You want the best cash back credit cards. You hear the words “cash back” and it sounds great, doesn’t it? Money given back to you. Sometimes we call these rebate credit cards. There was even one bank doing commercials in early 2014 where they implied that their cash back rewards were so good that people were trying to find ways to spend money on their credit cards just to get the cash back rewards. Well, that’s just silly, but the idea is sound, that if you use credit cards responsibly cash back can be a great reward. But what does it really mean?
There are at least four different ways that the best cash back credit cards programs work. One thing they all have in common is that as you charge on your credit card you accumulate points, often one point for each dollar that you charge. Then, you are given a “reward” of a certain percentage of what you have spent. This amount is generally somewhere between 1% and 5%.
Here are the four basic ways that you can get your money:
This one is rare in our electronic age, but originally cash back cards were just that – you were sent a check for the money you had earned. Today, few banks really send out paper checks, but hey, anything is possible.
It is more common to have cash earned deposited directly into your bank account. Sometimes, this is done automatically, every month. Paypal does this with their card. Other times you have to request that the money be deposited to you. It just sits in your account, building, until you request a transfer, or forget about it.
Sometimes, you can apply the rebates you have earned towards your card balance. And of course there are other programs where you can buy things or redeem the points for airline tickets.
Some cards will give you the option to use your money directly at some vendor. For example, if you earn cash back on your Discover card you can apply those funds directly when you make purchases at Amazon. It’s easy, just add your Discover as a method of payment and then click the button when you checkout.
There are 3 potential “catches” to be aware of when it comes to cash back if you want to make money on credit card rewards, even with the best cash back credit cards:
Some cash back programs require you to sign up – just owning the card doesn’t immediately get you earning. Some you sign up for just once, others you have to sign up for every so often, especially if they offer special bonus offers.
With some accounts your awards might start adding up, but no one at the card company ever really tells you how to access them. It’s up to you to surf their site or call and ask to learn how to take advantage of the points that you earned.
Credit card rewards can offer you value, but don’t feel bad for the credit card company – they count on still making money off you through interest, fees, and fees paid to them by the places where you shop.
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