Cash Back Cards

Reward cards make life a little easier by rewarding us for purchases we already make. Cash back credit cards are the most versatile of the reward cards; they give us points, discounts, and -- just like the name says -- cash back on the purchases we make.

Every major credit card company offers one or more cash back cards. How can you tell which one is the best card for you? By taking a hard look at your monthly spending, and comparing the terms and conditions of various cash back cards.

Cash Back for Frequent Purchases

Do you spend the largest chunk of your monthly income on groceries? Gas? Travel expenses? Eating out? You'll want to apply for a cash back card that rewards your most frequent purchases. Some cards specialize in gas rebates, while others reward your trips to the grocery store. These "everyday purchase" cash back cards usually have limits on where you can earn your reward points. Always check your cardholder agreement to avoid unpleasant surprises.

Fees and Interest

Most cash back reward cards don't charge an annual fee. With so many cards available, look for one that doesn't cost anything year after year. The more you pay in fees, the less value your rewards will have.

Interest rates tend to be slightly higher on cash back cards. If your credit is good, look for a flat interest rate of 9.99% or lower. Of course, if you pay off your balance every month, interest rates aren't a major consideration.

Rules for Redeeming Rewards

How you claim your rewards is an important consideration. Some cards have a cap on the amount of cash back rewards you can claim in a year. Others give you a limited window of opportunity in which to redeem your rewards. Some cards let you redeem your points only once a year, while others give you cash back every time you accumulate $25 to $50 in points. Look for the card with the most generous redemption policy.

The Best Rewards

Last, but certainly not least, compare cash back cards to find the one with the very best rewards. 1-5% cash back on approved purchases is typical. Some cards use a tiered reward system; that is, you earn 1% cash back on purchases up to $5,000. After that, your purchases earn 5% cash back. If you're a big spender, a tiered system can be used to your advantage.

The terms of all cash back cards are subject to change according to the issuer's rules. Watch your credit card statements for alerts. If your card's reward system suddenly changes, it may no longer be the best choice for you. Always shop around, especially when you're selecting a cash back card. They require you to spend money to earn money, so you'll want the best deal you can find.

Click here to see a detailed list of cash back credit cards.