Cash back credit cards are a kind of reward cards with which you get tax-free cash for every purchase you make. These cards are the most popular type in North America according to a survey by TNS Global’s Financial Services. Results show that 57.4 per cent of reward credit cardholders own cash back cards. If you choose this option, there is one main rule to follow: always pay the card off in full, else interest piles up and makes up for the cash you get back. The best way to make sure the card is paid off every month is by setting up direct debit. This is when you allow the card company to take money in a set or varying amount a month, which matches what you owe it. Make sure the issuer is aware that you have paid off the card in full. If you have taken these steps you can trust in the fact that you make money every time you use the cash back card. The company charges retailers in order to prevent operating at a loss, and you get a large portion of the retailer’s fee. You can make money in other ways apart from cash back. Two such ways are saving and taking advantage of bonuses. A lot of people have made money by getting a loan from the credit card company at 0 percent interest and then putting it away in a bank account with high interest.
In addition, many companies offer free goods, plane tickets and other bonuses to potential clients, and all that clients have to do is sign up for a particular card. In this situation, people apply even when they don’t want the card. Other bonuses include extra points after the first transaction, cash payout, credit, double points for a year and more. Some companies permit balance transfers or cash advances to make an initial payment or accumulation of points possible. Despite all this, be cautious! Do not get lured by rebates to the extent that you overspend. Do not fall for balance transfer offers unless the initial period, fee, and rate are a good deal. If you are not careful, the expenses for the transaction may offset the amount you are supposed to get back. Cash advances are tricky too. Take such only in cases of emergency, because the fees are huge and interest is charged from day one.
Clients of Canadian banks can choose from a large selection of cash back cards. The Bank of Montreal, for example, advertises its BMO CashBack MasterCard, going with no annual fee and 19.5 percent interest rate. Customers who choose this product get 0.5 percent cash back on purchases they make with the card, and 1.5 percent at National Car Rental, Almo Rent A Car, and Shell. The Canadian Imperial Bank of Commerce offers the CIBC Dividend Card which comes with a minimum credit limit of $500, current interest rate of 19.5 percent, and no annual fee. Individuals who apply should have a minimum total household income of $15.000.
Finally, cash back cards are certainly not for everyone. If you are unable to pay it back in full or have existing debt, you are better off with a card with a lower interest rate.