Use a credit card and earn up to 5% cash back!


Credit cards have become a staple of the United States economy since the 1990s. The idea of the revolving line of credit was first introduced in the late 1800s, but it took many technological advances in the process of processing the credit card payments before credit cards were found in every household. Today, depending on who you talk to, a credit card can be a man’s best friend or his worst enemy!

What exactly is a credit card?

A credit card is simply a loan. When making a purchase with a credit card you are making a promise to pay for a good or service at a later date. The user of the credit card will receive a monthly bill which will list all of the purchases made during the most recent billing cycle. Most of the time the customer is given the option to pay a minimum amount due of the balance owed which is usually between 1-3% . It is very tempting for a borrower to pay the minimum and leave a balance on the credit card, however he will have to pay interest on the balance that he keeps. The interest rate can be as high as 30% APR!

So with the risk of having to pay interest, why would anyone use a credit card?

Credit card issuers offer great deals to their customers. An issuer may be a bank, a retail store, a restaurant or even a gas station. All of these businesses are looking to win your business and your loyalty. We have all been checking out of a clothing store and been told that we could get 15% off of this purchase if we sign up for that stores rewards card, right? Well, they want you to sign up for their credit card so they can offer you benefits which will ultimately make you a more loyal customer.

Most banks offer very appealing credit card benefits. There are options of cash back, points which you can redeem for gift certificates or products, or even miles to specific airlines. When using a credit card with a ‘cash back’ rewards program you can often times earn up to 5% cash back on your purchases! If you are spending a couple thousand dollars a month that is $100 a month free in your pocket!

For those who like to travel there are also some very appealing mileage credit cards on the market. While some of them have annual fees attached to them, they will most likely be very rewarding if you use your credit card for most of your purchases. Most credit cards with annual fees wave them the first year to get you to try them out as well as give you an up-front bonus. The mileage cards will give their new customers a free roundtrip domestic flight in most cases!

Credit cards are also beneficial for the card holder because it can help increase your credit score. Making your payments on time and in full will show lenders that you are not a risky customer and in turn your credit rating will rise. Making your payments late will result in large penalties as well as interest charges.

Go online and check out the different benefits that credit cards can offer you. If you do not already have a credit card it is a good idea to apply for one to help build your credit score. Remember that you can be receiving up to 5% cash back on all of your purchases, so get on top of it today!

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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