Understanding Cash Back Credit Cards

Cash back credit cards are cards that provide you with cold, hard cash in return for every purchase you make. In some cases, this cash is sent to you in the form of a check. In others, the cash is automatically added to your credit card account in order to help you pay off your credit card balance.

The precise method for gaining cash back with one of these cards depends on the actual card. With many cards, you earn points for certain purchases. Some purchases may be worth more than one point. Usually, these double point purchases are applied toward those that were made at specific stores or certain types of stores. With other cards, all purchases are worth one point regardless of where the purchase is made or what is purchased.

With cash back credit cards that use a point system, you receive money back after accumulating a pre-determined number of points. Other cash back credit cards, however, simply pay back a percentage of what you spend. Usually, this savings is automatically deducted from your monthly balance. If you pay your credit card bill in full each month, cash back credit cards can be an excellent option. Otherwise, the higher annual percentage rate (APR) associated with these cards usually means they are not a good option for those who carry a balance.

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