Cash back credit cards

Are you looking for a way to earn money while shopping? Do you use your credit card for everything and then pay the bill off in full each month? If you answered yes to the previous questions then you might want to consider getting a cash back credit card so that you can earn money while you are spending money on everyday items. But if you are going to get a cash back credit card you are going to want to choose the right card for your needs. Here is a look at the various types of cash back credit cards:

• Basic 1% cash rebate credit card - this basic card pays you a 1% cash rebate for every dollar that you spend on your card. This is the normal rebate percentage for both cash back and reward credit cards. Some examples of the basic 1% cash back credit card are: HSBC MasterCard with Cash Back Rewards, Chase Free Cash Rewards Visa Card, and Bank of America Efectiva Visa.
  
• 5% cash rebate credit card - these cards are similar to the 1% cash back card, but they [pay a higher rate and are based on your everyday purchases, which American Express was the first company to offer this category for the card. But with this type of card in some cases you are going to need to spend a certain amount before you can get the 5% rebate or you only get the 5% rebate on certain purchases and the rest of your purchases would earn you a 1% rebate.
  
• Hybrid Cash Back Reward Credit Card - this type of card allows you to use either your reward points for rewards or to redeem those points for cash rebates, basically you are exchanging points for cash. But in your traditional reward programs the rebate percentage is less than 1%. But with the newer cards, such as the HSBC MasterCard with Cash or Fly Rewards allows you to use your points towards airline tickets and cash back. This makes sense because normally a roundtrip ticket requires 25,000 points and if your ticket costs $250 that is the same as getting a 1% rebate. But if the ticket costs more than $250, using those 25,000 points means you got more than a 1% rebate from your points. And if your ticket cost less you can exchange 15,000 points for a cash rebate and still get your 1% cash rebate.
  
• Tiered Cash Back Credit Card - these are actually becoming less popular because of the 5% cash back credit cards. But these cards pay a lesser rebate percentage when your annual spending is below a certain level, but once your spending crosses that threshold you will earn a higher rebate percentage. For example American Express Blue Cash pays you a 1% rebate for everyday purchases below $6,500 and .5% for other purchases. But once your annual spending exceeds%6,500 your rebate goes up to 5% and 1.5% respectively.
  

Here are some things that you need to know about cash back credit cards.

Number one:
If you are looking for cash back credit card, or a rewards credit card, then you need to be aware of the fact that these types of credit cards usually charge a higher annual percentage rate than other credit cards. Even the cash back credit cards with the lowest APRs charge about 1% more than standard cards with the lowest and best interest rates. This is important to know because if you carry a balance than the interest you are paying on your credit card can quickly cancel out your cash back reward.

Number two:
These types of cards are actually best for people who pay off their balance in full each month for a variety of reasons. Mostly though because these cards charge a higher interest rate you would lose what rewards you have earned if you had to pay interest on the balance each month. But because you are paying your balance in full each month you will never have to worry about paying interest so the higher rate that they charge would be of no concern to you at all.

Number three:
In order to find the perfect card you are not going to need any complicated formula or even need to use a spreadsheet, all you are going to need is a calculator, an idea of how much you spend each month, where you tend to spend your money and even what day or days of the week you tend to shop the most. What you are going to want to look for is the cards that give you the most generous rewards for shopping at your usual spots. In fact it is quite common for cards to reserve their most generous cash back offers for purchases at supermarkets, drugstores, and gas stations.

Number four:
You really need to pay close attention to the details for each of the credit cards that you are considering. The reason for this is that many cards that pay you cash back at the highest rates are going to have caps and restrictions that actually result in a lower annual rebate than a card that has a straight 1% cash back rebate. For the most part if you see a card with a 5% rebate or higher there are going to be strings attached. One example is the Discover's Open Road Card. The card pays 5% cash back on gas and auto maintenance but in the fine print it states that the 5% cash back only applies to the first $1,200 you spend in that category.  The Discover More Card also pays 5% on purchases in certain designated categories, but those categories change four times a year. Not to mention that if you shop at warehouse clubs or discount stores you only get .25% cash back. But there are cards out there that do pay the 5% no matter what, the perfect example of this is the American Express's Blue Cash Card, which after you charge $6,500, the card pays 5% back on further purchases the rest of the year at supermarkets, drug stores and gas stations and 1.5% back on everything else and it has no reward limit.

Number five:
One thing that you have to really watch out for is the gotchas that can be included in the fine print, so make sure you pay close attention to the details when signing up for a cash back credit card.  Some of the things that you are going to want to look out for are: late payment penalties, can be as high as $39 a month; shrinking grace periods, some can be as short as 20 days; and super high default rates, they can get to be 30% or higher in some cases. But some other twists that normal credit cards don't have that you need to watch out for is that some companies will require you to request your cash back rebate in order to get it. In most cases the credit card company is not going to automatically send you a check or gift certificate or credit your account because then they have to pay out money. But also be on the lookout for any changes to the cash back agreement because credit card companies can change this agreement at any time. So to make sure you stay up to date on any changes to your program be sure to read all enclosures that come with your bill each month, and to read the terms and conditions page for all credit card applications.

Number six:
In most cases cash rebate credit cards actually offer a better value than regular reward credit cards because you get your reward in the form of "cash". It used to be that it was a low rate that was given back on cash back credit cards but because of how competitive the industry has gotten the credit card companies have to keep up with one another so various cards are offering various types of rebates, and at different percentages, based on certain criteria, such as gas purchases, groceries, over a certain limit, etc.

Here is a competition that was held by Kiplinger's to find and pick the best cash back credit card. The competition was based on the following spending patterns: you spend $35 a week on gas, $100 a week on groceries and $1,000 a month on everything else, including $100 at the drugstore and $100 to watch movies at home or at the movie theater. Based on that information the top three cash back credit cards are:

• Winner: Chase Rewards Plus Visa - 5% rebate on all of the basics, gas groceries, and drugstore items, plus 1% back on all other purchases. Based on the spending patterns above you would get an annual rebate of $493.
  
• Second Place: Citi Dividend Platinum Select - 5% rebate on purchases of gas, groceries, and drugstore items, plus you get 1% back on everything else. Your annual rebate cap is $300, which with the spending pattern above you would receive it no problem.
  
• Third Place: National City Everyday Rewards Elite Visa - 4% rebate on gas, 3% rebate on movies and video rentals, and 2% rebate for food related spending at grocery stores and restaurants. And then after you spend $10,000 you will earn a 1% reward on all other purchases, but spend less than $10,000 and all you are going to get back is .25%. Based on the spending habits above at the end of the year you would have earned a rebate of $281.