Credit card companies offer a variety of rewards to selected customers. Among the many reward programs is the Cash back, this system among the others, is offered to attract customers. Customers feel that with the cash back rewards, they will get back a part of their money.
One must remember however, that the terms and conditions of the credit card companies have been tailor-made in such a manner that the cardholder does not earn huge amounts in cash back. This is done to protect the business interest of the credit card companies. It should be noted that only one to five percent of the final purchase is offered as cash back. So unless the user spends a sizeable amount he will not earn much of cash back that would stand to be beneficial for him.
Irrespective of the above factors, there are certain benefits of cash back reward credit cards
. These benefits can be summarized in the following points:
- With the cash back reward credit card, the cardholder earns a percentage of cash for every purchase made. The purchases can be from food and beverages to air line tickets or common grocery materials. Cash back reward credit cards offer a scheme through which the credit card user is paid a part of the money that he spends back.
- Cash back reward credit cards can be used to balance the monthly credit bills. Since this facility offered by the different credit card companies pay a percentage, which is usually one to five of the total expense, the cardholder gets to save that percent of money from his bills.
- The use of cash back reward credit card is not confined to a specific use or merchant. This facility can be used anywhere and anytime. Some credit card companies have a period throughout which, the reward remains valid. The user therefore needs to use the cash back facility within the grace period.
Cash back rewards are most beneficial in case of business credit cards
. They have been found to be greater in value than normal credit cards. As it is difficult for common consumers with an average credit line to make purchases of higher monetary value, therefore their credit cards will have no or minimal cash back benefits. Business people with an above average credit line will be able to reap the advantages of cash back reward offers. Since the business expenses are much larger than that of common people, their cash back percentages will be higher. Moreover, credit card companies will offer greater cash back benefits to such people as the bank will have a greater opportunity to earn revenues than that of the normal middle class customers.