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Credit Card Survey - We have just completed out 2010 cash back credit card survey, where we have surveyed and investigated 19 cash back credit cards in the market (as new cards appear, we will add them to the results). Out of this survey, we are doing a report here about the state of cash rebate credit cards. Here is our outline.
Table of Contents
Editors Choice - For those who don't want to read everything!.
Understanding Cash Back Formula
How Cards Pay Your Cash Rebates?
Caps on Rebates
Cash Back Credit Card Comparison Table
Editor's Choice - Our Top Pick
The Blue Cash® from American Express is perhaps the top (or at least top two) cash back credit card in the market. It has the highest payout for "everyday purchases" expenses like gasoline and supermarket (see application page). I personally have this card and on average, my annual rebates comes out to over 2%. Customer service has been excellent for me as well. I highly recommend this card as a core cash back card for anyone looking to earn cash rebates.
The problem with most cash rebates given by credit cards is that they are confined to just a few categories or they only pay 1% rebates. This is where the Discover card blows away most other cards. You can earn 5% rebates on more items than any other card. Here's the run down :
5% rebates on Airlines, Hotels, Car Rentals and Cruises between Jan and Mar
5% rebates on Home Improvement Stores, Department Stores and Clothing Stores between April and June
5% rebates on Gas Stations, Hotels, Theme Parks, Zoos and Bookstores between July and September
5% rebates on Grocery Stores, Restaurants, Movie Theaters, Movie Rentals between October and November
Furthermore, what if I told you that you could earn anywhere between 5% and 20% rebates (I look at them more like discounts) at over 100 online retailers like GAP.com, OldNavy.com, Dell.com, BestBuy.com!
Double the value of rebates that you have earned if you redeem them for select gift cards (over 100 partners). For example, if you have accumulated $40 in rebates, you could get a $80 celebrity cruise, carnival cruise or Universal Orlando Resorts gift card or a $100 Hyatt Hotel and Resorts Gift Card
Well, the Discover® More® Card
is probably the most under-rated cash back card and many of their own cardholders aren't even aware of these great perks. No other card really comes remotely to matching Discover in terms of giving 5% rebates or more on so many items. When you combine this card with the Blue Cash, the amount of rebates you can earn will be unbelievable!
The TrueEarnings® Business Card from Costco and American Express is another cash back card that gets our thumbs up. It is one of the very few credit cards today that pays good rebates (more than 1%) on gasoline, restaurants and any travel items. If all you want is a simple rebate card without any tiers or complicated formula, this is the card to get.
Understanding Cash Reward Formulas
Before you go on trying to choose the best cash back credit card, it is best that you first understand the different types of cash rebate cards that are available in the market today. Let's go through the different types of cash rebate formulas that credit card issuers offer these days.
Basic Rebates (1%) - Most cash back credit cards offer 1% rebates on all purchases that are made on the card. This is the standard for most rebate cards.
Tier Rebate System - Some cash back cards impose tiers on their rebate formula. That means that you have to spend above a certain amount every year to earn maximum rebates. This isn't necessary bad because cards like that tend to offer higher rebates. One example is the Blue Cash from American Express, which pays 5% rebates on some items only after you spend $6,500 on their card. Below that, the rebate you earn is slightly less.
Reverse Tiers - While some cards pay you the best rebates after you spend a certain amount on the card, some actually give you less rebates when your spending exceeds a certain amount.
More than 1% Rebates on Certain Items - The better cash rebate cards pay more than 1% rebates on certain types of spending. Such items include gasoline spending, spending at supermarkets, drugstore, utilities, travel, restaurants. They range from 2% to 5%. You typically want to choose these cards rather than the ones that simply pay you 1% on everything.
How Cards Pay Your Cash Rebate?
Different credit card issuers present their customers with different ways to redeem their cash rebates.
Statement Credits - Some credit card issuers pay you back the rebates you have earned in the form of statement credits. Many gasoline credit cards used to do this by rolling your statement credits to the following months statement. Hence, the next months statement is actually low by the amount of rebates you have earned the previous month. Some cards like the Blue Cash from American Express gives you a statement credit on the anniversary date. So for one month in the year, cardholders will find that they will have a month where their bill is lower than usual because of the rebates.
Rebate check by request - Some rebate credit cards require the card holder to call the customer service center to have a rebate check mailed to them. Very often, you need to have earned a minimum amount of rebates for them to write the check (usually $50).
Automatic rebate checks - Some cards will simply write you a check automatically once you have earn a certain amount.
Automatic Bank Account Credit - Some cards will automatically debit your bank account once you have earned a certain amount of rebates.
