May 14, 2012

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.

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