Cash return credit cards, as the name implies, give you money in the form of a cash refund on a percentage of your purchases. For each item you charge to your cards, you’ll collect cash rewards.
The normal cash back credit card will provide a money rebate of around 1%. Several cards, like the Discover More Card, American Express Blue Card, or the Chase Freedom Card offer higher cash back percentages, depending on how you utilize the card.
Using Cash Back Credit Cards Properly
Cash back credit card can save you a lot of money when carefully used, but they are best suited to people who do not carry large balances from month to month. Cash back credit cards are not curiosity free. Most have a minimum interest rate of 10%, and several have actually higher interest rates. If you’re one to keep a balance on your card, then the 1% in cash returns you’ll get won’t help you much since you’ll certainly be paying much more in interest costs.
If you fall into this category, then the rewards points card like an airlines miles credit card may be the better choice. If, on the other hand, you pay off your balance at the end of every month, then a cash back charge card may work wonders for you.
Where Does the Money Come From?
All businesses exist to make a profit. This holds true regarding companies as well. Credit card companies use guarantees of cash rebates to attract new customers, but you can be sure they’re not suffering financially by offering this perk. These companies offer perks because there are so many credit cards on the market and competitors for customers is fierce. Each corporation wants to do something to stand out from its competitors, and offering cash back rebates is one way to do this.
These companies are on the proper track. According to the JD Power and Associates 2007 Credit Card Satisfaction Research benefits and features are the the very first thing customers consider when selecting a charge card. None of the money you receive from your discounts cut into the companies’ profits. The cash you get back on your credit card purchases actually comes from the merchants of the stores you shop.
When retailers choose to accept credit card payments, they will pay a percentage of the transaction amount to their merchant services provider, also known as a MSP. MSPs can be a bank, Internet. Many companies that issue cards share this commission along with you, the cardholder, in the form of money back, prize points or airline miles.
Greatest Return Cash Back Credit Cards
One of the credit cards with the highest cash back rebate program is the Blue Cash from United states Express. It was one of the first cash back credit cards to provide a 5% rebate program on all types of everyday purchases.
The Glowing blue Cash American Express started out by offering a cash rebate construction that was divided into return proportions based on the annual amount spent as well as the type of purchase. Purchases were categorized as everyday and other.
People who made annual purchases of up to $2, 500 received a 0. 25% to 0. 5% cash back rebate. Those who made annual purchases between $2, 001 and $6, 000 received a 0. 5% to 1% rebate. Annual purchases from $6, 001 to $50, 000 offered a 1 . 5% to 3% rebate with a 2% additional refund for everyday purchases if the consumer carried a balance on the card. In May 2005, the card changed its rebate tiers to the current structure where clients can get an up to 5% discount if they make $6, 500. 01 to $50, 000 everyday purchases (supermarkets, gas stations, and home improvement stores) a year. American Express cards have ranked highest in customer satisfaction according to the J. D. Power and Affiliates Credit Satisfaction Study.
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The Chase Freedom Visa Signature Card can be another great cash back credit card, and because it is a Visa card, it is accepted just about everywhere. This card gives you 3% cash back on up to $600 of your purchases in the 3 main entitled categories where you spend the most profit a given month, including grocery stores, gas and convenience stores, cable plus satellite TV, Internet service providers, and a variety of others. On purchases above $600, the cash back rate is 1%. The interest rate of 18. 24% is a bit on the high side, however the card provides great rewards for those who don’t carry a balance.
Another great thing about cash back credit cards is that they have got different rewards programs, so you can get two different cards and use each one for different purchases in order to get even more savings than you could from one card solely. The best thing to do is to check out the provides that are available and apply for a couple of credit cards, like the two mentioned above, that go with each other well.