Credit card deals with cash back are usually referred to as the most applied-for plastics in the US. No big surprise. They are pretty aggressively advertised. Besides, a desire to be rewarded is a quite natural trait of human nature. You do not have to do anything but make purchases with your cash back card and some time later you will get a part of your money spent back, as if by magic.
According to statistics, about 60% of card holders who can qualify for reward credit cards choose cash rebate programs. No wonder. Cash back cards benefits do not leave any space to doubts. 0% introductory interest rates, no annual fee (with few exceptions), extra bonus cash rebates for the first purchase, double rebates on selected eligible categories and other perks.
But are there any downsides to cash back credit cards? Or it is a perfect credit product with no flows?
The first outrageously screaming drawback rewards credit card applicants can notice when checking the cash back offer’s terms is pretty high ongoing APR. With rare exceptions. Actually, most reward credit cards come with considerable interest rate. So, you’d better think twice and do some math on your cash back card-to-be, will the cash rebate make it up for the money you will lose on the interest.
Redemption minimums on such offers are the second disadvantage of cash back credit cards. Nearly all cash rebate offers have these minimums. This means that first you are to spend a certain amount of money on your card, and after that the cash back option will be available to you. In other words, you will not get your cash rebate before you spend a settled sum.
For instance, you spend $2,500 and get $25 back. Not that much, huh? But, taking into account that you do not just waste your $2,500, you shop for some necessary items (hopefully), a $25 cash back bonus is not so bad. But 10% cash rebate is something next to impossible. Most cash back deals offer 5-6% cash back.
Another shortcoming of such credit cards is caps on rewards. The caps constrain the amount of cash rewards you can collect per year, or even per month. And all your attempts and determination to accrue as much cash back bonuses as possible will be in vain. So, if you want to apply for a cash back card, check the cap limits. You should better devote some time to finding a deal with no caps on rebates.
So, it turns out to be that even this worshiped by numerous card holders credit product has flaws. Nothing is perfect. Especially in the world of credit.

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One Response to “Are Cash Back Credit Cards as Beneficial as They Are Painted?”

  1. PaulRoman said:

    The main idea of cash back cards is the more you spend the more money you get back. There is the trick: in order to get as much cash back as possible, you will spend more and more. The mistake is to spend more than you can actually afford.

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