Best Cash Back Credit Card to Get Rewards for Your Purchases

Cash back is one of the most appreciated types of credit card rewards. The idea of receiving money back every time you make a purchase is so popular among Americans that many of them hold at least one, if not several cash back cards. However, these credit cards differ in the offers they include, so finding the card with the best offers is important in order to fully enjoy the benefits of this type of reward cards. While, some time ago, credit card issuers offered as much as 5% of kickback on all purchases, this is no longer the case. Now, the cash back offers are around 1%-2%, but special increased rewards for different purchases can also be received.

Cash back card offers differ in many ways. There are two major point systems used: flat rate system or a tiered system. The first one has flat fees for every transaction you make, while the tiered system implies there are point tiers, and the fees differ depending on how much you spend. The latter type encourages spending a lot, so it is more appropriate for people who make large purchases every month.

Cash back cards also have different benefit options – it can be even more complicated than Air miles credit cards options. Some of them offer the same return percent for all the purchases, all year long. Some offer higher cash back percentages for certain purchases, for example gasoline, groceries, or movie tickets. Also, cardholders can enjoy higher return percentage for different categories throughout the year, depending on the season.

In order to apply for a cash back card, you usually need good to excellent credit score (but there are still good exceptions left on the market). Card issuers vary in their credit score requirements, so this is another aspect you must take into consideration. Some ask for a credit score around 650, while others might ask for an even better one. No matter the type of cash back card you choose, it is extremely important to pay your bills on time and avoid interest charges, or else you will not be able to fully beneficiate from cash back offers. But there are still several offers for those whose credit score is not so good, or who has not created a credit history yet.

So, what makes a cash back credit card the most beneficial? First, you should choose a card with no annual fees and, preferably, low APR. Then, you have to check if the card has any caps on rewards. These caps limit the amount of return you can get back every month. Usually, these amounts are quite high, but big spenders should make their calculations before choosing a card that has caps on rewards. If you spend over the set limit, you will not receive any more rewards that month, which is why it is better to look for cards that do not have any restrictions of that kind. Also, your accumulated cash back benefit might expire if you do not use your card regularly.

Most cards offer a standard kick back percent of 1% for all types of purchases, but they might have a higher percent for certain categories. For example, the True Earnings Card from Costco and American Express has different cash back rewards on gasoline, travel and restaurants. If you spend a lot on gasoline or on restaurants, you should choose a card that offers a 2%, 3% or even 5% cash back on these categories.

Some cards have revolving offers, meaning that you can get higher cash back percentages for categories that rotate throughout the year. For example, three months a year you receive 5% cash back on gasoline, the next three months you receive 5% on theaters, and so on. Such a card is the Chase Freedom Visa. Another card with rotating categories is the Discover More Card that offers 5% cash back on different types of purchases throughout the year. It also has and introductory offer of 0% on balance transfers that lasts for as long as 18 months.

Most cards have offers that target specific categories of people. The Discover Open Road card is great for people who travel a lot, because it offers high cash back on gasoline and restaurants. Members of the Pentagon Federal Credit Union can enjoy special offers with the PenFed Visa Platinum Cash Back Rewards Card.

Another interesting offer some cards (like the Discover Motiva) include is crediting 5% of your interest charges to your account, if you make your payments on time. This is a great way of reducing the interest cost you have, and it is also an intelligent way of stimulating you to pay your bills on time. Other cards offer cash bonuses if you spend a certain amount of money in a limited period of time (for example, $1000 in the first three months).

As you can see, cash back credit cards have different advantages, so it might be a good idea to apply for more cards, in order to enjoy the different benefits each and every one of them offers. But if you want to stick to a single card, remember that the best credit card is one that suits your lifestyle and shopping needs.

Preapproved Credit Cards for Dummies

It’s like Christmas in the mail. You open your mailbox and there, right in front of you, are preapproved card offers just awaiting your response. Are they too good to be true? Banks just don’t approve people in advance to get a line of credit, do they?  In a few short minutes you’ll know the answers to these and many more questions you may have.

What Are Pre Approved Credit Card Offers?

Preapproved credit cards are basically the offers to apply for a particular credit card that you receive in the mail.  Because banks or credit unions have a specific niche in mind when they send these out, chances are you fell into their target audience.  They will do analysis on customer base, coming up with data on which people are more likely to establish a line of credit with their company and which demographics are lacking.

For instance, let’s say that a credit card company did some market research and found out that 75% of their customers used their credit cards to shop for pet food and supplies.  In order to expand further into that market, the company would purchase a mailing list from a source like a pet lover’s magazine or members of PETA.  Figuring that these people would love pets and that their credit card holders love pets, the company would then send out pre approved credit card letters to all on that list.

