Cash-Back Credit Cards: Worth The Hype?

As one of the most aggressively-marketed credit cards in recent memory, cash-back cards come with plenty of expectations built in.  In fact, they see the most number of applications, both online and offline, among all credit cards in the US.  How good are they really for consumers like you, though?

Rebates Galore

The basic feature of cash-back cards is the fact that you’ll get part of the all money you spent on purchases charged on it.  If you’re constantly using your card to pay for both personal and business expenses, that means plenty of additional rebates you otherwise wouldn’t have access to.

Among credit card holders who qualify for reward credit cards, 60% prefer a cash rebate program - very telling of the feature’s popularity and the perceived level of satisfaction it can provide.  Why not, after all, when you can get such offerings as no annual fees, bonus cash rebates for specific purchase categories and 0% introductory rates?

High APR

A feature common to all rewards cards, particularly cash-back plastics, is an unusually high APR.  Customers who like to keep floating balances for months on end are likely going to feel the pinch of that high interest rate so make sure the rebates can more than make up for it.  Otherwise, your cash-back feature just ends up being just another debt trap.

Other Things To Consider

There are redemption minimums on most cash-back cards.  Unless, you’re spending a lot using plastic, you’re not likely to see your rebates anytime in the near future.  Some have a fixed schedule for the rebates (usually once a year) so you’ll have to wait a while before seeing the benefits.