Credit card use more expensive now

MOST of us have credit cards.

All these holders will have to brace up to pay more on their dues. The Government has imposed a 5 per cent service tax on the credit facility offered by credit cards. This is with effect from July 16.

The Government is leaving nothing out. This tax will apply on all charges, including interest and annual payments. Services rendered prior to July 16 will not be liable for the service tax. This is the saving grace and will apply even if payment is made after July 16. So, if you have some buying plans, use your card before July 16 to avoid some charges on the near-term usage. -- BL Research Bureau

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Kotak Mahindra Bank awards creative business of its credit card to JWT

Recently Kotak Mahindra Bank launched its credit card and it has awarded the creative business of its credit card to JWT. Industry sources have attached the size of the account upwards of Rs 15 crore. While the media business for this account continues to be with Starcom Worldwide.

Karthi Kumar Marshan, Head, Group Marketing, Kotak Mahindra Bank confirmed the development and said, “We have awarded the creative business to JWT and the agency has already started working on the creative work for our recently launched product.”

Currentlythe Kotak Mahindra Group has various other services in the domains of banking services, investment and insurance, and mutual funds, among others.

Yatra, Barclays join hands to launch online travel credit card

Travel services company, Yatra Online and global financial services provider Barclays will soon launch the Yatra Barclaycard, an online-travel co-branded credit card and a multi-carrier frequent flier programme.

The card offers attractive travel benefits and rewards, and is tailor-made to keep pace with the rapidly growing demands of frequent business and leisure travellers, Yatra Online Services CEO and Co-founder Dhruv Shringi said in a statement.

The Yatra Barclaycard is designed for the fast growing group of Indian travellers offering wide global acceptability, flexibility on credit limits and billing dates, while the Yatra Miles programme offers travel-related benefits.

"The range of cards especially targeted at Indian travellers who are increasingly using online travel services without having their spend rewarded," Barclays Bank PLC Head of Cards-India Kusal Roy said.

2 posts from January 2008

As part of its retail expansion, Kotak Mahindra Bank plans to enter the credit cards business by March 2008.

"We plan to introduce silver, gold and platinum credit cards. We will target high networth individuals," said K V S Manian, group head of retail liabilities & branch banking, Kotak Mahindra Bank.

The bank intends to set up this credit card business on its own rather than though tie-ups with other entities.

Branch expansion is also on the cards. Currently, the bank has 134 branches across 92 locations. "By May 2008 we plan to have more than 200 branches," Manian said. Besides, the bank will also set up 75 additional ATMs by February 2008, taking that tally to 150.

Credit card improved statistics in India

The advent of credit cards have not just improved the buying power of individuals, but has also made it quite imperative for the vendors to be ready with their card swiping machines, or else they would end up losing big money.

Since the latest statistics from the credit card companies elucidates that consumers spend nearly Rs 50,000 crore annually through credit cards, which is expected to grow at 50 percent over the next 4-5 years.

At present, about 87 percent of the entire plastic money transaction is done through credit cards. Further figures state that while travel and hotel bills along with dining, account for nearly 25-35 percent of the total purchases, jewellery purchase accounts for a staggering 10-11 percent. This is followed by apparel purchase at 8-10 percent and consumer durables at 6-7 percent.

"Travel has definitely become much larger a segment than what it was two years ago. Airline tickets, both domestic and international, are now bought through credit cards making it the largest category for credit card purchases," said an industry expert who did not wish to be identified.

Deccan offers special fares to SBI credit card holders

Low cost carrier,Deccan in association with State Bank of India has announced its special fixed fare offer called "SBI card Flat Fare" for all SBI credit card holders.

A fixed fare of Rs.499- (Basic fare) will be offered to passengers booking on Deccan using their SBI credit card. Taxes and surcharge,as applicable will be borne by the passenger, Deccan said in a release here today.

The offer is valid only for bookings made through the Deccan call centre (Prefix city code 39008888). Bookings under the offer are on till March 15 and valid for travel from January 15 to March 31.

