Finding a Great Cash-Back Credit Card

If yours is one of the 30% of households who carry credit cards but pays off the balance each month (source: Federal Reserve), the interest rate on your cards matters little to you. With many credit cards not charging annual fees, what you want to look for is a credit card with a good cash-back program. Cash-back credit card issuers are tricky, however, and what you see is rarely what you get. So what are some of the best "free money" plans out there?

Cash-back credit cards are better than other reward cards

Many reward cards offer you frequent flier miles, or other incentives, but cold hard cash is hard to beat. Most frequent flier reward cards charge an annual fee for the privilege of giving them business. Then there's the ever increasing difficulty of getting the frequent flier tickets you want.

Other reward cards offer you gift certificates for one retailer or another. Some are affiliated with car manufacturers and offer a discount on your next vehicle purchase. All these rewards limit your flexibility and require you to spend them. Cash-back credit cards provide the simplest, most flexible reward.

You can use the cash-back reward to pay bills, save for little Johnny's college fund, or just put away some money for a rainy day. Of course you can also use the cash-back reward to take your sweetie out to a fancy dinner date without going into debt.

With nearly one in three transactions in the U.S. paid for with a payment card of some sort (source: Visa USA), and over $1 trillion per year just on U.S. Visa cards (source: Visa USA), cash-back rebates can provide a handsome reward for U.S. card-holders.

Not all cash-back credit cards are created equal

Our wallets are saturated with credit cards. That's why it's important to find which ones provide a good cash-back plan. Many websites are dedicated to comparing consumer credit card offers (see Resources box). However, the information there is not complete, and can be misleading.