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Cash Back Credit Cards
Selecting the Best Cash Back Credit Card

The rewards you'll receive by using your cash back credit card are based on what you spend, so they're not "fast tracks to easy money."

Credit cards allow you to shop without having to carry cash, buy the items you need in an emergency and splurge on special things even when pay day is still a few days away. And although you'll pay for this convenience either in the form of annual fees, interest rates or both, cash back credit cards can actually help offset the cost of using your card.

However, cash reward credit cards can provide you with some real benefits. So if you're ready to find a card that gives you something in return, think about how you use your credit card and do some comparison shopping. Here are a few questions to consider that'll help you make an informed decision:

  • Which types of purchases will earn the reward? Some cash reward credit cards only allow you to earn cash back on internet purchases, while others cast a wider retail net. By reading the terms & conditions you can find out what types of purchases will help you earn cash back then you can choose the right card based on your shopping habits.

  • What percentage of your purchases will be returned to you? The percentage of money back you can receive on qualifying purchases is typically 1%. However, depending on your card, that percentage could vary so find out what percentage you can expect to receive before choosing a card.

  • How are the rewards received? Depending upon the terms your contract, your cash back rewards may be received in the form of a check or a credit on your account.

  • Does the cash reward credit card carry an annual fee? If the card does carry an annual fee and your spending is light, your rewards value may not exceed the annual card fee. If this is the case, it may be wiser to apply for a different, no-annual-fee rewards credit card.

  • Does the card let you choose cash back or rewards? Some credit cards give you the option of selecting cash back or rewards for goods and services, depending on your preference.

When you're shopping for a cash back credit card, don't overlook the interest rate. Many cash reward credit cards offer competitive rates plus the perks of getting cash back-so you can get the spending power you need plus the benefits you want.

Get the Full Potential from your Cash Back Credit Card

With a little bit of planning you can go a long way in maximizing the earnings you accumulate on your cash back credit card. Here are some tips to get you started:

  • Most credit cards offer double cash back rewards when you use your credit card to pay your phone bills, mortgage, cable bills and fill up your gas tank.

  • Get a card for all members in the household responsible for making purchases so you earn cash back on all purchases.

  • Search for cards on that allow you to leverage your spending. Many cards, for example, offer a 5% cash back on purchases made in supermarkets, drug stores, and gas stations and 1% on all purchases.

If you run a small business, look into getting a business card that will give you 5% cash back on such qualifying purchases as computers and electronics, office supplies, phone usage, and ground transportation, (i.e. cab, limousines, train, or bus). If you have employees who make purchases for the business, get a card issued for them as well. Business cards have the added advantage that they typically don’t have a ceiling on how much cash back you can earn.

Some cards offer 5% cash back on other types of purchases as well, e.g. in bookstores, restaurants, and home improvement stores. If you plan to remodel your home, for example, a card that gives you 5% cash back on purchases in home improvement stores can produce significant savings over time.

Be sure that you pay off your balance in full on your cash back card each month. Otherwise you end up paying more in interest than you earn in cash back rewards. If you need to carry a balance, look for a card that offers the lowest possible interest rate instead.

If possible, keep two cards, one with cash back benefits and one with a low interest rate. Use the cash back card for expenditures that offer a high cash back rate, such as purchases in supermarkets, and pay that card off every month. Use the other card for expenses that you plan to pay off over time.

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