Cashback credit cards are becoming more and more popular these days owing to its attractive cashback option. Cashback reward programs offer a flat percentage rate, generally, 1% of purchases, rebated back to the customer in the form of a check at the end of a statement credit or at the end of the year.
Several merchants as well as established department stores offer cashback credit cards to entice its regular customers and new customers to encourage shopping at their stores by charging the purchases with their respective cashback credit cards. The customers who utilize this scheme will get the cashback reward for the total amount of purchases done at the end of a billing statement.
Most of the cashback credit card issuers create their own cashback credit programs. The two most popular types of cashback credit card programs will provide the customers with a credit to their balance card amount whenever the customer makes a purchase with the card. However, the original amount of the cashback reward a customer obtains will depend on the original terms and conditions of the cashback credit card program. This varies from one card issuer to the other and the amount of total purchases made by a customer using the card.
There are several points you need to consider before applying for a cashback credit card. The first step is to determine your spending habits and calculate how much credit is needed for you every month. If you are a frequent shopper, and you buy a lot of products from a particular store which offers a cashback program, then obviously, it is a good idea to obtain a cashback credit card.
However, all credit cards offering cashback rewards are not limited to a particular shop. There are several credit card issuers who provide an ordinary MasterCard or Visa credit card which the customers can use at any shop which accepts payments, providing cashback reward offers for goods or services purchased using the credit card. If you are using these types of cashback credit cards, you need not purchase from one specific shop all the time. You can use these cards to purchase products from any store which accepts these credit cards.
Before you apply for any of the cashback credit cards, read the terms and conditions of the card carefully, paying particular attention to any annual fees or hidden charges that you might need to pay for obtaining and using these cards. To obtain cashback benefits, some credit card issuers will require customers to carry forward a card balance from one month to the next. However, oftentimes these types of card offers are not useful as cardholders end up paying more in higher interest rate charges just for keeping a balance on the card.
So, before applying for any cashback credit card it is a good idea to estimate how much you will spend each month and calculate the cashback benefit you will receive every year. Now, subtract the amount of the annual membership or total fees you will need to pay to obtain the card. The result, if positive, is the net benefit you obtain by using the cashback credit card. If the result is negative, you need to rethink your motivation for needing this type of card. Keep in mind that the best cashback credit card is the one which will help you to secure the most net benefit in cashback rewards less any fees or surcharges that will be incurred.