Cash back credit cards are generally offered to consumers with the best credit ratings, and issuers are getting more aggressive in their attempts to offer these cards to people with excellent credit histories. The more you spend with these cards the more rewards or cashback you will receive.
By sharing a percentage of the money they receive from merchants, credit card issuers encourage cardholders to put away the cash and debit cards in favor of credit cards whenever possible. In the best of situations, this is good for both parties.
The cash back credit cards are often recognizable by the names given to the cards: Citi ThankYou Card, Citi Dividend Platinum Select Visa Card, Capital One Cash Rewards, BankAmericard Cash Rewards Credit Card…
And then there is the Discover It card, which may not be obviously recognizable as a rewards card by the name, but if you know the history of Discover there should be no surprise that this card falls into the cash back category. Cash back is synonymous with the Discover brand.
How it works:
There are many rewards options available to cardholders and many different types of rewards and different systems for receiving those rewards. This is true of cash back offers also. You get money back, but how you get it varies.
Some credit cards offer standard 1% cash back on all purchases. This is simple enough to keep track of. Regardless of what you buy, a shirt at the local mall or a refrigerator at the appliance store, you will get 1% back. For every $100 you spend you earn $1 cash back.
In what has been a recent development, some cards will give you 5% cash back when you purchase specific items. Some cards will offer a standard 1% back on all purchases and then choose a group of items that will earn you 5% cash back. These purchases are often those made at grocery stores, drug stores and gas stations. Some card companies will change which items earn 5% cash back each quarter of the year. Finding and buying 5% items becomes a game of seek and find for many cardholders.
Rather than giving cash back based on 1% or 5% of the purchase, other credit cards offer rewards systems based on points. The value and uses of the points will be outlined by the company. As an example, 1000 bonus point might be equal to $5, and different items accumulate different numbers of bonus points.
Cash Back Programs:
Discover it card offers 1% cash back on all items purchased with the credit card, and some items can be purchased at a rate of 5% cash back. In addition to this, items bought from the online shopping center can receive cash back at a rate as high as 20%.
Citi ThankYou Card is one of the rewards cards that offers cash back in addition to other rewards. This card offers 1 ThankYou point for each dollar you spend. Unlike some cards, there is no limit to the number of points you can accumulate throughout the year. As a ThankYou cardholder you are also eligible for yearly bonuses based on the number of points you accumulate during the year.
Citi Dividend Platinum Select Visa Card is one of the cash back credit cards that offers 5% back on some of the items bought with the card. The 5% cash back items rotate each quarter of the year, and cardholders have to register for the new categories each quarter. The limit on cash back is $300 a year.
Given the choice of getting cash back or not getting cash back, the correct choice seems simple. However, all cash back credit cards are not the same. If a cash back credit card gives you 1% cash back on all purchases, but charges you a higher APR than other cards then it may not be a good deal.
In this scenario, any savings gained through the rewards program might ultimately be used to pay interest on purchases. In which case, there is no advantage for the cardholder. Also some cash back programs have limitations that make it more difficult for consumers to take advantage of rewards.
As a rule, if you tend to carry over a balance from month to month then cash back credit cards are not going to earn you as much money; yet it will for someone who pays off the balance each month. To choose the best cashback credit card offer, read the fine print. Some offers expire after a specified period while some limit the amount of cash back a customer can earn.