Credit cards that have reward programs that give you rebate incentives or cash back are the way to go. Why shouldn't your credit card reward you when you use it? Are you still using a card that does not reward you? Why is that? The possible reason that more people don't have these types of cards is because they usually require fair to excellent credit ratings to get approval.
These kinds of cards have become a lot more popular because gas prices have risen so sharply. You can earn up to 5% cash back on eligible purchases like utility bill and phone payments, cable and gas bills, groceries, and dining when you get some of the more widely available cash back cards.
A lot of cash back cards are in the lower range of percentage payback, hovering at around 1% to 2%. However, there has been a trend to raise the cashback percentage to 5% amongst major card issuers. However, the 5% cashback rate usually just applies to purchases made at gas stations, pharmacies, and grocery stores. You usually only get the 5% cash back on one of these items, but getting 5% back is substantial. Image getting 5% back on gasoline ?! In today's world, where gas prices as so high, getting 5% back can be quite substantial.
The trend towards offering cash back, in general, is increasing for a variety of reasons. The uptick in gas prices, the higher percentages being offered by card issuers, and the increased competition being faced by credit card issuers as well, are all contributing to the larger numbers of cashback credit cards being offered.
Wait a minute, you might be asking, how do these types of rewards programs really work? How can the credit issuers afford to give me a percentage of the cash back? Why are they letting me get away with such a smart financial move? When merchants accept payments by credit cards, they give a percentage of the transaction as a commission to their merchant services provider or bank. A lot of those issuers share that percentage with you. They do this in order to set themselves apart from the competition.
Now, rewards based cards are usually a lot better for consumers who pay their credit card statement off each month. Rewards based credit cards usually have a much higher APR too. If you don't continue to pay your balance each month, the extra interest will defeat the purpose of the rewards that you've earned.
A lot of financial institutions also have cashback bonus programs with the top online retailers. You might be able to use your cashback bonus into larger rewards each instance that you redeem for gift cards at big name partners of the credit card issuers you've gotten your cashback credit card programs with.
It just doesn't make sense to go without cashback cards if you have a good credit rating. If you plan to pay your bills on time, then these types of cards are the ones to choose (in my opinion). These cards reward their customers who spend money and pay back their bills wisely, as they would have done in the past before getting accepted for the card and as they will continue to do in the present when they get the card.