How Do Preapproved Credit Cards Work?

The term itself is a bit misleading.  It’s not that you are automatically approved, it’s just that you’ve fallen into the company’s marketing crosshairs and have met a minimum requirement they’ve set.  Typically, this requirement is something like a certain credit score or initial deposit or some demographic indicators.

After a person receives a preapproved card offer he\she still needs to fill the application that is enclosed in the envelope and send it back to the bank. To your surprise the bank still have an option to decline your application despite the fact that you were preapproved.

To put it quite simply, the only thing you’ve really skipped is the choosing a credit card process.  The card is pre approved in a manner of speaking, but not in the manner in which people often believe.

Are these Offers So Good?

Besides the ease that comes with the credit card offer coming directly to you, preapproved credit cards can be good for a number of reasons:

• They are good for building a credit score.  If you haven’t had any credit before or are trying to improve your score, they can be a good way to do so by using it responsibly. Sometimes pre approved offers targeted specifically for bad or fair credit come into your mailbox right after your application was declined by another bank.
• They can have the same variety of advantages as all other credit cards – reward incentives, low interest rates, high limits, zero percent interest or just low APR, cash back programs.

In fact, one of the only drawbacks to preapproved credit cards is that it was not chosen by you – so it is always good to shop around to check if there are any better options for you in the market.  Since the cards still require an application and you can get a decline, you are not putting yourself at more risk applying for another card, if you chose it according to your credit score.

Identity theft in case of pre approved credit cards is not more likely than usual, because the application process goes in a regular way, and your card will be sent to you by mail not activated.

Why I’ m not getting Credit Card offering letters?

If you are not currently receiving offers in the mail, there are a few steps you can take to ensure that you’ll receive any offers you want.

• Obtain a credit rating.  You can do so with the government for free once per year or you can sign up with a company that tells you your credit score.
• Check the credit report for any erroneous charges.
• Dispute these charges with the three major credit unions.  They must remove them if they can’t prove them.  This will make you more likely to receive good offers.
• Visit the Opt Out Prescreen site Optoutprescreen.com, send and “opt in” request to receive offers and fill out any information required.
• Contact your bank or credit union and ask if they have any offers available that you may qualify for.

I Got Denied, Now What?

You have to be careful with credit card denials as they show up on your credit score.  If you gain too many of these negative marks against your credit rating, other companies will be more likely to deny your applications in the future.

To prevent this from happening, after one or two denials you should go through the steps mentioned in the section above about checking your credit score and then work on building better credit.

How Can I Increase My Credit Score?

There are a number of ways to improve your credit score:

• Be responsible with your credit cards; don’t overuse them but don’t let them rust
• Pay all bills on time
• Setup payment reminders
• Don’t open new accounts rapidly, but rather slowly and responsibly
• Pay down your debt
• Keep all balances low
• Purchase something with credit that you can pay down right away and then do so
• Visit a credit counselor

Zero Percent Credit Cards – Too Good To Be True?

In today’s modern economy, many consumers are finding their attention drawn to the attractive prospect of zero interest credit card offers. Traditionally, credit card debt has proven to be one of the more costly types of finance for the average household, with interest rates ranging from introductory low rates to standard rates into the 30 percent plus range. More and more consumers find themselves looking for ways to ease their credit card debt commitments, and zero APR credit cards can often seem like the ideal solution. However, there are many things to consider before you enter into any financial arrangement, and these offers are no different.

What are Zero Percent Credit Cards?

Most credit cards advertise their costs in terms of APR, or annual percentage rate. Unlike the name suggests, APR is not a direct reflection of annual costs, but it is a good indicator of how costly different credit cards can be. 0% interest credit cards, are credit cards that offer a special interest rate for consumers who transfer a balance on their existing credit card over to a new card from a new provider. Many providers also offer 0% rates on purchases on these new cards. The interest free introductory period on these credit cards varies, but is usually between 6 months and 24 months. For example, the Discover More card offers 0% APR on both balance transfers and purchases for 15 months from the date you open the account.

Benefits of 0% interest Credit Cards

The clue is in the name. An interest free card allows you to access a line of credit that doesn’t cost you anything. Let’s take the Discover More credit card mentioned above as an example. If you wanted to buy new bedroom furniture for your house, and you had recently been issued with a Discover More 0% credit card, you know that you have an interest free period of 15 months on any purchases you make on your card. If you spend $2500 on furniture, you know that you can make repayments to your card of $167 per month for 15 months. By the time your introductory period is finished, you will have paid for your furniture without paying any interest at all.

