Forget Miles. These Days, Cash Back Is King

by Dan Seitz
Credit Cards › Credit Card News & Reviews
Forget Miles. These Days, Cash Back Is King

It seems that today’s rewards credit card holders just want the cold, hard cash baby. BankRate.com reported that, according to a 2012 Capital One survey, nearly 44 percent of rewards-seekers said cash-back was their top choice. 

That’s not so surprising at a time when debit card rewards programs are going the way of the dodo. When used right, cash-back rewards cards basically give their owners free money, which the survey also noted was the driving factor behind earning and redeeming credit card rewards for three out of five users. The tangible usability of cash is especially important when the economic situation looks bleak.

The New York Times notes that banks are prefectly happy to issue cash-back cards, which draw in what they see as low-risk customers. Cash-back seekers also tend to use the cards frequently to earn rewards, which results in fee-processing income from merchants.

How you can get the most out of your cash back card

Nearly half the credit cards studied in Bankrate's 2012 Credit Card Rewards Survey pay 1 percent cash back from the first dollar you spend. That’s up slightly from last year's 44 percent. BankRate.com analysts suggest that you use the 1% back as your baseline while shopping for cash-back cards. But if you can find a better deal, go for it. Many cards offer sign up bonuses or end-of-year rewards based on your total spending.

You should also look for a card that offers a higher return on purchases in certain categories such as gas, dining or groceries, and make sure it’s offering those higher returns where you spend the most. If you rarely fill up the tank, for example, getting a cash back card that triples your cash back on gas purchases isn’t going to get you very far.

Once your cash rewards credit card is set up, spend away and watch the free money roll in! Just remember to pay it off each month—if all your cash back is going toward interest fees, that kind of defeats the purpose. And if you want to get extreme, try this LifeHacker trick: sign up for a cash back checking account as well, then use it to pay off your cash back credit card for double the free moolah.

 

SOURCES:

http://bucks.blogs.nytimes.com/2012/02/15/cash-back-credit-card-rewards-offers-going-strong/

http://www.bankrate.com/finance/credit-cards/credit-card-rewards-survey-cash-still-king.aspx?ic_id=News_this_week_default

http://articles.businessinsider.com/2011-10-11/news/30265823_1_rewards-programs-banks-rewards-systems

http://lifehacker.com/5812420/how-to-double-your-cash-back-spending-rewards-every-month

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