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Consumers who practice responsible spending with their credit cards can earn some extra money for their efforts. Several year ago, the top cash-back credit cards routinely offered cardholders up to 5% rebates for purchases. A few card issuers have gone back to 5% cash back credit card offers. There may be a twist, such as purchases must be made in specific categories that rotate every quarter and have maximum limits.
Although most cash back cards offer 1% rebates on purchases, there are credit card companies that have higher rebates.
Interest rate and introductory periods
According to data compiled for the Bankrate’s 2013 Credit Card Cash-Back Rewards Survey of 54 credit card rewards cards reviewed from 22 of the largest issuers, it found that 34 of the cards also offered zero percent interest rates for purchases for at least the first six months. The most common introductory period for these cash back cards is 12 months, which 22 issuers offered.
Five of the credit cards had introductory periods of 15 or 15 months. The remaining cards had durations between six and nine months.
The Credit Card Accountability, Responsibility and Disclosure Act of 2009 (CARD Act) requires card issuers to keep introductory APRs in place for a minimum of six months.
Compare APRs after introductory period
The low introductory rates offered by card issuers are specially intended for borrowers who carry balances from month to month. According to Bill McCracken, CEO of Synergistics Research, “(Issuers) hope they will stay past the intro period and become profitable interest payers,” he says. “Consumers have to educate themselves on what the rate will be after the intro (rate) expires. (It) could be good but could be bad.”
Research shows that cash-back cards with zero percent introductory have an average interest rate of 17.78 percent. This rate is 2.5 percentage points above the average APR for cards with variable rates. Riskier borrowers might pay as much as 25.99 percent. These cardholders could end up paying more interest than the rebates they receive if they carry large balances from month to month after the intro APR expires.
The average APR after the introductory period runs from 13 percent to 15 percent. Some issuers have rates as low as 7.9 percent, based on a survey conducted by the website SmartCredit.com.
Three cash back credit card offers
The following cash back cards do not charge an annual fee:
QuicksilverOne Rewards – 1.5% cash back on every purchase, every day- average credit required. 0% intro APR until June 2014; 19.8% variable APR after that . Transfer purchases 19.8% variable APR; No Transfer Fee 0% , until 09/2014
Chase Freedom – Earn 5% cash back on up to $1,500 spent in bonus categories each quarter and. Receive $100 cash back after spending $500 in 3 months from account opening . The card has an introductory APR of 0% for 15 months and a variable interest rate of 13.99% to 22.99% after the intro period. 100 cash rewards bonus after you spend $500 on purchases in the first 90 days of account opening.
BankAmericard Cash Rewards – Receive 1% cash back on all purchases, 2% cash back on groceries and 3% cash back on gas. The introductory rate is 0% for 12 billing cycles for qualifying purchases & balance transfers made in the first 60 days and then a variable interest rate of12.99% to 22.99%.
To really benefit from the best credit cards that offer cash back programs, it’s important to save money by paying your bill off every month to avoid the high interest rate charges. At the very least, make your payment on time to avoid late fees