This offer cannot be combined with any other package/scheme.Limited numbers of tickets are available under the offer and will be offered on a first come first serve basis.

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Credit Card Basics

1. What is a Credit Card ?

A credit card often referred to as plastic money, is a card, which is handy to carry and use for shopping or buying goods and services. You use your card to BUY a pair of shoes. You now owe the credit card company the amount paid at shoe store which will be billed to you, at a regular time interval, usually 30 days. More detaisl available here.

2.How is Credit Card different from a Debit card ?
A debit card is authorized only if their are sufficient funds in the account. While on credit card it depends on the cerdit line the issuing company has provided you. The basic difference is in debit card, you pay your own money and in acse of credit card, the issuing company pays for you to whom you have to pay later.

3.What’s the difference between secured credit cards and unsecured credit cards? Secured credit cards are usually given to those with bad or no credit history. A deposit is made, say Rs5000, which gives the customer Rs500o limit. The customer isn’t allowed to spend more than the amount of the deposit. As the deposit decreases, so does the amount the customer is allowed to “charge”. That’s why these cards are sometimes called prepaid credit cards, or bad credit credit cards(In Western countries, every individual has a credit history, will come to India soon. A person with bad credit history is known to have "bad cerdit") An unsecured credit card is granted to those with a good credit record, because they have a history of paying their bills on time.

4. How are my credit card finance charges calculated?
This is something you need to check out before you apply for a credit card. There are three basic ways finance charges are calculated, and they range from favoring you to favoring them. That’s why you need to know what method they use.

The first method is the Adjusted Balance method, where the balance on your previous statement is added to any charges. Then any payments you’ve made are subtracted, and the result is multiplied by the interest rate. This method is the most favorable for you.

The second method works out fairly even. It’s called the Average Daily Balance method, with charges and payments being added and subtracted as they occur. Then, at the end of the statement period, these charges are averaged, with that average being multiplied by the interest rate.

The other method, which will cost you the most, is called the Previous Balance method. The balance on the previous statement is first multiplied by the interest rate, then your charges and payments are calculated. With this method, in effect, you’re paying interest on the same amount twice.

5.My credit card has been stolen – what should I do?
Stealing credit cards is a huge business these days. Credit card fraud is at an all-time high, with identity theft at the source of most stolen credit cards. The first thing you need to do when you discover you don’t have your card is call your credit card company. They’ll immediately cancel your card so no one else can use it. (Always keep the number to call your credit card company in a safe place)

If you’ve acted quickly, there probably won’t be any changes on it. But if it’s taken a while to realize your credit card is gone, then your identity may have already been stolen, with the criminal making charges in your name.

6. Am I liable to pay for charges not authorized by me because of stolen credit cards ?
This is a tricky question. Some cards put your liabaility at Rs500. Most others don't. They hold you accountable for charges made by others. This is only seen in India. In the US, if you call the company and tell them that your card is stolen, then you have no liablity on fraudalent charges. However, in India, our own financial institutions make their own customers scapegoats and haress them. I strongly object to these practices by Indian banks/FIs along with VISA, MasterCard & AMEX.

7. What’s a balance transfer?
A balance transfer is used as an advertising tool by credit card companies. To persuade you to use their credit card, they’ll offer to pay off any existing cards you have, and add the balance to a new card with their company.

Visa, MasterCard, and American Express, the big three of credit card companies, are constantly competing for your business by offering balance transfers at reduced interest rates.

8.What are pre-approved credit cards?
This is another method credit card companies use to get your business. They get a list from a CRA (credit reporting agency), or employers or Luxury car woners, of people who have good credit records and favorable payment histories(Mobile Bills, Club Memberships etc).
These people have a history of paying their debts, so they become prime targets for pre-approved credit card offers. In effect, that’s exactly what the credit card company’s done – they know you’ll pay, so they’ve already approved your application. And to further entice you, they’ll usually offer you a low interest credit card. But watch that interest rate – it could go back up within a short period of time!

