Credit Card Cashback
What Are Credit Card Cashback
And Reward Schemes
Credit card reward programs work on the premise that banks and other
financial institutions form an alliance with leading companies
such as retail store chains, hotels, airlines etc., When you make
a purchase using your credit card with any of these companies or
stores, you are awarded points or a credit card credit cash-back.
Credit card points can in turn be redeemed against services or
products you purchase from them. So, when considering which credit
card is best for your needs, give some thought as to how and where
you shop? This will help you to identify which credit card reward
scheme offer you the very best points for your every day spending.
Another variation of a credit card reward scheme is cash back
credit cards, which offer a cashback incentive to credit card
holders. A cash back is usually made up from the commission fee
that is paid to the merchant service or bank by the
merchant who accepts your credit card payment.
Increasingly, more and more credit card issuers are choosing to
share this credit card commission fee with their card holders.
This is done in various ways, including giving the credit card
holder air miles, points or a credit card cash back whenever the
card holder use his/her credit card at particular retail outlets
or for services.
A credit card cashback represent a small percentage of your purchase
that might either be paid to you or alternatively in the form of an
annual rebate credited to your card account. It is really a good
way to spend while at the same time getting paid for doing so. But
only if you pay off your balance each month.
Interest Charges For Credit
Card Cashback Schemes
While reward schemes such as cashback credit cards are ideal if
you plan on using your credit card heavily, it is important to
note that if you don't plan on settling your credit card bill in
full each month, credit card cash back may not be such a good
option for you.
This is because reward credit card products tend to have a
higher APR and if you don't pay off your balance each month, you
will find that interest charged on the outstanding amount may
well cancel out any earned credit card cashback rewards.
Although some of the best cashback credit card benefits in
general only apply to purchases made with partnered companies
such as chain stores, pharmacies etc., the good news on credit
card cash-back is that major credit card issuers are now giving
away larger cash-back percentages of up to 5%. A much smaller
percentage of between 0.5% to 1% will still be applicable to
purchases made elsewhere.
To secure the best cashback credit card to meet your needs,
carefully consider your spending habits and spending needs. Being
clear about these two key factors will enable you to decide on
whether a credit card cash-back deal is the right choice for you.
The crucial thing to remember with any reward scheme or cashback
credit card, is that if you don't plan on paying your credit
card bill in full each month, then a cash back credit card product
might not be right for you.
The content on this site is purely for information purposes only
and is not intended to replace your seeking professional financial
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