How to Compare Cash Back Credit Cards

By: Eric Wasselman

To be able to make an informed decision on which cash back credit card is best for you, you need to understand three basic features of the card: what percentage of the amount spend is rebated as cash, are some category of spending rated higher than others and how to receive the awards.

Other features to look for when comparing cash back credit cards are APR (Annual Percentage Rate), percentage cash back reward, are you locked in to making purchases at select places to earn reward, annual fees, finance changes to name a few.

Some banks make it easy to understand how they calculate cash back rewards by using a flat percent of your spending, others have a more complicated system. For those cards that offer a flat rate, they may only specify that x % credit is applied on purchases of certain items such as fuel and y% on others items such as drugs.

Other institutions use a tiered system to calculate cash back rewards. With this system points are awarded based on how much is spent, for example tier one may stipulate that for spending of $50 up to $500, 1% cash back is given, for $1000 to $2500, 5% cash back is paid.

How you receive your cash back is important to card holders. Some person want back actual cash while others don't mind credit statements. With actual cash, after a certain cash rebate has accrued a check is sent in that amount. For credit statement, your outstanding balance is debited with the cash rebate, that is, you do not receive any actual cash, it is used to pay part of your balance.

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