Cash back credit cards are becoming increasingly popular among American consumers. The benefits that these credit cards provide are significantly different from other reward programs. The features of cash back credit cards are what make them so popular. Instead of providing a particular reward, they give you the opportunity to choose yours and not among a set of pre-defined options like other reward programs do.
Since the cash back part of these financial products is a reward program it may seem as there are no advantages and disadvantages to consider. However, there are consequences that these programs can cause that should be taken into account. See whether you would benefit from a cash back
credit cards or you would rather stick to other financial products that are available and may suit your needs and personality best.
How Much Can You Get Back?
The percentage of money you can obtain from a cash back credit card varies from one program to another. However, don’t expect it to be high enough to make you decide getting a cash back credit card over other reward programs. Truth is that though the benefit of deciding where to spend your reward is significant, sometimes you can be better off by selecting a prize from the list of rewards that other programs offer because credit cards purchase those goods altogether and thus, get better products for significantly lower prices.
The percentage rate you can get with cash back credit card is, as stated above, quite variable. Nevertheless, it usually ranges from 0.5% to 1% of all your purchases with rare higher exceptions. This implies that if on a particular period you spend $10,000, you can get as a reward between $50 and $100 which is not much. However, there are people that spend way more than that and it also depends on the amount of time on which to base the calculations. Rewards that are awarded yearly can be rather high and thus if available for Christmas or vacations, they can come in really handy.
The Issue Of Overspending
There is a particular risk associated to these reward programs especially for those that cannot control themselves. Some people are shopping addicts or have a tendency to overspend. Recently there have been many requests to include this particular problem among the list of psychological disorders. So, as you can see, it is not a simple issue or an overreaction. Thus, for those people, it is important to avoid if possible certain temptations.
Credit cards are problematic enough because they provide additional funding over the amounts people count on to live with. This amount in excess of their income can contribute to generating and accumulating debt. But, if that credit card offers cash back for every purchase the holder makes, this might be used as an additional excuse for overspending. Thus, prior to accepting a credit card offer and especially one with this type of reward programs, you should sincerely consider whether you can control yourself or you will be driven to uncontrollable spending on things you actually do not need at all.
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