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Cash back and reward credit card programs seem very similar
and are very often clubbed together by many credit card companies
and banks. Still there are differences in the manner by which
you earn the "currency" and how you use it. It is
up to you to decide whether you would like to earn points
and redeem it for merchandise or receive hard cash. Your preference
will help you to decide on choosing either the cash back or
reward credit card program.
Cash back rewards programs are, as the name suggests, programs
that give you back cold cash or offer a certain percentage
of what you have spent on your credit card as cash rebates.
This is definitely the most uncomplicated type of reward and
it is good for people who want hard cash in exchange for their
credit card loyalty. In the cash back program you may get
less value at the end of the day but it is easier to monitor.
In other types of credit card reward programs you receive
points for your purchases, generally at a rate of one point
per dollar spent on the card. The hassle is in keeping track
of the points. Here the credit card companies have an advantage
as they price award merchandise in terms of required points
to redeem for the things you want. However, compared to buying
the merchandise at retail prices it is a great deal, particularly
since you have earned it by simply being loyal to a credit
card company.
Some rewards credit cards have very specific currency, such
as those issued by banks in partnership with gasoline retailers
or generic gasoline rewards cards, such as the Discover Gas
Card. Points earned on these types of cards are stored in
a points bank and used as a credit to future gasoline purchases.
These are beneficial if you drive a lot and have a huge monthly
gasoline bill. But, as with other types of statement credit
rewards, consumers may not enjoy rewards in the form of debt
reduction as those that provide a gift or actual cash in hand.
Neither of these programs fill your pockets, but they do
give you back hundreds of dollars per year just to use the
credit card without any annual fee. It sure is better than
having debts and paying interest!
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