Cash Back Credit Cards
Currently there are two different types of cash back credit cards available. The difference between the two lie in the structure of the rewards program. One type of offer has a rotating or revolving category system. This means that the bonus structure changes periodically (usually on a quarterly basis) and the percent rebate on purchases per category reflects this. For example, one quarter you may receive 3% cash back at grocery stores while 2% at fuel stations. The next quarter it may flip. The other type of cash back program doesn't rotate. The structure is set based on the card. Browse through offers below with links to secure applications and start earning rebates on your purchases.
Cash Back Credit Cards and How They Work
When you look for a cash back credit card offer, it's imperative to understand how the programs work. We touched on this briefly on our top cash back credit card page but we'll explore cash back cards in more depth here.
Most cash back credit cards entice you with rebate percentage numbers. What do these really mean? You'll see the term 5% cash back thrown around in marketing copy all over the place. Do you really receive 5% cash back on all purchases you make? No you don't. Cards that offer this type of incentive usually operate as a revolving rewards program and it's important to know the difference between one of these and a fixed one.
Revolving Cash Back Program
Revolving or rotating as it applies to these types of offers means that you can earn a rebate percentage for a given amount of time in a specific category that changes over time, usually on a quarterly (3 month) basis. Examples of categories are gas, grocery store, supermarket, quick service restaurants, and drugstore purchases. There will typically be a tiered system where in one of these you will receive the highest amount back (sometimes as high as 5%) and then the levels will trickle down to 3% to 1% for the others at each step. They are still great deals as you do earn great rebates, but the misconception among most consumers is that they are going to earn the highest tier for all purchases all the time -- which isn't the case.
Fixed Cash Back Rewards Programs
With a fixed program, your tiers are constant, meaning they don't change. Though there are still categories where you will earn more money if you use your card there, the percentage will not change over time. If a card, like the Blue Cash EveryDay Card, awards you 3% cash back at grocery stores in January, you'll still earn the same amount in November. The one caveat is that these particular offers don't provide the highest percentages, although in many cases the earnings are greater. For example with this offer, the program structure is such that you earn 3% at grocery stores which typically is the greatest household expense. With a revolving program, you may earn 5% at supermarkets for 3 months and then not have the opportunity to earn the same savings for a full year once that quarter ends.
So Which is a Better Deal
It really depends on how you plan to use your card and whether you're going to carry a balance. For most, knowing what you're going to earn ahead of time and have it set in stone is more appealing. However, because the structure of fixed programs is such that you earn more in competitive categories all the time, the interest rates usually aren't as favorable. But, if you aren't planning on carrying a balance, they can be more lucrative. It makes the most sense to analyze your situation and think about what you use your card for when determining which program structure is best. Not every situation is the same, but one things holds true no matter which type of cash back card you choose -- earning money back on everyday purchases is a very nice perk as it doesn't happen when you pay for things using cash.