As consumers scramble to keep afloat during a downturn in the economy, credit card companies have continued to push cash back reward programs. According to the market research firm Mintel Comperemedia, credit card offers mailed to consumers have increased from 1.086 billion in 2006 to 1.118 billion in 2007, even as direct mailings in general declined. Christopher Zagorski, a senior analyst at Mintel, said that companies are looking to encourage consumers to use their credit cards for more than big spending sprees but for everyday purchases, as well. For savvy consumers that may be the ticket to earning big rewards.

Although cash back cards aren’t for everyone, people who are able to pay off their balance each month are sure to benefit. Because these offers tend to have higher interest rates, carrying a balance will negate the value of any cash back that’s earned - so it’s important to reduce interest charges as much as possible by paying off your credit card quickly. Most of these offers are targeted to consumers with a credit score above 720 with rebates ranging from 1% to 5% cash back.

While many cash back programs are simple, others can be quite complicated. For example, the Chase Freedom Credit Card rewards 3% cash back - but only if you spend in certain categories - then it reverts to 1% after reaching $600 monthly. The terms can also vary on how you can spend or redeem your rewards. Some will automatically credit your account; while others will issue a check quarterly or yearly. Be sure you understand any limitations on your cash rewards and make your claim before the expiration date (if applicable).

Consumers can earn substantial rewards if they use their credit cards wisely. Before you apply for a cash back credit card, examine each offer and look for terms that will benefit your personal spending habits. Once you’ve chosen an offer, the key is to payoff your new charges quickly and avoid carrying a balance.

Posted in Credit Tips, Card Advice

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