With cashback credit cards, cardholders get back a percentage of the amount spent on purchases, and the cashback is in the form of refund or check. The amount of cashback is small compared to the total spending on the card. The more the cardholder spends on the card, the more money he gets back. Cashback credit cards are a good option for cardholders who pay the balance in full, avoiding interest payments. The interest on the outstanding balance can outweigh the amount of rewards if the bill is not cleared in full. A cashback credit card is also a good option for those who charge purchases rather than make balance transfers and cash advances. Some credit cards are further limited to some locations only.
An obvious advantage of having a cashback credit card is that the cardholder gets a discount on all items purchased. Cashback credit cards with higher credit limits can be used to purchase kitchen appliances, furniture, and other big items as to get a larger discount.
Those who consider applying for a cashback credit card should know that it usually comes with a higher interest rate. If there is outstanding balance on the card, the holder ends up paying more than if carrying a balance on a low interest credit card. The terms and conditions can change any time as well. This means that the categories of expenses that qualify for cashback may change as well. Certain limitations may apply to the amount of rebates, as the card may come with a ceiling amount. Even if money is spent only on approved cashback categories, the amount of earnings may be limited to a specified amount.
While many prefer cashback credit cards as a payment option, the terms and conditions should be read carefully. For instance, the credit issuer may require that certain amount is spent in one month to be eligible to get cash back. Alternatively, the qualifying amount may be limited to the first $1000 spent on the card. The cashback is not deposited into the cardholder's account immediately. The money will be credited within a period of 7 to 21 days. If the money is not credited, the cardholder has to claim it within a specified period of time.
Given that credit cards come with different terms and conditions, you need a cash back credit card only if you understand what is in the fine print and keep track of the accumulated cash back. Finally, keep in mind that while the credit card issuer may offer cash back, there are some limitations. Cash back is typically offered when you pay for dining, travel tickets, entertainment, groceries, and apparel.