9.Do credit cards have hidden costs?
Generally, credit cards don’t have hidden costs. What they do have is extra charges, such as application fees, annual fees or late fees. Although these fees aren’t hidden, you need to read the entire “Terms & Conditions” that comes with your credit card – all the fine print – to be aware of these charges.

10. Can I get a credit card if I’m under 18?
You can’t legally have a credit card in your name if you’re under 18, but there are other ways to get one. You can get a prepaid credit card, or a secured credit card. Or you can get a parent or legal guardian to get a credit card on their account, with your name on it. That’s a great way to start building a good credit record.

If you’re a student, 18 or over, you can get a student credit card. That’s also a good way to start working towards establishing a positive financial picture.

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Getting the most from your credit cards involves four main steps:

Use your credit cards wisely.

Protect yourself against fraud.

Review your credit history regularly.

Get the right card for your needs.

Use your credit cards wisely

Follow these simple tips to get the most from your card.

Tips:-

Pay your credit card bills on time. This is the single most important thing you can do to preserve and enhance your credit rating. Always pay at least your minimum payment and allow time for your payment to reach the company if you are using the mail.

If possible, pay off your balance in full each month. If this is not possible, then make as large a payment as you can comfortably afford. Paying off or paying down your balance is a sound financial move—one that will save you money on interest charges.

If you can’t pay off your balance in full, then slow down on your credit card use for the next while. Take time to step back and have a careful look at how much you earn and how much you spend each month. A little budgeting can save you big money down the road.

Check your statement carefully each month. Review your statement carefully. Do all the charges look correct? Have any required credits been applied? Are there any unusual or unexpected charges? Your credit card company will correct legitimate errors, but only if you bring them to their attention in a timely manner before you pay your bill.

Transfer your balance to a card with a lower interest rate. If you have two or more credit cards with outstanding balances, consider moving the outstanding balances to the card with the lowest interest rate. You will save money each month and simplify your record keeping by receiving only one bill.

Negotiate for a lower rate with your credit card company. If you have a good credit history, you are a valuable asset to your credit card company. Call them and seek ways to lower your interest rate. This is often possible, but never advertised. If the interest rate you are currently paying is very high, imply you may cancel the card and go with a competitor unless they adjust your rate downward. It doesn’t hurt to ask, and you may be surprised at the results.

Protect yourself against fraud

While credit card fraud is a problem, here are a few simple steps you can take to greatly reduce the risk of becoming a victim.

Tips:

• Sign new cards immediately. When you receive your new or replacement card in the mail, sign it, in ink, right away. If it is a replacement card, destroy the old card by cutting it into many small pieces.
• Shred old credit card receipts. You can purchase an inexpensive paper shredder at an office supply store. All old receipts with your credit card number and any unneeded documents with your social insurance number or other sensitive personal information should be shredded before disposal. This prevents the common practice of criminals going through the trash to find receipts and stealing your identity
• Never fax your credit card number. Your credit card number can lie for hours in the fax basket at the other end. Anyone passing by can record your number and begin to use your card number fraudulently. It is even possible for criminals to intercept your credit card number while the fax is in transmission.
• Use caution when giving your credit card number out on the phone or on the Internet. Only give out your credit card number on telephone calls you initiate to business or organizations you trust. Never give your number out to callers who call unannounced, no matter how legitimate the call sounds.
• On the Internet, look for an Internet address that begins https:\\. The “s” indicates that it is a secure connection and a small padlock symbol should appear in the bottom right hand corner of your screen, indicating it is safe to transmit your credit card number.
• Call your credit card company instantly if you suspect trouble. All credit card companies have 24 hour lost and stolen help lines. If you lose your wallet or purse or have it stolen, call without delay! Much fraud happens within the first hour or two, before the victim realizes the cards are missing. Your credit card company will block your cards from being used and stop you from being responsible for any charges thieves incur.
• Take advantage of any security features your card offers. Many newer cards have the option of including your photograph on the card. This is excellent protection and is highly recommended.

Review your credit history regularly

After you have obtained the best credit card, and are using it wisely, review your credit history on a regular basis. This helps ensure your history is accurate and that any issues have been resolved to your satisfaction.

