by Marco Angioni II

Created on: May 04, 2010

Cash rebate credit cards are credit cards that offer cash back as part of its rewards program.  Other kinds of rewards programs include points, gas credits, and airline miles.  However, only with cash rebate or cash back rewards programs do you actually receive a check in the mail for a percentage of your charges. 

Cash rebate credit cards generally give back to you a percentage of your charges on your credit card.  Usually, the percentage is 1%.  Therefore, for every $100 you spend, you will get back $1.  Of course, you will not get a check for $1 every time you charge $100.  Cash rebate credit cards generally require a minimum amount of rewards before they will pay you.  For example, a cash rebate credit card company may require that you obtain $25 in rewards before you will be sent a check.  Based on the 1% example, this means that you will have to have charged at least $2,500 to your credit card.  Keep in mind that most credit card companies do not require you to pay the balance off before you get the reward, but you may have to stay current on your credit card in order to remain active in the rewards program.  As such, one late payment can affect your cash rebate rewards program.

Getting 1% back does not sound like a lot of money, and in fact it is not.  However, if you use your credit card correctly, you will be getting the money at no cost.  For example, if you pay off your balance in full each month, you will never be charged interest.  As such, any cash rebate reward you receive will not have cost you anything extra.  Obviously, if you spend more than you normally would simply to obtain the cash rebate reward, you are losing money.  But, if you keep your normal spending patterns and pay off the balance in full each month, it is essentially free money.

Avoid cash rebate credit cards with an annual fee.  Due to the fact that you generally receive only 1% back, it may take you some time to accumulate enough to receive a reward payment.  However, if you have to pay an annual fee, your reward payment might be wiped out by the cost of the annual fee.  As such, only consider cards without annual fees.

Finally, it is important to note that not all charges count towards your cash rebate rewards.  In the Terms and Conditions of your rewards program, your credit card company will detail whether all purchases or only certain purchases count toward your cash rebate awards.  For example, your credit card company may exclude charges to your credit card to pay utility bills.  As such, make sure you know what is covered or else you may not be receiving any reward for using your card.

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