lower annual percentage rate and this may mean dropping out of any cash rewards programs.
To take full advantage of your cash back credit card it is a wise move to pay all of your regular bills with the card. Naturally this takes a little bit of monitoring of your spending as you don’t want to be in the situation of facing large interest rate charges if you cannot clear the balance at the end of the month, but by paying things like your telephone bill or electricity bill or even your mortgage payments with the card you are increasing the amount of cash back that you will receive.
Another point to consider is if you are shopping around for a particular item do your best to buy from the supplier that will give you the most cash back. For example you can shop on the internet and locally to see who will give you the best deal on your “points” before making a decision on where you will buy it from. It may seem trivial to do this but think of it this way, you are more than likely going to spend that money anyway so why not take full advantage of the cash back program. Over a number of purchases this amount can really add up!