Cash Back Credit Card Options
There are several choices for cash back credit cards that allow you to earn cash back on your regular purchases. Each card can have different reward features and fees, so understanding the various options available can help you choose the card that best suits your reward preferences and spending habits.
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History
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The first rewards credit cards appeared in the 1980s. The AT&T Universal credit card was the first to give cash rewards for purchases made with it in the form of a credit to the cardholder's phone bill, according to CreditCards.com. Discover took the concept further in 1986 when it introduced a cash back rewards program in which cardholders received cash back at the end of the year based on their purchases made. Cash back rewards programs have since expanded in scope, with more than 60 percent of credit cards in the United States offering rewards programs as an incentive for cardholders, according to CreditCards.com.
Features
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Cash back credit cards can vary in the types of rewards offered. Some cards may specify that cash will be earned back only on specific categories of purchases such as gas or groceries. Others may offer a minimum percentage of cash back for most purchases with an additional percentage for purchases that fall into specific categories or that are made through the credit card companies' affiliate shopping sites. It is also common for credit card companies to offer additional cash back for applying for a new card or to offer an introductory cash back rate that features a higher percentage of rewards for purchases made during the introductory period of your credit account.
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Cash Back Options
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There are several options available for receiving cash rewards, depending on which card you have. Credit card companies will often issue a check upon request for the amount of rewards earned or apply the amount as a deduction on the balance owed on your account. Some companies offer gift cards or merchandise that can be purchased with reward points. In many cases, rewards can also be used to pay for travel or other activities like sporting events or concerts. Donations to charity with reward points is also an option offered by several credit card companies.
Terms
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Terms will vary from card to card. There are several cash back rewards cards that offer no annual fee. Annual percentage rates (APR) typically vary anywhere between 11.99 to 22.99 percent depending on the card and the credit history of the applicant. Statement periods span one month like most other credit cards.
Considerations
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Most cash back credit cards require good to excellent credit in order to be approved. When choosing a cash back rewards card, make sure to choose a card that maximizes rewards for the types of purchases you will typically be making. Also, If you plan on keeping a balance on your card, a cash back rewards card may not be the best option because the APR offered on these cards tends to be higher than a card without rewards offered. The cash back in most cases will not outweigh the additional interest charged.
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References
- Photo Credit three credit cards image by Aleksandr Ugorenkov from Fotolia.com
