Cash Back Credit Cards Provide YOU With Extra Buying Power!

Everybody Loves A Rebate

Purchase rebates are among the most popular special offers provided at stores and services today. Who can object to the idea of getting back a percentage of the cost of an item in cash? These offers work because businesses know that offering to return part of the purchase price of an item will encourage buyers to consider the product more favorably. For this reason, they are perfectly willing to make slightly less profit per item in exchange for much higher sales rates. Unfortunately, however, such offers are often hard to come buy, because if they were too common they would lose their effectiveness. However, with cash back credit cards, you can essentially have the benefit of a small rebate on every purchase you make!

Cash Back Cards Are Not Reward Programs

Many lenders offer reward programs such as airline frequent flyer miles credit cards and travel rewards cards to customers with better credit. They also have other rewards cards that offer such amenities as store credit or free services for spending certain amounts of money on the card. These programs are excellent, and I don't mean to put them down in any way, but cash back cards are not quite the same thing. These cards give you money. These aren't pre-spent funds that can only be used for certain things; they simply give you a portion of your money back straight away.

What's better than a credit card that gives back a percentage of your money? How about one that helps to pay its own bill? Many cash back cards add the cash reward directly to the balance of the card. This decreases the amount that you will have to pay interest on and saves you the trouble of eventually paying the money anyway. With this type of card, you basically receive a small rebate on every item you buy as you buy it. There are no rebate forms to fill out, no conditions to meet, and no delays in getting your money. But what's the catch?

There Is No Catch

The three major credit card providers, Visa, MasterCard, and American Express, offer the cash back feature on credit cards with no annual fee with no strings attached and they do not charge ridiculous interest rates. In fact, most cards provide the industry standard rates of between 9 and 18 percent. Also, the grace periods for these cards are no shorter than the industry average. Just like most other credit cards, if you pay your balance within 20 to 25 days of the purchase (depending on your credit and your provider), then you don't pay interest on the purchase price. This keeps you from expensive bills every month if you just keep up with paying your bill before the grace period expires. Even better: almost all cash back programs offer balance transfer credit cards the same as with other cards. If that doesn't catch your attention, most cards offer between 6 and 12 months at zero percent interest. Some cards even offer as much as 15 months!

Some Cards Are Even Better Than Others

Many cards have recently become available that take advantage of this cash returning system even more. For customers who spend large amounts of money at particular places, the rate can often be increased. For example, cards are now available through Visa that give 1 percent cash back on all purchases and 5 percent cash back on gasoline and auto repair purchases. With the constant changes in the price of gas and the constantly high price of repair work, this 5 percent discount can make a huge difference in your personal finances. Similar cards are available for other types of frequently used services (from bookstores to coffee shops to airlines).

How Does This Work?

So, this all sounds too good to be true. How can a credit card company offer this kind of a card and still make money? Well, it helps to first get an idea of how card providers stay in business. Credit card providers make their money in two ways. The first way is obviously the interest collected on the customers' account balances. The second way, that most consumers don't even realize, is a percentage of the price is charged to the merchant. Stores, service centers, and online markets that accept credit card payments enter contracts with card providers to give them a percentage of all purchases made in exchange for their services and access to their processing servers. This percentage is usually between 1 and 6 percent, depending on the type of merchant and the credit provider.

When a card provider offers a cash back program, the money returned on the charge is usually taken entirely out of that merchant fee. For example, when you spend $100 on an item at a store, the credit card company may get about $5 of that purchase. If you have a cash back card, they return about $2 or $3 of that money directly to your account (or by check at the end of the month).

Is A Cash Back Credit Card Right For You?

Despite all the obvious benefits and immediate appeal of these cards, they are not for everyone. Applying for one of these cards is easy enough (with online applications usually available), but getting approved for one is another story. These cards require an excellent credit rating, and are basically impossible for first time credit applicants to get. However, if you have a solid credit history in your credit report, these cards are by far the best deal you will find. If not, you may have to get a card for damaged credit.

These cards also have great small business applications. The cash back program basically provides you with a small percentage discount, but that discount applies even at wholesale locations (the cash back is on ALL purchases made with the card). Business owners couldn't hope for a better small business credit card, because it helps them keep their inventory price down.

All things considered, if you are eligible for one, you can't go wrong with a cash back credit card. The only major drawback to these cards is that you will be overwhelmingly compelled to overuse them, because no one can object to an instant rebate on everything they buy.

Please visit our cash back credit card offers section for additional information.

About The Author:

Don Willoughby is a successful author and regular contributor to http://www.e-credit-card-service.net. His websites provide research and applications for different types of low interest rate credit cards .