What is a Cash Back credit card?
A cash back credit card gives credit card users a rebate every time they use their card to make a purchase. We will examine cash back credit cards to determine if a card may be right for you.
How Cash Back Cards Work
Credit card companies charge merchants a processing fee each time you swipe your card. Some of this fee is used to pay for cash back rewards, which are often equal to 1% of a purchase price. Thus, one who spends $500 per month with his or her credit card would receive $5 in cash back rewards.
The benefits do not stop at cash back offers for regular purchases. In fact, some cards provide more rewards for other types of spending. Often, restaurant purchases, gasoline paid for with a credit card, as well as other entertainment expenditures, are subsidized with higher rewards. The Chase Freedom card, for example, gives borrowers a 5% cash back benefit for every gallon of gas purchased and paid for with the card.
Cash Back for Online Shopping
Credit card companies also offer cash back rewards for purchases made online. Through your online card management backend, you can make purchases at one of hundreds of online retailers to receive an additional 1-30% cash back with any purchase you make with your card. This is how so many people accumulate thousands of dollars in annual rewards - simply log-in, click through to a particular site, and pay with your card. The benefits are automatically added to your cash back rewards balance.
Making Cash Back Redemptions
Typically, cash back rewards can be redeemed for anything from statement credits to a paper check or gift cards to your favorite eateries and retailers. A statement credit is one of the most common types of rewards, as the reward balance is immediately subtracted from your total balance. Thus, if you have a $500 credit card balance, and make redemption for a $100 statement credit, your actual balance is now only $400. Consider it a free payment toward your card balance!
