Cashback Credit Cards
What are they - How they work
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Last update : December 2011
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| When we use a Credit Card the merchant who accepts the card has to pay a handling fee to the Card issuing company. But with a Cash Back Card the issuing company shares this commission with the card holder.
Expect about 1% - 2% cash back every time the card is used. Note that any cash back is normally paid annually. Although you will be able to see the cash back money accruing on your monthly statement.
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Be on the lookout for special offer Cash Back Cards which can pay up to 5% but this will be for a set period of time - usually 3 months and there is a maximum limit probably of no more than £500.
As ever there are some catches to these types of Cards, including -
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| Look for the catches |
- If you miss your monthly repayment or exceed your credit limit you can lose all your cash back money
- There's usually a cap on the amount you can earn in any one year, normally £500
- The Cash Back rates can be lowered, perhaps you signed up for a card that offers 2% but 6 months later the issuer drops the rate to 0.5% (smallprint clauses means they can do this)
- Most cards only credit the cash yearly
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| Are Cashback Cards worth it |
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Yes, if you spend large amounts on your Credit Card plus always clear the balance every month. But if the full balance is not repaid every month the interest bill will almost certainly be much larger than any Cash back received.
See also
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FREE Report
How to Audit your Credit File
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With errors your rating will suffer
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How a clean credit rating can save you money
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4 steps to a clean up any mistakes |
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Don't discount the importance of your credit file
It's absolutely critical.....
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Get the FREE report |
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Read more in the Credit Cards section:
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