3 Tips on Choosing a Cash-Back Credit Card

  • Which cash-back card is best? If you pay your balance in full each month and use your credit card frequently, you may want to consider a credit card with cash-back rewards. The obvious benefit is that you'll earn rebates on what you'd buy anyway.

    The trouble is weeding through all the choices and finding the right card. Almost 50 percent of all card offers feature cash-back rewards, according to Synovate Mail Monitor, a global market research firm.

    To help you narrow the hunt, Bankrate.com has surveyed 32 popular cash-back rewards cards. A handy chart lists each card, along with annual fee information, any introductory bonus, the reward formula, the cash-back ratio, any expiration period on accumulated rewards and other important details.

    In light of the data, here are some tips to help you find the best cash-back credit card.

  • Compare payouts "The typical cash-back return rate is 1 percent," says Anuj Shahani, director of competitive tracking services at Synovate.

    However, some cash-back cards give you the opportunity to boost your payout based on spending level, purchases made in certain spending categories or category bonuses. For instance, the Chase Freedom card and Discover More offer 5 percent cash-back in certain purchase categories that change. Blue Cash from American Express offers 5 percent cash back on "everyday purchases" once you hit a spending threshold of $6,500.

    Bankrate.com's cash-back credit cards study makes it easy to compare cards. Our chart shows the "cash-back ratio," which lists the rate or rates of return offered on transactions, and the "reward formula," which details the reward offering and explains the break points for higher payouts.

    Of the 32 cards surveyed, 28 percent offered higher returns for purchases made in certain spending categories. Nineteen percent of the cards offered tiered reward rates based on spending level.

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    Bankrate.com is the Web's leading aggregator of information on financial products including mortgages, credit cards, new and used automobile loans, money market accounts, certificates of deposit, checking and ATM fees, home equity loans and online banking fees. Visit Bankrate.com to get the tools and information that can help you make the best financial decisions.