Cash-back or Reward Cards: A Question of Choice

Depending mostly on one’s personality and needs, cash-back and reward cards can be great choices, to get the max benefit from your spending, traveling or auto expensess. In essence, they need to fit the individual holder’s way of life as well as spending habits. However, it is interesting that according to recent financial service research, cash-back cards are held by over 57.4 percent of cardholders throughout the U.S. and worldwide.

Cash-back cards, being the most predominantly used kind of card, are no use if office supplies are the only things one will receive cash on. Especially if one doesn’t really use more than a pencil and half a ream of paper every few months. However, there are other cash-backs that will give back up to five percent if purchasing from supermarkets, drug stores, gas stations and another one percent for most any other item bought.

Some cash-back card companies offer up to double cash-back. E.g., once 2,000 points for a $20 gift certificate are accumulated, the certificate becomes worth a value of $40. Typically, cash-backs become even better when one receives a cash-back or rebate check in the mail.

On the other hand, reward cards based on points are a different breed and once again they are preference-based on the user. Many people like the feel of “treating themselves,” and rather than receive cold cash, they prefer being able to select the gift items themselves.

However, there is a drawback in that reward cards are many times limited in the selections of choice. For instance, people may save to accumulate their points for a designated item–only to later discover the product is no longer available in the particular reward point catalog. Likewise, others save, accumulate and expectantly go redeem their points only to find the point requirements have been increased to an even larger amount.

Important Tips And Things To Consider

The huge selection of different kinds of cards and combinations of rewards are almost staggering to a consumer’s mind. That said, the first thing to do is seriously analyze one’s spending habits to see where the bulk of one’s expenditures go. If one doesn’t drive much, why invest in a cash-back card for gasoline? Having made this determination, the decision becomes simpler.

The second most factor to consider, in this writer’s mind, is the purpose for which the card will be used. Some have opted to reserve a cash-back card for use in giving hospital deductibles. Others have kept it in reserve for a petty cash fund in an emergency. Perhaps saving for a vacation trip warrants a cash-back while a new apartment may merit a points reward system to help furnish it.

The third most important thing to consider is that terms are crucial. Rewards are great, however, a credit card offer that doesn’t give a consumer low-interest rates, zero annual fees, zero introductory offers and other perks, is not a good choice. The choice now also depends on how well one can “crunch the numbers.”

In a nutshell, depending on the consumer’s lifestyle, their needs and the terms offered by the credit card(s), the field is open wide and growing exponentially once again in the credit card industry.