Cash back credit cards are the newest incentives from credit card companies. You make purchases and you eventually earn back a percentage of what you spent. You may receive between 1%-11% back, depending on the company. These cards also offer you a low APR and the same securities you will find with most platinum cards. That being said, you must have excellent credit in order to qualify for one of these cards. If you have a tarnished credit history or you are currently behind any payments, you may not qualify for one of these cards.
Earning Cash Back Takes A While
While the idea of earning cash back from your purchases is appealing, there are certain rules to these cards. Though you earn cash back, you may not get a chance to use it for a year or so. Many companies do not allow their customers to get the money until the anniversary of the day they signed up for the card. Even if you do stay around long enough to see that day, you may not have earned enough to get the money back. If you only use credit cards occasionally, it will take a few years before you can reap the rewards. If you plan to use your card quite often, you will have a better chance of earning enough to get money back.
Not Always Cash Back
The title “cash back” can be a little deceiving. Not all of the cards labeled “cash back credit cards” really give you any money back. Sure, some do live up to the promise but not all of them. Some credit card companies have a reward program instead. For example, for each dollar you spend, you earn a reward point. These points, when accumulated, can be used to purchase certain items. You could buy clothing or go out to dinner with a gift card, for example. You may earn points for discounts at certain stores or for travel. Each company decides which rewards will be made available for their customers. Sometimes you have to spend more than a dollar just to earn one point. Make sure you review the policies and FAQ’s before you sign up for a cash back credit card.
Only Certain Items Earn Cash Back
Some cash back credit cards make it a little harder for you to earn money back. Granted, some cards allow you to earn money on all purchases. Some, however, have stricter policies. If you get a credit card that is sponsored by a certain company, you may only be able to earn cash back at that company. For example, a credit card through a gas company may only let you earn cash back when you buy gas from them. The same may be true for a car company or toy store. Some companies may allow larger cash back percentages for their stores and only 1% back from all other purchases. Thoroughly read the policies for cash back credit cards. Make sure if you are limited to a certain company that you will make enough purchases to make the cash back credits worth your while.
By Tamara C. Jude