Types of Cash Back Credit Cards
If you’re considering cash back credit cards, and how you can benefit from those cash rewards programs, then it’s important that you understand there is more than one type of cash back credit card available:
- Standard Rebate Cash Back Credit Cards – A standard rebate cash back credit card normally rewards you with up to 1% cash back on all products and services that you purchase with your credit card.
- Tiered Rebate Cash Back Credit Cards – A tiered rebate cash back credit card offers a higher cash back reward the more that you use the card. Typically, you will start with a simple cash rebate, follow by an increased reward once your spending reaches a certain threshhold. Depending upon how you’ll utilize the card, this may be advantageous for come customers, especially if you use your card for large expenditures like travel, home furnishings, etc.
- Reverse Tiered Cash Back Credit Cards – A reverse tiered cash back credit card works exactly the opposite of the tiered rebate credit cards. Instead of seeing increased rewards for higher spending, your cash reward will start out at a higher percentage and decrease once you reach a certain spending threshhold. This card works best for those who want a Cash Back Reward Credit Card, but don’t normally use the card much.
- Capped Cash Back Credit Cards – A cash back credit card with a capped reward amount means that once you’ve earned a set amount in cash back bonuses for the year, the cash back reward no longer applies to any purchases you make with the card, effectively placing a limit on your cash back reward bonus.
- Qualified Purchase Cash Back Credit Cards – For lack of a better adjective, the final and most popular type of cash back credit card pays you a greater cash back bonus for products and services such as gasoline, auto repairs, and travel, as well as grocery purchases and even online utility payments. The rewards rates for these purchases can be up to 5% cash back and you’ll still get up to 1% on all your other purchases! Used correctly, this type of cash back credit card typically offers the greatest rewards to more people than any of the other offers.
Regardless of the type of cash back credit card that you ultimately decide upon, carefully review the terms and conditions for the card, compare the interest rate with that of your other cards, and make sure you’re well aware of any annual fees up front, before you apply for the card.
And, remember, you’ll only truly benefit from the cash back bonus if you pay the balance, in full, each and every month. Otherwise, your cash back reward will only offset your interest payments on the balance of the account.
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