Cash back credit cards are among the most popular types of credit cards being issued today. Below are the 5 types of categories in which most of these cards provide “cash back” for. The percentage of which varies depending on which company issues your card and your personal credit history.
1) Gasoline: This is one of the most popular categories because of the high percentage of cash back you can earn as well as the frequency at which it is purchased. Some gas credit cards can earn between 5% and 8% cash back. Assuming 5% cash back and $100 dollars spent on gas each month, one could save up to $60 per year. Or to look at it another way, one could turn a $3.0 per gallon fill-up into a $2.85 fill-up simply by using one of these cards. As for getting the rebates, many gas credit cards allow you to earn your rebates differently. Most company related gas cards (ie. shell card, etc) credits your rebates to your next statement bill, however some cards may require that you request the rebate once you have reached a certain amount.
2) Food/Grocery: According to this Salem News article Americans spent roughly $895 billion on food in 2005. If this amount had been purchased using a cash back credit card with a 1% reward structure, over $8 billion could have been saved (in the form of rebates) by American consumers. These types of cash back cards can provide anywhere between 1% – 5% cash back. This can add up to substantial amounts of savings for individuals and families with even modest grocery budgets.
3) Dining Out: This category ties in with the above category and the $895 billion spent on food in 2005 may have encompassed both of these. Typical returns on these types of credit cards can vary between 3 and 5% and may require certain expenses at specified restaurants for maximum earnings. In other words, some credit card issuers may make deals with individual restaurants, wineries, etc which impose incentives for the consumer to choose that particular place to eat.
4) Drug Store Items: Many Americans needs prescriptions filled each month along with many other essential drug store items such as Tylenol, diapers and make up. With a monthly drug store expenditure of $75 and a drug store rebate credit card offering a 5% cash back rate, one could save $45 annually with these cards. Some cards may even earn higher rebates for drug store purchases, as much as 8%. This would be an additional $20 to $30 saved.
5) Leisure (Books, Movies, etc): Many credit cards on the market can provide earnings of 5% on all movies, music and book purchases. Assuming you spend about $35 per month in this category you can earn about $21 back per year. Just make sure these cards don’t come with any annual or hidden fees and be sure to pay the full balance back each month.
If there is a possibility that you may be unable to pay the full amount off each month with any of the credit cards mentioned above, be sure they come with the lowest possible APR as the interest accumulated each month may eat away at your rebate earnings.