There are a number of different rewards based credit cards around these days, and one of the most popular ones is the cash back credit card. This type of credit card offers an extra benefit to consumers in addition to the ease, convenience, and flexibility that most credit cards offer. By using this type of credit card to make purchases cardholders can actually earn money back on what they spend from the credit card company rather than being stung for cash by the card provider for the privilege of having a credit card.

The level of cash back offered on these cash back credit cards can vary from one card provider to another, and this is something that you will need to check and compare, as you want the best level of cash back possible. You will earn a specified level of cash back for each pound that you spend on the card – for example, some cards may offer 1% cash back whereas others may offer 2% or more per pounds spent.

You may also find that some cards have special offers, such as earning a higher level of cash back when making purchases from a particular retailer or paying a higher level of cash back for a set period of time.

Although the cash back levels earned are low in terms of percentage the cash back can soon add up. However, to bear in mind that you will only benefit from these cards if you pay your balance off in full each month. If you spread your repayments and have to pay interest on your balance, the interest that you are charged will cost you way more than the cash back you earn. Therefore these credit cards are beneficial only to those that repay their balance each month in full and will therefore not be charged any interest on the card.

Also, remember that you will not earn any cash back for cash withdrawals or transactions made on the card, so these types of transactions should be avoided, as they also incur extra costs as well as interest. Therefore you need to make sure that you only make cash transactions and withdrawals on your in an emergency rather than as standard, otherwise you will not enjoy the benefits of earning cash back, and will have your cash back earnings affected by the charges and interests applied on these transactions.

Dos and don’ts

If you want to benefit from a cash back credit card:

• Do use your card on a regular basis or to make a larger purchase so that you can earn more cash back
• Do repay your balance in full each month so that you are not charged interest on your spending, as otherwise this will counteract any cash back you earn
• Do avoid making cash transactions and withdrawals on the card, as these will incur charges and interest, and will not earn you any cash back
• Don’t spread repayments on the balance and end up paying interest to the card provider