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The cash back credit cards give you a small percentage of returns on the amount you spend on purchasing. The amount varies from .5% to 2% generally. The card companies give the amount annually to the customers. The cash back credit cards are useful for the customers who are in the habit of paying their credit card dues monthly.
Factors to be kept in mind
It’s important to choose a credit card suiting your needs and purchase habits. There are certain factors you must keep in mind when choosing a credit card - what are your spending habits, do you frequently use your credit card for shopping and do you travel frequently. For every need there is a different answer. If you are a spendthrift never paying your bills on time then cash back credit cards are not for you, the card that would suit your requirement would be the one offering a low rate of interest. For the frequent travellers it’s best to go for a credit card offering reward program. There are several companies in the UK offering rewards like airpoints and hotel discounts.
In what situations should you choose cash back credit card?
In case you are accustomed to paying your bills on a regular basis you can go in for cash back credit card. There are companies providing competitive rates of cash back and you can choose from any one of them. The Morgan Stanley Platinum Card offers cash back of 2% on purchases. There are certain companies like the Egg Credit Card, which provides a high cash back rate of 10% in case you shop at any of the selected online retailers. The American Express Platinum offers cash back of up to 2%.
A strict no- no
Cash back credit cards are not for those who end up paying an interest every month, in that case the interest payments would far outweigh the benefits that accrue due to the cash back credit cards. For those who want to use the credit card for taking credit or carry out business transactions, the cash back credit card is not for them. In these cases, you are going to lose out on the benefits and end up paying a high rate of interest. If you are looking for balance transfer, do not do it on a cash back credit card, as you are going to be charged on that. There are several companies offering a 0% balance transfer rate for a period of 5 to 9 months.
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