Money Back Cards Can Earn You Cash

By Matt

Are you making money on every purchase you make? If you’re not then you might be losing out.  Money back cards, credit and debit, are widely available from almost all financial institutions. If your current cards are not giving you cash back on purchases then it’s probably time to explore what other options are available.

The money back reward system

Credit cards that pay you cash based on the amount of purchases that you make with them.  These cash back reward systems are very similar to other points or flight based reward programs. The main difference is that you can opt to be paid out in cash and use the money at your pleasure. You are not constrained by the limited products and services offered in some reward programs. The cash option is especially suitable if you don’t do a lot of travelling. No point in accumulating air miles that collect dust in some dormant account.

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Money back cards pay a percentage of your purchase back to you in cash. The rates are variable but a typical card will earn you one percent cash back on all purchases with up to five percent on purchases at select retailers or retail categories. Money accumulates and is reported on your monthly statement. When you’re ready for your cash you simply request a check mailed to your address or have the money credited directly to your bank account.

Top three money back card features:

1. Sign up bonus – When researching new credit cards keep an eye out for cash sign up bonuses. The bonuses can range in value, sometimes up to $150.  If you make a specified dollar amount in purchases within the first few months the bonus will be credited to your reward account.
2. Introductory APR – Many cards offer a low APR (annual percentage rate), sometimes as low as 0%, in order to woo you. Remember that these are introductory rates that will go up, usually after six or twelve months. Find out what the rate will be following the introductory period. This often depends on your credit score.
3. Premium cash back rates – You want to earn the most money back possible, so find out how widespread the premium offer is. Some cards have rotating premium categories. If you plan on using your card at supermarkets and gas stations then confirm that these categories will always offer the premium five percent cash back rate.

Are money back cards for everyone?

The simple answer: No. If you carry a balance you might save more money by opting for a card that offers a lower long term APR. Reward cards typically charge higher interest rates to offset the costs of their programs. Also, individuals with poor credit scores might not qualify for money back cards and their associated bonuses. If they do they might end up paying extra high interest rates. If the card has an annual fee then you should consider whether you will be using it enough to cover the cost.

Money back cards, when used wisely, can help put hundreds of dollars pack in your pocket. To find the card that works best for you look for a card that compliments your existing spending habits.