Cash-Back Credit Cards

If your looking to beat the bank and get a credit card that pays you back rather than costs you money then look no further than a cash-back credit card. Cash-back credit cards provide you with a percentage cash-back on every purchase you make and avoid the need for complex reward point schemes.

Applying for Cash-back Credit Cards

When you're applying for cash-back credit cards there are some factors to look for (and watch for). Some of these are:

* Rate of cash-back: Normally, the practice in this type of credit card rewards scheme is that you will be awarded a certain percentage of the monthly spending you charge on your credit card. The cash-back offers vary among the various credit card companies and often among the range of each individual issuer. The really good deals available on the market are willing to refund you up to 5 per cent of what you spend. The most common schemes award between 0.5% and 1% for each dollar spent. This can be significant: if you spend an average of $1000 a month on your credit card, 1% of that is $10 or $120 annually. Where possible, you will want the higher rate but you will have to compare this with the annual fee to see if it truly works to your advantage.

* Timing of cash-back credit: The usual practice is to calculate the amount of cash-back you have earned on the anniversary date of your account; the method of paying it back to you is by crediting your account. There are cash-back credit cards however, that credit your account on a more frequent basis, even monthly.

* Annual fee: Cash-back credit cards usually have higher annual fees than the basic credit card. In a way, this is how the credit card issuer will recover the cost of administering this credit card rewards scheme. Compare credit cards and see which one gives you the best advantage. Going by the above case study, if you are likely to earn $120 per annum in cash-back rewards you will still come out on top if the annual fee was $69.

* Ceiling on cash-back: There are cash-back credit cards that limit how much you can earn to a certain amount, say, $10. This would be fine if your average spending rarely exceeds $1000 a month, but if it is significantly higher then you will prefer a card that does not put a ceiling or, at least sets a higher limit.

There are some credit card rewards programs that allow you to convert rewards points into cash-back credits. In such a situation, the card issue may have a minimum number of reward points you need to redeem for a set amount of cash-back, e.g 10,000 points provides $100 cash-back.

* Flexibility: Certain cash-back credit card have a limit to the refund for a particular purchase, e.g. food purchases or petrol. You don't want them; you want those cards that give credit on whatever you buy.

Maximizing Your Cash-back Credit Card:

The first condition to really maximize the benefits of cash-back credit cards is to pay your account in full every month. If you don't, the interest accrued on unpaid balances will quickly wipe out your cash-back gains. In some cash-back credit cards, the corresponding purchases will no longer be eligible to earn cash-back. If you cannot comply with this requirement, the cash-back credit card is not really suited for you.

For some cash-back credit cards, you may get extra cash-back points if you use your credit card at certain stores and outlets which have made arrangements with the credit card company as participating sponsors. Look for these opportunities to earn extra cash-back credits.

The best way to get the most cash-back credits is to charge The Dark Knight Curse spending on your credit card. This means charging all your regular bills, groceries, petrol, clothes, a holiday everything. By doing this, your cash-back will build up very fast.

Richard Greenwood is author of a wide range of finance articles as well as Director of click4credit.com.au which compares click4credit.com.aucredit card offers including click4credit.com.au/rewards-credit-cards.phprewards credit cards