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Cash Back & Rewards Credit Cards

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The new trend in credit cards, "cash back" and "reward cards", have become very popular over the last few years. Many banks are now issuing both cash back and reward cards with a variety of options, requirements, and reward rates. Cash back cards pay cash rebates when they are used for everyday purchases. The rebate can come in a check or be applied to your account as a credit. Depending upon spending habits cardholders can receive hundreds of dollars in cash at the end of the year. Rewards cards typically accumulate "points" that can be redeemed or used to purchase items at specific merchandisers.

Credit card reward programs usually offer better rewards for specific purchases from grocery stores, drugstores, or for gas. Many of them offer a lower reward rate for other types of purchases. Credit card users who pay off their balance each month are good candidates for these cards. If you do not pay off your balance each month the interest paid on outstanding balances will outweigh the reward. You have a choice and it makes sense to receive something back when you use credit. A consumer who uses credit frequently will see the rewards and cash add up quickly.

Cash Back Rewards Cards

Cash is accepted everywhere.
The better cards offer 5% on Gas, Grocery, and Drugstore purchases.
Most cards give 1%-2% on all purchases
Cash back can only be used when a check is issued.
Often have no annual fees.

Rewards Points Cards

Usually give a higher value back for your purchases.
Use of card in merchant network can get as much as 5% value back and at gas, grocery and drug stores when redeeming reward points.
Other merchants you'll get 1 reward point for every $1 spent.
May require the accumulation of a minimum of rewards points before redemption.
Reward points usually more available for use.
Reward points can only be redeemed from specific merchants or for certain merchandise.
No limits on reward earnings.
Some cards are flexible with an option of cash or points at redemption.
Often have no annual fees.

When reading the fine print of the terms of the credit card, compare the following

APR- Fixed or Variable-is it an introductory rate?
Is there a Cap on amount of cash or points you can accumulate? If there is you can always have two reward cards and use both.
Do points or cash expire?
Is there a grace period? How long?
What are the penalties for late or missing payments and default rates?
Is the reward merchandise network any good. Do you like the products?
What are the balance transfer rates and the terms?
What is the cash advance rate?
Are rewards two-tiered? Do rewards begin at one level and after you have spent a certain amount of money rise to the higher level?
How easy is it to access your cash or use your accumulated points?

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