Cash Back Credit Cards

What Is A Cash Back Credit Card?

Cash back credit cards are similar to reward cards in so much as you are being rewarded for using your card. With a cash back credit card you will be rewarded with cash, the amount per £100 will vary between credit card companies, but as with reward credit cards the more you spend the more you get.

Why Do Credit Card Companies Offer Cash Back?

The simple answer is to make you spend more money. The more money that is spent the better, especially as the interest rate is usually higher than the standard credit card rate.

Credit card issuers know that many people who have cash back cards will not pay back the balance before interest is charged, also they take a small percentage from the retailer for the transaction when you use your cash back credit card.

Is A Cash Back Credit Card Right For Me?

The only people that really benefit from cash back credit cards are those who always pay off their balance in full each month before incurring any interest charges. The reason for this is that the minute you start paying interest it can negate the cash back benefit.

If you are disciplined and financially secure enough to be able to pay off your balance in full then cash back credit cards are a good way of earning a small additional amount of cash. The more you spend the more cash you get, if you do all your monthly spending on your credit card, and pay it off at the end of each month you could benefit in more than one way.

You would benefit from the cash back being greater because you spent more, also your money would remain in your bank for longer allowing you to increase the amount of interest you receive on your bank account. In addition to this you would benefit legally from the protection of the "Section 75 Consumer Credit Act" where purchases over £100 are protected providing part of the purchase was made on your credit card. Ask your credit card provider for more information on this, or an independent financial advisor.