Reward Credit Cards and Cash Back

A credit card can be quite sweet if it's properly used and now with reward credit cards or cash back, it could be even sweeter.

You make use your usual credit card for purchases and receive incentives in the form of cash back or reward points with these types of cards.

You use these incentives to receive free or discounted products and services. Some cards even allow you to donate your cash back to your favorite charity.

There are also cards that will allow you to deposit your cash back into a savings account to save for your child's college fund, which can be very beneficial and can add up over the years.

This sound like a terrific deal and you're probably wondering, 'What's the catch?' Well, it is the fact that you're probably paying a higher level of interest in order to receive the cash back or rewards.

Cash Back Credit Cards

Cash back credit cards usually pay between one or two percent cash back on the majority of your purchases.

You receive a check in the mail at specified times for the amount you have earned and you can put the cash in your pocket to spend as you wish. Sometimes 'hard cash' takes various forms, though.

Discounts on particular items, such as gasoline or furniture are common. Others offer to store the cash back in the form of a negative balance on your account. Such credit can be used towards future purchases.

Reward Cards

With reward cards you receive points for your purchases, usually one to five points for every dollar you spend on your credit card. Use caution here.

Some reward credit cards only offer rewards when you shop at specific places that they stipulate in their 'Merchant Network' list. If you don't shop at these specified merchants, you will not earn any rewards, or you may get a few points less for using your credit card elsewhere.

When rewards have accumulated to a certain level, you can redeem them for 'specified' items at any location that is on their 'Merchant Network' list.

The advantage of a reward credit card is that the reward points are usually a little higher percentage of your purchases than cash back.

Reward incentives often reach as high as five percent. On the other hand reward incentives can only be used at specific merchants that belong to the credit card company's 'Marketing Network' and you can only purchase specified items.

It is strictly your decision whether you choose a cash back or reward credit card. If you use your credit card often, rewards can add up quickly, but remember, you can only shop at locations that are specified locations.

Cash back can also add up, but not as quickly. Make your decision by carefully researching the incentives of several credit card companies. This will assure that you get a cash back or reward credit card that is right for you.