Similarly, if you are with a different credit card provider and currently have an existing balance, you can transfer that balance to a no interest credit card and make structured repayments for the introductory period. This allows you to repay your debt much more quickly, as with typical standard APR rates of roughly 20%, credit card repayments often seem like fighting an uphill battle.

Downsides of no interest  Credit Cards

Unfortunately, there are downsides to interest free credit cards, and many consumers do not take the time to properly research the terms and conditions of these offers. Far from saving money; this can lead to consumers paying even more in interest and charges than they might have been paying with a previous credit card provider.

There are several common downsides to zero interest credit cards.

First of all, nearly all balance transfers to a zero interest credit card are subject to a transfer fee – usually 3%. While this does not seem excessive, it still much be considered. Someone transferring a balance of $5000 will be subject to a once of cost of $150 for the transfer. These costs must be factored in.

Secondly, these no interest credit cards often only remain interest free as long as you don’t miss a single payment. With most of these offers, a single missed or late payment will result in the interest on both purchases and balance transfers revert to the standard typical APR. If we look back at our Discover More card, we can see exactly how this will work. In the terms and conditions, Discover states that not only will a late payment cause the introductory period to end permanently, but that a special “Penalty APR” will apply indefinitely. This penalty APR is higher again than the standard APR. Furthermore, if you miss another payment, Discover reserves the right to add up to another 5% on top of your applicable APR, and can do so for each subsequent late payment. Quite quickly, you can see how no interest credit card can turn into an extremely high interest credit card.

Why Do Banks Offer Zero Percent Credit Cards?

These credit cards still make money for credit card providers. Every time you use your credit card in a store or online, the retailer must pay a charge to the credit card provider. Even when you’re not paying interest, your credit card provider is making money on your card usage – that’s how credit cards work. As well as this, many consumers who have these credit cards are more likely to use their card more frequently, thus increasing the service fees paid by retailers. Ultimately, zero interest credit card providers offer these special rates because they want your business, and are confident of making their money back in the long term. Many people lack the willpower to resist the lure of APR free purchases, and often reach the end of their introductory period with a higher balance than when they originally opened the account.

Should I Apply for such an offer?

Not without doing your homework first. Any credit card offer comes with terms and conditions, and taking a couple of days to fully research the different options available to you can save you both time and money in the long run. Additionally, you should consider your credit score before submitting application; your score often can influence how high your APR will be.

Most importantly, what you need to consider is whether a zero percent credit card is right for you. Many people avail and use such credit card offers to dramatically reduce their cost of credit. Just as many fall foul of the terms and conditions attached to these interest free offers. You need to ask yourself whether you have both the willpower, and the affordability, to manage a zero percent credit card offer. If you do, then you could end up saving yourself a lot of money.

How do credit cards work?

Today credit cards became the essential and the most common way to perform money transactions between a customer and a merchant, but not all of the everyday credit cards users know how exactly it works from the inside.

A credit card is issued by the credit union or a bank for a particular individual. Credit card is connected to a revolving account and opens this person an access to a credit line with particular limit which is known as a credit limit. The size of the limit is usually determined by the type of the credit card, the person’s credit score and credit history. Credit limit is not a constant value – it is first defined when opening a credit card, but then it can be reviewed by the bank periodically based on the changes in credit score and the length of the relationships with the client.

Credit card is issued to be used in one of the leading multinational payment systems – Visa, Master Card, American Express, Discover, or a smaller national one. The actual plastic card will have a logo of the supported payment system on its face. Credit card processing companies provide services for merchants, from a small souvenir shop up to a big retailer, to enable them to accept credit cards of the international payment systems with an option to accept local payment systems (what is needed for example in a tourist areas).

Valid credit card should have a 16 digit credit card number, card holders name and valid date embossed on the face side. The reverse side has a CVV code that is used to confirm the possession of the credit card by the person who makes payments online (in “card not present” transactions).

How it works for the cardholder

Your credit card has a starting balance that is equal to zero – that means you do not have any debt. The highest amount of money you can use for spending is your available credit that is equal to credit limit. When you pay for a purchase or a service with a credit card, the transaction is processed by the processing company and your bank sends money to the merchant account. Your balance increases by the amount paid, and your available credit decreases by the same amount.  For example, you had a $1000 credit limit and 0 balance when you opened a credit card account. After you bought a $100 iPhone4, your available credit becomes $900 and your balance is now $100.

On the next month you will receive a credit card statement with all your spendings in the last month. Statement includes information about your previous balance, all transactions in the last month, fees and interest owed to a bank for the last month, your current balance and available credit.

