Is Your Credit Card Leaving Money On The Table?

Credit cards have become increasingly important in the daily lives of many people, with ecommerce and online bill payments meaning that plastic is just as often used as simply a payment method as it is a way of borrowing.

If you've been using the same card for a few years, and you spend a lot of money using it over the course of a year, you might well be 'leaving money on the table'. This is because of the latest trend in credit card features: cash back.

What Is Cash Back?

The idea of cash back, where a small percentage of what you spend is refunded to your account, has been around for years, but the figures involved have always been quite small, with percentage rates of just a quarter of a per cent common on the cards that boasted this feature. Today, though, there are many cards offering far more generous rates, with a full 1% now commonplace.

What's more, in an effort to attract new customers, some cards are now offering very substantial introductory cash back rates for a period of 3 months or more, and with these bonuses hitting as high as 4% or 5% you can see how the cash can really mount up if you transfer most of your everyday spending onto the card.

Clear Your Credit Card Balance

There's one caveat though: card companies obviously hope to make money from these cards, and in general they'll do this by raising the standard APR of the card a little to compensate for the costs of running the cash back program. However, to get the most benefit out of your card, you shouldn't really be carrying a balance in any case as any money earned through cash back will be totally overshadowed by the interest costs you incur in carrying a debt from month to month.

If you clear you balance in full, each and every month, then the interest rate charged will not be an issue, and the cash back total will be yours to keep - a pure profit from money you'd be spending anyway!

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