There are many different rewards based credit cards around these days, with cards offering everything from air miles and reward points to discounts and travel rewards. There are also cards that offer a percentage of cash back on all purchases that are made on the card. Generally the percentage is only low, such as 0.5 percent or 1 percent of the purchase value. However, when used properly these cards can prove lucrative for the cardholders.

The idea behind cash back credit cards is that you use them to make purchases as much as possible. However, you need to make sure that you repay the balance in full each month within the interest free period. This means that you will not be charged interest on your borrowing, but you will still earn cash back for the various purchases that you make on the card.

If you tend to use your debit card or cash to pay for everyday purchases such as petrol, food, travel, etc. then it is worth considering using your credit card to make these purchases instead, and then using your cash to repay the balance before interest starts being charged. You can then earn your cash back without paying any interest, so you will effectively get something for nothing.

It is important that you do not spread repayments on a cash back credit card, as otherwise you will end up paying far more in the way of interest than you will be able to earn in cash back. However, if you are able to repay the balance in full each month then you can use the card as much as you like, as the more you purchase on it the more you will earn in cash back.

With these cash back credit cards you will not earn interest on cash transactions and withdrawals. It is therefore important that you do not make these transactions, as not only will you not earn cash back but you will also be subjected to hefty fees and charges. In order to make the most of cash back credit cards you should make sure that you: do not use them to make cash transactions; do not spread repayments on them so that you incur interest; and use them regularly or to make higher value purchases so that you can accrue more cash back

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