Everyone has heard of cash back credit cards. For every purchase you make on your card, some percentage of that amount is returned to you at a predetermined date, usually on an annual basis. While this sounds like a situation where you can’t lose, that may not be the case.
Should you decide that you will be carrying a balance on your credit card on a regular basis; your highest priority should always be the APR that your credit card is associated with. Your interest rate will have a greater impact on you financially than the small percentage you might get back at the end of the year by using a cash back card. Remember that your returns will only be from 1%-5% annually from many of the cash back offers, and this pales in comparison with the amount of interest you will be paying by carrying a balance. If you can find a cash back credit card offer with a lower APR than a regular credit card offer, then of course take it. Chances are you won’t.
Creditors make a profit from charging an interest rate on the balance that your carry on your card. Cash back cards tend to have a slightly higher APR than other card offers. This is not always the case, but it can...
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