Credit Cards That Pay You Back

By: Richard Greenwood

Cashback credit cards are popular to many credit card holders because they are forthright and simple to use: you spend on your credit card, and you are credited for the corresponding cash rewards. This is easier for you to manage because you don't need to keep tracking the number of rewards points you are accumulating; besides, the usual credit card rewards points limit the options that you can redeem with your accumulated points. With cashback credit cards, you can use you cash rewards for more purposes.

Applying for Cashback Credit Cards

When you're applying for cashback credit cards there are some factors to look for (and watch for). Some of these are:

* Rate of cashback: The standard method for rewards is that your monthly statement is credited with a set percentage of your total spend in the billing period. The cashback offers vary among the various credit card companies and often among the range of each individual issuer. The really good deals available on the market are willing to refund you up to 5 per cent of what you spend. The most common schemes award between 0.5% and 1% for every dollar you spend. This can be significant: if you spend an average of $1000 a month on your credit card, 1% of that is $10 or $120 annually. Naturally you want the highest cashback rate possible but you need to calculate your potential cashback compared with other factors such as annual fees to see which will provide the maximum benefit.

* Timing of cashack credit: The usual practice is to calculate the amount of cashback you have earned on the anniversary date of your account; the method of paying it back to you is by crediting your account. There are cashback credit cards however, that credit your account on a more frequent basis, even monthly.

* Annual fee: Expect to pay a higher annual fee for a cashback credit card than a card with no rewards scheme. In a way, this is how the credit card issuer will recover the cost of administering this credit card rewards scheme. Compare credit cards and see which one gives you the best advantage. Going by the above case study, if you are likely to earn $120 per annum in cashback rewards you will still come out on top if the annual fee was $69.

* Ceiling on cashback: There are cashback credit cards that limit how much you can earn to a certain amount, say, $10. This would be fine if your average spending rarely exceeds $1000 a month, but if it is significantly higher then you will prefer a card that does not put a ceiling or, at least sets a higher limit.

There are some credit card rewards programs that allow you to convert rewards points into cashback credits. In this case, they may set a minimum number of rewards points to be redeemed, for example, 4000 rewards points to be equivalent to $20.

* Flexibility: Some cashback cards limit the cashback credits to specific items of purchase, e.g. food purchases or petrol. You don't want them; you want those cards that give credit on whatever you buy.

Maximising Your Cashback Credit Card:

The first condition to really maximise the benefits of cashback credit cards is to pay your account in full every month. If you don't, the interest accrued on unpaid balances will quickly wipe out your cashback gains. In some cashback credit cards, the corresponding purchases will no longer be eligible to earn cashback. If you can't meet this requirement, then you may not be suited to a cashback credit card.

For some cashback credit cards, you may get extra cashback points if you use your credit card at certain stores and outlets which have made arrangements with the credit card company as participating sponsors. Look for these opportunities to earn extra cashback credits.

The best way to get the most cashback credits is to charge all spending on your credit card. This means charging all your regular bills, groceries, petrol, clothes, a holiday — everything. By doing this, your cashback will build up very fast.

Article Source: http://www.articlecafe.net

Article on rewards credit cards by Richard Greenwood, Director of click4credit.com.au - part of the Click4Group of websites which compare financial products including cards and saving accounts in Australia.

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