North America has three national credit-reporting bureaus. Your credit rating is held at one or more of these bureaus. When checking on your rating, be sure to contact all three, as your rating may be held on file at more than one bureau. The three national credit bureaus where you can check your credit report are Equifax, Experian, and Trans Union. Check the Yellow Pages, under Credit to find the numbers in your area.

Get the right card

With all the choices in cards available, chances are good,very good, you can find a better card for your needs. Today’s cards can save you money, offer better features, and even support a cause you believe in. Here are some tips on finding the right card and where to check that you have the best card for your needs.

Tips:

Be alert for companies offering a great interest rate for transferring your existing balance to their card. Usually these rates are only in effect for a short time, often six months. At the end of this time, the rate can revert to a much higher permanent rate. Keep your eye on the Annual Percentage Rate (APR); this is the figure that counts in the long run.

Lower is better: read the fine print and find the Annual Percentage Rate (APR). This is the interest rate the companies charge you if you carry a balance. You want the lowest rate possible; as each percentage point drop will save you money on the months you have an outstanding balance.

Nothing can be better: Try for a credit card that does not charge an annual fee. Many credit cards charge you a fee each year to use their cards. While this may be offset by other benefits the card may offer, you can find cards that do not charge this annual fee. Why pay for the privilege of using a credit card when you don’t have to?

Explore the options: Today’s cards offer a wide range of excellent features, including frequent flier points, programs that bank points toward a new car, and cards that support charitable organizations. Other options worth having include car rental insurance coverage, trip cancellation coverage, and extended warranty coverage.

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Difference Between Debit and Credit Card

Many still don't know the difference between Debit and Credit Cards. Debit cards are most popularly known as ATM cards in India.

During the post-liberalization era, the Indian consumer had very less time in a Day and was looking for self banking. Thanks to K V Kamath who started the modern banking revolution - ATM, Online and Mobile Banking.

ATM/Debit Card:

Debit Cards are always tied to a Bank account [Savings or Current]. Earlier, Debit Cards came with a 4 digit PIN [Personal Identification Number] and you could use it to withdraw cash, view statements etc. They served as a Teller for your Bank account. These days, in addition to PIN and teller type ATM transactions, debit cards are endorsed by VISA or MasterCard and they can be very conveniently used like credit cards, but only if you have sufficient balance in your Account. Since you are using your own money, their is no APR [Annual Percentage Rate] or Interest.

Credit Cards:

Credit Cards are basically unsecured loans given to you by a Bank or a Financial Institution. Every credit card has a pre-set spending limit / credit limit. In India, the banks look at your Income Tax returns or your salary slip and fix the credit limit. Their is a payment grace period [upto 30 days] within which you have to payback the amount you have spent on your credit card failing which you will be charged an interest on the amount used. Depending on your credit card usage and payment record your credit limit will be raised.

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Who stole my credit card?

If you have lost your credit card and someone has used it, can you find the thief? Yes, here’s how…

Time: 4.30 pm. Venue: A shop at a mall in Kochi city.
She looked at herself in the mirror again. The trousers fitted her perfectly. The grey T too sat on her shoulders well. The whole ensemble was stylish and she was satisfied. But she had little time. Her flight back to Chennai was at 7.30 that evening.

She was praying all the time that the pilfered credit card she would use for payment would go unnoticed like the two small payments she did earlier as a dry run. She mumbled a short prayer inside the trial room and came out smiling. “I will take the two, they fit me perfectly,” she said.
“It’s the latest cut madam. Will you pay by card or cash?” asked the sales person.
“Card, please” she answered keeping her fingers crossed.

That must have been the longest wait for her as the card was processed and she signed the payment slip, clutched her carry bag and with a polite ‘thank you’ was out. She waved to an auto-rickshaw and quickly was on her way to her hotel room and subsequently on the way to the airport. She was tempted to wear her new clothes but that could wait. She needed to get out of Koch as soon as she could.

