Cash Back Cards, Not As Good As They Sound Articles | Personal Finance

By: Guy Starbuck

So you have received in the mail an offer for a new credit card that offers a cash back reward. For every dollar you spend you receive a percentage back in a cash back account. Then depending on the card, once the amount reaches a certain level you can cash it out. Some cards have no minimum, so you can cash out whenever you like. This all sounds great because you are already spending money and you might as well get something back for all the money you spend. You read all the rules and the agreement and it sounds too good to be true though doesn't it? Well in reality it is.

Yes, you will receive cash back that is true they can not tell you that you will and not give it to you. However, usually it is around 1% and there may additional restrictions that say that certain retailers you get that 1% back on or maybe you will get more at particular retailers at certain times of the years. There are also times when you have to spend a certain amount to get the cash back. There are so many rules and restrictions that have to be read carefully to make sure of what you are getting.

Furthermore, there really is no such thing as free cash. You are going to spend quite a bit to get a very tiny amount back. You will then pay exuberant rates in interest. What you are paying in interest will be more than any cash back you have received. Also, there is a limit many times to how much any credit card company will give you back. There is a max amount that will be paid out per year. What you will pay in interest and possible fees, because a lot of cards have a yearly fee to get the cash back reward in the first place.

In reality you are getting nothing for free and probably paying a lot more to get it. These cards sound great and really only work well for the customers who are able to pay off the entire balance every month to avoid the interest charges. If this sounds like you and you can do this consistently without keeping any balance and not having any interest accrue than definitely get a card like this. Also, find one that there is no yearly membership fee, you should not have to pay a fee to be a good customer.

However, if you can not pay off the balance every month or can not get approved for a card with no fee, then do not get this card. For the average person this is not a good card to get and offers very few benefits to the average consumer. Check out all credit offers out there to find one that really suites your needs.