Caps on Rebates
No Caps - The better cash back cards usually have no limits to how much you can earn. For those who spend a lot, this will be an important feature.
Monthly or Annual Cap - Some cards cap the amount of rebates you can earn either monthly or annually. This is not necessarily a bad thing (it just depends on how much you spend versus what is the cap). You can also get more than one rebate card to get around any rebate caps, or if you have a spouse, simply get two identical cards. Some of the caps apply to all types of purchases while some may only apply to certain categories of expenses. For example, when gas prices were skyrocketing not too long ago, some rebate cards capped the rebates they paid only on gasoline spending.
Cash Back Credit Card Comparison Table
Below is a summary of the results of the cash back credit card survey
| Card |
Rebate Formula |
Caps on Rebates |
Annual Fee |
Comments |
| Discover® More® Card |
0.25% for first $1,500. 0.5% for next $1,500. 1% rebates when annual expenditure exceeds $3,000 |
Unlimited Rebates |
$0 |
Editor's Choice - Allows you to earn 5% rebates on more items than any other card |
| Capital One® No Hassle Cash(SM) Rewards - Good Credit |
2% cash back on purchases at gas stations and major grocery stores and 1% cash back on all other purchases |
Unlimited Rebates |
$0 |
n.a. |
| Capital One® No Hassle Cash(SM) Rewards |
25% annual bonus on the cash you earn during the year. 1% cash back on every purchase |
Unlimited Rebates |
$0 |
Editor's Choice - if you have average credit |
| Discover® Student Card |
0.25% for first $1,500. 0.5% for next $1,500. 1% rebates when annual expenditure exceeds $3,000 |
Unlimited Rebates |
$0 |
Nothing great about rebates but can earn great rebates (up to 20%) with ShopDiscover.com |
| HSBC Platinum Mastercard® with Cash Back Rewards |
Earn 1% rebates for every dollar you spend. |
Unlimited Rebates |
$0 |
n.a. |
| HSBC Platinum Mastercard® with Cash or Fly Rewards |
Earn 1 point for every dollar you spend. Points can be redeemed for airline tickets or cash rebates |
Unlimited Rebates |
$0 |
n.a. |
| Chase Freedom |
Earn 1% rebates on all purchases. Earn 3% rebates on gas, groceries and fast food purchases for the first six months |
Unlimited Rebates |
$0 |
n.a. |
| Bank of America Cash Rewards Credit Card |
Earn 1% rebates on all purchases. |
Unlimited Rebates |
$0 |
n.a. |
| Bank of America Efectiva Visa |
Earn 1% rebates on all purchases. |
Up to $600 a year |
$0 |
n.a. |
| Bank of America Financial Rewards Visa |
Earn 1% rebates on all purchases. |
Up to $600 a year |
$0 |
n.a. |
| Bank of America® Acelerated Cash RewardsTM American Express® Card |
Earn 1.25% rebates on all purchases. |
Unlimited Rebates |
$0 |
n.a. |
| Bank of America Money Return Visa |
Earn 10% rebates on all interest charges you incur during calendar year |
Unlimited Rebates |
$0 |
n.a. |
| Motley Fool® Cash Back Platinum Plus® Visa® Card |
Earn 1% rebates on purchases |
Unlimited Rebates |
$0 |
n.a. |
| Schwab Bank Invest First Visa Credit Card |
Earn 2% rebates on purchases - rebates will be deposited in Charles Schwab account |
Unlimited Rebates |
$0 |
Consider if you have a Schwab Account |
| Wells Fargo Cash Back Visa |
Earn 1% rebates on all purchases. |
Unlimited Rebates |
$0 |
n.a. |
| National City Bank Everyday Rewards Elite Visa |
Earn 4% rebates on gasoline (up to $250 in net monthly gasoline expenditure), 3% on cinema and movie rentals, 2% on grocery restaurant and fast food. Earn 0.25% on first $10,000 in spending other purchases. Earn 1% after $10,000 in spending |
Unlimited Rebates |
$0 |
Looks impressive at first glance, but the Costco is a much better card |
Cash Rebate Credit Cards Articles and Lessons
Different Types of Cash Rebate Credit Cards
There are many types of cash rebates credit cards, each with its own unique formula. In this article, we highlight the main types of cash back credit cards so you will have a better understanding when you make your choice.
A closer look at cash back credit cards that pay 5% rebates
Cash back credit card that pay 5% rebates on certain purchases offer the best value for consumers. In this article, we look at the these cards in greater detail.
How to combine cash back credit cards to earn maximum rebates?
While cash back credit cards that pay 5% rebates on certain purchases is a great way to earn rebates from your credit card purchases, combining cards can allow you to earn even more rebates. Find out how.
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