Editorial Policy

What To Look For When Choosing A Cash Back Credit Card

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By Eva Norlyk Smith, Ph.D.
May 22, 2009

The way to get the most from cash back credit cards is to pay off your balance every month.

When choosing a cash back or rewards credit card, it pays to do your homework. That way you choose the best card for your needs and know how to take full advantage of it. Below are some of the things to look for when choosing a cash back credit card.

Which card offers the highest cash back incentives on purchases you frequently make? Several cards advertise a 5% cash back on purchases at supermarkets, drug stores, and gas stations. This is the equivalent of a 5% discount, which can turn into significant savings over the course of the year. If, for example, you spend $500 in groceries per month, this is the equivalent of $25 in savings each month, or $300 per year. And that’s just the savings on your grocery purchases! Some cards offer 5% or higher cash back on other types of purchases, e.g., in home improvement stores. If you make a lot of these types of purchases, these cards are worth considering as well.

Is there a ceiling on how much you can earn? Many cards limit the amount you can earn in cash back over the course of the year, so look for a card with a high limit. Some cards allow you unlimited earnings within their merchant network. If the members of this network are merchants that you would typically do business with, these cards are worth considering.

How is the cash back redeemed? Some card issuers will simply issue a credit directly to your credit card at the end of each year. Others will send you a rebate check. Still others will allow you to redeem only in specific increments of e.g., $25 or $50, and you have to call in and request the rebate check. Many people don’t realize that they have to do this, and never call. This is why it is important to know the terms of your card holder agreement, so you can be sure to follow up as needed.

Do the cash rewards expire over time? In some cases, the cash rewards will expire after a certain number months or if you don’t use your card for a period of time. Again, be sure that you are very familiar with the terms of the card you choose.

To determine the exact details of the offer, look in the Terms and Conditions or Rules and Regulations section of the offer and pay special attention to the sections that discuss Cash Back or Rewards.