Selecting a Cashback Reward Card
Gas prices and energy bills are climbing higher again and many households are looking for ways to hold on to a little more money. One immediate solution is a cashback credit card that gives a 5% rebate on gas purchases. A household that spends $5,000 on gas each year can receive a $250 rebate by using this type of credit card.
Receiving cash back for purchases sounds like a good idea, but the trick is finding the card that will provide the most cash for specific credit card usage. Cashback cards can be a great perk for cardholders with very good credit who pay off their cards each month. Those who carry a balance at least several times a year should focus on cards with the lowest rates, not rewards.
"There are other rewards that may sound more exciting, but it is hard to beat a cashback card,” says Bill Hardekopf, CEO of Lowcards.com. “The rewards are straightforward and the cash earned can be used for anything and can help you get ahead by paying down other debt or earning interest. Cardholders are not restricted to using rewards only at specified merchants and they can receive rewards with fewer points, especially compared to airline miles."
Selecting the Right Card
Start with a strategy to select the right card. Will the card be used for every purchase from gas to vacations, getting the most cash possible, or will the card be used sparingly and the extra cash is a nice bonus? There are a variety of cashback cards available, but the rebate for most cards is 1% for general purchases and 5% on purchases made at standalone grocery stores, drugstores and gas stations.
Choose a card based on the amount charged each year. If the amount is over $10,000 then look for a card that doesn't have a maximum spending limit or a cap on the amount of cash you will receive each year. Some cards offer tiered pricing that benefits heavy users. Blue Cash from American Express is one of the better offers for those who charge $40-50,000. If you charge less than $6,500 per year, the rebate is only .5% on general and 1% on everyday purchases. Charge over $6,500 and the rebate increases to 1.5% on general purchases and 5% on everyday purchases. The spending limit is $50,000 but spending that much earns $685 in cash.
"If you put all spending on your credit card and pay it off each month, you could also take this to another level by maximizing your rebate on one card and then switching to a second cash reward card. However, I only suggest this for those with exceptional credit score and an almost perfect payment history," says Hardekopf.
For those who selectively use credit cards, look for a card with the highest rebate starting with your first purchase. However, if it will take more than two years to earn a significant reward, then the card may not be a good choice. There is always a chance that the reward program may change or end before points are redeemed.
Also select a card with no annual fee. Some cards waive the annual fee during the first year then charge an annual fee that is typically $35-$40. "Avoid the cards with annual fees because you will have to charge $3,500 each year to just cover the fee," says Hardekopf.
Redeeming cash rewards varies by company and most disclose reward distributions in their Terms and Conditions. "Do not assume they will automatically send a check each time you reach a point level. Some companies require that you pay attention to your statement and request your rewards. If you don't pay attention and don't request them, then they may eventually expire or you will forfeit them if you close the account."
Cashback cards seem like easy money for users but the credit card companies profit from them as well. "Their goal is to convert consumers to use cards for every purchase. Even if they will not make money from cardholder fees or interest, they will make money on the merchant fees. The merchants pay a fee to the credit card company for each swipe of a card," says Hardekopf.
LowCards.com ( http://www.lowcards.com ) is an independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards/rebates, and lowest intro rates. It also gives and unbiased ranking and review for each card. Created by Hampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for over five years.
For more information, contact Bill Hardekopf at 1-800-388-1910 or billh@LowCards.com
Receiving cash back for purchases sounds like a good idea, but the trick is finding the card that will provide the most cash for specific credit card usage. Cashback cards can be a great perk for cardholders with very good credit who pay off their cards each month. Those who carry a balance at least several times a year should focus on cards with the lowest rates, not rewards.
"There are other rewards that may sound more exciting, but it is hard to beat a cashback card,” says Bill Hardekopf, CEO of Lowcards.com. “The rewards are straightforward and the cash earned can be used for anything and can help you get ahead by paying down other debt or earning interest. Cardholders are not restricted to using rewards only at specified merchants and they can receive rewards with fewer points, especially compared to airline miles."
Selecting the Right Card
Start with a strategy to select the right card. Will the card be used for every purchase from gas to vacations, getting the most cash possible, or will the card be used sparingly and the extra cash is a nice bonus? There are a variety of cashback cards available, but the rebate for most cards is 1% for general purchases and 5% on purchases made at standalone grocery stores, drugstores and gas stations.
Choose a card based on the amount charged each year. If the amount is over $10,000 then look for a card that doesn't have a maximum spending limit or a cap on the amount of cash you will receive each year. Some cards offer tiered pricing that benefits heavy users. Blue Cash from American Express is one of the better offers for those who charge $40-50,000. If you charge less than $6,500 per year, the rebate is only .5% on general and 1% on everyday purchases. Charge over $6,500 and the rebate increases to 1.5% on general purchases and 5% on everyday purchases. The spending limit is $50,000 but spending that much earns $685 in cash.
"If you put all spending on your credit card and pay it off each month, you could also take this to another level by maximizing your rebate on one card and then switching to a second cash reward card. However, I only suggest this for those with exceptional credit score and an almost perfect payment history," says Hardekopf.
For those who selectively use credit cards, look for a card with the highest rebate starting with your first purchase. However, if it will take more than two years to earn a significant reward, then the card may not be a good choice. There is always a chance that the reward program may change or end before points are redeemed.
Also select a card with no annual fee. Some cards waive the annual fee during the first year then charge an annual fee that is typically $35-$40. "Avoid the cards with annual fees because you will have to charge $3,500 each year to just cover the fee," says Hardekopf.
Redeeming cash rewards varies by company and most disclose reward distributions in their Terms and Conditions. "Do not assume they will automatically send a check each time you reach a point level. Some companies require that you pay attention to your statement and request your rewards. If you don't pay attention and don't request them, then they may eventually expire or you will forfeit them if you close the account."
Cashback cards seem like easy money for users but the credit card companies profit from them as well. "Their goal is to convert consumers to use cards for every purchase. Even if they will not make money from cardholder fees or interest, they will make money on the merchant fees. The merchants pay a fee to the credit card company for each swipe of a card," says Hardekopf.
LowCards.com ( http://www.lowcards.com ) is an independent website that helps consumers easily compare credit cards in a variety of categories such as lowest rates, rewards/rebates, and lowest intro rates. It also gives and unbiased ranking and review for each card. Created by Hampton & Associates, the company has been analyzing the credit card industry and supplying objective websites on various consumer expenses for over five years.
For more information, contact Bill Hardekopf at 1-800-388-1910 or billh@LowCards.com
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