Comparison of Cash Back Credit Cards

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Cash-back credit cards give you an opportunity to earn rebates on purchases. Some people use them to pay bills and rent or to buy groceries, airline tickets and other items. Cash-back cards can be to your advantage if they are used properly.

Types

Most major banks and credit-card providers offer some type of cash-back card. Unlike airline-miles cards or other reward cards, cash-back cards usually carry no annual fee or cap on the amount you can earn. Some cards may cap cash back in terms of percentage of purchase though not on the total you can earn.

Promotion

Almost every major bank that offers cash-back cards offers an introductory annual percentage rate of 0%. The rate usually is good for six months to a year, after which the rate will jump to normal. The introductory rates are given to attract customers.

Function

A cash-back credit card gives you a rebate as a percentage of the amount you spend with the card. The percentage varies among card providers, who sometimes offer promotions in which specific categories of purchases--such as groceries or clothing--carry a higher percentage for cash back.

Benefits

A cash-back card can be beneficial if you pay your credit-card bill in full every month because you receive a percentage back without other costs associated with the purchase. In effect, you get a discount on everything you buy with the card. Some cards triple your cash back when you purchase directly from the card provider.

Warnings

Don't be tempted to use a cash-back credit card to make purchases you can't afford. If you are not able to pay off the card balance every month, you may get hit with an interest fee higher than the amount of your cash back. Generally, your cash-back reward will be 3% or lower. But your APR usually will be 11% or higher. You may lose your cash-back reward if you make a late payment or if go over your credit line. Read the terms and conditions of your card.

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