The Best Cash Back Credit Card Rewards Programs

Ever thought that your credit card could make you money? With cash back credit card rewards you can earn whilst you’re spending – or at least that’s the theory. But do they deliver all that they promise and which one is best for you?

In order to evaluate which are the best cash back credit card rewards programs, you need to first understand how cash back rewards programs work.  A cash back credit card rewards spending on your credit card by offering money back on purchases. Purchases that you receive cash back on may include daily items such as gas and groceries, as well as specialist items from selected brand name stores.

The cash back rewards varies and can be as little as 1% up to around 5% of the total purchase price. The method of payment also varies; it may come in the form of gift vouchers, direct cash back into the credit card account or into a savings account.

The best cash back credit card offers are usually available to those with a good credit rating.

Some cards will give you a higher cash back return on standard items and a lower return on non-standard items, but you will need to check the fine print to know exactly what classifies as an ‘everyday purchase’. Most cards advertise the areas they offer the reward, such as the Discover More Card, which offers a 5% cash back reward “in categories like travel, home, gas, restaurants, movies and more”.

All cash back card offers vary tremendously, so it is important to compare them carefully.

Earning rewards on spending is always an advantage. If you’re spending on your credit card anyway, you might as well get something back. But it’s important to remember that cash back is a percentage of what you are spending – you have to spend more to gain more cash back – so spend strategically. If you frequently eat out or entertain then cards offering cash back on restaurants would be ideal for you. The Capital One® Card Lab allows you to choose the best cash back plan to suite your spending habits.

To get the most out of cash back rewards cards, it is ideal if you pay off your balance in full each month. If you carry a monthly debt you will probably find that the amount you pay in interest each month could cancel out any cash back benefits you will earn.  For instance, your minimum monthly repayment may be as low as $5 but even if you spend $50 on your card that month, you have still only earned $2.50 in cash back. If you pay off your balance that’s $2.50 straight into your account, but otherwise it just reduces your monthly pay out by half.

However, most cash back credit cards do come with a 0% APR introductory offer which means that you will be able to earn cash back without accruing interest on spending during that period.

Major criteria to watch out for….

As with any credit card, always read the fine print before you sign. There are one or two specific things to watch out for with cash back cards:

• Make sure you know which purchases offer cash back rewards. And in addition what is the percentage offered on each type of purchase.
• Is the payout method acceptable to you: would you be happy with gift certificates and savings or would you prefer direct account balance repayments?
• Do you have to spend a specific amount before you start earning cash back?
• Is the high cash back reward only an introductory offer; is it reduced after the initial introductory period is over?
• Are there maximum cash back rewards that can be earned in a year, for example a ceiling on all rewards beyond spending of $10,000 in a year?

Essentially the best cash back credit card is the actually an individual choice depending on your spending habits and whether or not the cash back rewards program rewards the type of purchases you make frequently.  If you keep all these principles in mind and read the terms and conditions of the credit card carefully then you will find the card that is best for you.

Consumer Reports recently evaluated (October Issue 2008) 100’s of credit cards and has found these to be the best cash back credit card rewards programs:

Capital One No Hassle Cash Rewards
Chase Freedom Visa
Discover More

In addition, if you are looking for gas rewards credit cards, Consumer Reports has found these to be some of the best cash back gas cards:

Chase PerfectCard MasterCard
Discover Open Road

We offer all these cash back cards and many more.