Whoever the person was at the Discover Card Corporation
that came up with the idea for cashback credit cards is a
true unsung hero in the world of banking and finance. After
all, this was a revolutionary idea. Today, while there are
a number of ways to make an application for a particular
credit card attractive in the early days there was little
more used to entice people other than offering low interest
rates or offering no annual fee. Then, someone at Discover
came up with the brilliant idea for a cashback credit card.
For those not familiar with this particular type of card,
its name implies exactly what it is: for every purchase on
the card you can get a certain amount of cash back. That
is, if you use the card at a specific retail store you may
receive a certain percentage of cash back on every
purchase. Needless to say, this idea proved wildly popular
and spawned a number of different cashback cards that
provide cash back on a number of services.
While this notion of receiving cash back on credit card
purchases seems like a great idea, there are those who may
be somewhat skeptical of the value and the benefits of such
a card. This is a fair and valid skeptical viewpoint. After
all, there have been many promotions that have proven to be
too good to be true so it is not surprising that a number
of people may look towards the various cash back credit
cards on the market and wonder if they are truly
worthwhile. This can be a somewhat difficult question to
answer because there are such a great variety of cashback
credit cards on the market that it would be difficult to
offer a blanket statement of whether or not the cards are
worthwhile. After all, some cards have terrible terms and
conditions and others have very fair terms and conditions.
However, if a generality had to be made it would be that
cashback credit cards are usually quite worthwhile if you
are looking for a minor discount on your purchasing budget.
If there were a criteria to base how worthwhile or not the
card is it would be based upon what percentage the cash
back represents. If the cash back purchase percentage is
low, then it may not necessarily be all that worthwhile to
make your purchases on the card. If the cash back
percentage is a fairly competitive amount, then the card
may have significantly more merit. Of course, if the
interest payments exceed the cash back amount then the
whole promotional aspect is a moot point. This can,
however, be avoided if the individual opts to pay the
balance completely in full every month. This would
eradicate interest payments and make the cash back value
increase significantly.
Another area that must be taken into consideration when it
comes to deciding whether or not a cashback card is
worthwhile centers on the method in which the card is paid
back. In some instances, the cashback is provided in the
form of adjusting (reducing) the statement balances and
others will pay the amount directly and mail a check. When
it comes to receiving a check, one must realize that there
may be a minimum cash out amount requirement. (For example,
$25 must be accrued in cash back "points" before a check
can be requested) The frequency of how often you use the
card will then play a significant role in defining whether
or not the cashback card it worthwhile. Additionally, there
will be some cashback cards that will only make their
payouts on an annual basis. Is waiting a year to collect
the money that you are owed acceptable? If it is, then the
card is worthwhile. If not, then the card simply will not
be worth it.
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