Rebate and Cash Back Credit Cards Overview

Rebate credit cards, or cash back cards as they are often called, are a very popular type of credit card to have. The article “What Are Rebate Cards?” introduces the topic and explains how rebate cards. work. Simple to understand and requiring little record-keeping, cash back cards can reduce your purchase costs across the board if you choose a card without an annual fee and are careful to avoid interest and any other fees, penalties, or charges. Technically, they are a subset of the type of card referred to as “rewards” credit cards, but they are in a category by themselves because they pay you back with money rather than merchandise, miles, minutes, or any other media. This is explained in more detail in the article “Rebate vs. Reward Cards.”

What rebate cards do is literally return cash to you based on your purchases and in accordance with their terms and conditions. With a card that is well-matched to your spending habits (see the article “How to Find the Best Rebate Credit Card for more information), you can buy exactly the same products and services that you purchased before you obtained the card and, in effect, pay less for them because you will receive a check or a statement rebate that returns a small amount of your purchase costs to you. It is not that uncommon for couples to see close to $1000 return to their pockets from their purchases.

Cash back credit cards have much in common with most other credit cards. They are a convenient alternative to paying for purchases with case and/or checks, and help with record keeping as well. They generally have one set of terms for an introductory period and then switch to a second set of terms more favorable to the card issuer and less favorable to the card holder when the introductory period is over. The introductory period currently varies from 0 months for some cards to 12 months.

As with other cards, the terms and conditions of a cash back credit card can be changes at the card issuer’s discretion. And like other cards, the Annual percentage rate (APR) and other terms are offered based on the applicant’s FICO score, which gives an indication of his or her creditworthiness. In July, 2008, the offered APR’s on rebate cards ran from 8.99% to 14.99%.

The range of interest rates runs from 0.5%–2% for many cards, but a number of cards have higher percentages offered in certain circumstances or with certain merchants, as well as offering different rates for different categories of purchase. One such circumstance is reaching a certain amount of charges, which—in the case of tiered cards—will cause a higher percentage to kick-in for the rest of the year for you.

Some cards offer bonuses when the first purchase is made or upon redemption, and while some have a cap on how much you can earn, for others there is no limit on the cash back you can rack up.

That’s the rosy side of things. Rebate cards do have their drawbacks, and these are detailed in the article “Pros and Cons of Rebate Credit Cards” so that you can make an informed decision and think through whether rebate credit cards are a good fit for you.

There is also an article “Who Offers Rebate Credit Cards” to help you understand another very important party in the agreement you accept when you decide to get a credit card. In this article we explain the differences between bank cards and cards that are of the type called affinity cards, as well as co-branded cards.