Previous Balance – your Payments and Credits + Fees and Interest Charged + Transactions = New Balance

For our example shown above it will be: $0 –$0 + $0 + $100=$100

You should pay your new balance in full or at least do the minimum payment (also shown in the statement) towards to it till the due date– usually due date is 20-30 days after the billing. If you do not have a debt on your credit card (that means your previous balance is zero) you have a so called grace period before the due date when the interest will not be charged. After the end of the grace period bank starts to charge you the interest on your new balance. If you already have a balance, a new debt will be just added to your balance and the interest will be calculated on your increased debt. It is also a good habit to read your statement carefully to check if all the claimed transactions are real and no fraud transactions are included there.

If in the current month you spend all your available credit, you will not be able to use your credit card until you make a payment towards your balance that will unlock available credit. If you use your credit card regularly and usually do all the payments in time, the bank reviews your credit limit periodically (1-2 times a year) and can increase it. Average credit limit on the customer’s credit cards in the US is about $10 000, but for the new customer with not an excellent credit, a bank can make a starting credit limit of only $500-$1000.

If you fail to do a minimum payment (which is in average about 1% of the balance + all fees and interest and no less than $15-$35) on the due date you’re in trouble. A bank adds a late payment fee to your balance, information about late payment will be sent to credit agencies, your bank can raise your APR or even close your account.

Now the good news – credit cards often offer rewards in a form of cash back, flexible rewards or air miles options. Cash back is the option when the bank sends a certain percentage (usually 1-2%) of your monthly purchases of particular goods or services (e.g. all travel spendings or purchases in participating retailers) back to your account. Flexible rewards instead of cash back award you virtual points that you can later combine and spend in a selection of participating businesses. Air mile cards are often issued in partnerships with air carriers and award you a certain amount of virtual air miles for every dollar spend with your credit card. After you collect enough air miles you can exchange them to the air tickets according to the conversion rate.

Another good option for most credit cards on the US market is the benefits they offer e.g. rental car insurance and travel medical insurance. These options are free of charge and provide a customer with secondary car insurance when renting a car or a basic medical insurance when travelling abroad. Best credit cards for high earners offer additional benefits like 24/7 concierge service and personal travel agent.

How it works for the merchant

Merchants are provided with electronic devices to read credit cards – POS (Point of sales) and a service to accept electronic payments from the card holder’s account to the merchant bank account. Another old-fashioned way to receive credit card payments for a merchant is making a slip of a credit card with a valid credit card holder’s signature on the bill for the service or a purchase. Later these bills with slips are processed by the processing company and the money is transferred from credit card holder account to a merchant account. Today many alternative payment systems are offering convenient ways to collect payments and accept credit cards – for example PayPal, Square, Google Wallet and others. All these payment systems are competing for a share of the purchase or a service price that is collected from the merchant – a % of commission that stays for the system when the money is transferred from the card holder account to a merchant account. Average commission for a credit card processing for a “card is present” transactions (e.g. retail shop) is about 2%. It is even higher for businesses that use “card not present” transactions (online shop) and can reach 2.5%-3%. Simply put – all the goods and services are 2-3% more expensive because all the customers want to use credit cards. Because of the complicated commissions structure that includes a flat transaction fee and the % of the transaction, many small businesses do not accept credit cards for purchases less than a curtain amount (usually $3-$10). Some small businesses even use it as a selling point that they can offer lower prices because they do not accept credit cards.

Credit cards offer us a lot of convenience in our everyday life, but as any technology it involves certain risks for the customers who do not follow or just do not know the rules. First thing to start with a new credit card should be reading your credit card terms and conditions along with explanations of benefits – let it be your credit card bible or a bedside reading whatever is more important for you.

Top Best Miles Credit Cards

If you are looking for a credit card that will add extra miles to the frequent flayer program you participate in, you definitely need to pick one of the miles credit cards. If you don’t participate in any airline program it is not a big deal, because a lot of credit cards offer you flexible miles that can be redeemed for a flight, car rental or other travel merchandise.

Normally you get 1 mile for each dollar you spend and you get extra miles for shopping at selected online stores. Some miles credit cards also offer you huge sign up bonus that can be from half to the whole price of domestic flight. Frequent flyers credit cards seem to be very attractive especially if you travel a lot. But you should not forget about the annual fee that is charged by some issuers.

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Top Best Interest Free Credit Cards

If you are shopping around for a new credit card you should definitely pay attention to credit cards with 0% interest. Though such generous offers last for introductory period only zero percent credit cards are excellent way to save some money. 0 APR cards attract a lot of new customers to banks but unfortunately they are available for people with good credit score only.

When you apply for 0% interest credit cards, you should pay attention at the duration of introductory period and regular APR. You should also evaluate the annual fee and rewards program. If you are going to transfer the balance to the new card check the rates and fees for balance transfer cause they can be different from purchase APR.

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