6.45pm, Foyer of the same mall,same day
Sajil Kumar takes out his wallet to make a payment and finds his credit card missing.
“It cannot be lost because I have not taken the wallet out since morning,” he tells his boss, Raju Kannampuzha half an hour later.

“Contact the credit card section of your bank at once and deactivate the card,” Raju orders him. Seeing Sajil’s helplessness, Raju takes the matter into his hands. Both men from an event management companyhad been at the mall for two days on a promotional activity for a company. As it was an all India event they were joined by a person handling the event from Chennai. It had been hectic, the event, the music and the crowds. Sajil had not bothered even with food and then this…his credit card goes missing. “Once you lose your credit card there’s nothing much one can do,” he moped after reaching the bank and deactivating his card. Looking at the transactions made he found to his surprise that the card had been used three times since morning. It was for a small of amount of Rs.100, then for Rs. 250 and then a major transaction of Rs. 5,000 was carried out.

He returned with this information to Raju, who at once found out where the big shopping had been done. The two reached the store and asked for the details of the transaction for Rs. 5,000, telling them the need for such investigation. The store keepers were attentive and cooperative. They immediately rewound the CCTV in the showroom and went through the customers who were there at 4.45pm when the transaction was done. The footage revealed to the horror of Raju and Sajil that there was only one customer in the store at that time and it was their colleague from Chennai!

The two quickly took printouts of the footage, copies of the transactions and asked the shop staff to be more alert when carrying a credit card transaction. “How can a Sajil Kumar be a lady,” asked Raju. “Why did you not check the signature that’s behind the card?” questioned an agitated Sajil. But they had played Sherlock Holmes and found the thief.

“We called her up in Chennai, next day and told her everything, about our investigation. She was stunned and offered to return the money. No, we did not inform her office or her boss,” said the two gentlemen.

Adds Raju, “There are lessons for all of us to learn from this. We now know what we can do when our credit cards are stolen or lost and store keepers need to be very careful when they make such transactions. And I hope nobody will try thieving with cards any more”

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CIBIL and Credit Score in India

Credit History is a an alien term to 99% of the Indians. So lets explore the necessity of Credit History in India.

Prior to 2003, many businessmen[small / petty traders / contractors etc] including large business houses such as Essar, Jindals etc would borrow heavily from one bank and due to their mismanagement would default on loan payment @ that bank and go and avail a second loan at another bank without the knowledge of the first lender. This led to severe rise in Non Performing Assets of Banks, mainly PSU banks.

*Must Know about CIBL

In 2002, all the banks came together to form a Credit Bureau which would share only the Credit[Any type of Loan or Credit or Money borrowed] information of borrowers indexed on the basis of IT - PAN number. Thus Credit Information Bureau of India Ltd [CIBIL] was born. In countries like the US & Canada, even defaulting on paying your Rent or Cell Phone Bill, you can get reported to the credit bureau as a defaulter.

*Credit Information Bureau (India) to maintain fraud database

Thus if you avail a loan in SBI @ Kashmir and if you default on the payment, you can't goto Mumbai and avail a loan in any bank because your data from SBI Kashmir is now reported to CIBIL.

Credit Lenders request for a copy of CIBIL report before lending. CIBIL report comes with a statistical score based on various factors and is known as CIBIL Credit Score. This score is an estimate of an individual's creditworthiness. The score tells the risk of lending to a person. So be very careful the next time you default on paying something.

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The Beginning of the Credit Card Era

It can be difficult to wade through the masses of credit card offers you may receive, especially when low interest credit cards and rewards cards catch your eye. From business credit cards to personal and student cards, do some research before you sign up.

In 1951, Diners Club issued the very first credit card to 200 customers who could use it at a selection of twenty seven restaurants in New York City. From that modest beginning, credit cards have grown to become an indispensable part of modern life.

Nowadays consumers rely on their credit cards to help them achieve their lifestyle goals by letting them take advantage of special bargains, spread payments out over several months, and provide cash in emergencies. Credit cards have become so widespread that they are often accepted as a piece of primary identification.

How to Choose the Best Credit Card - Consumer Tips

When was the last time you heard about a new and improved credit card? Probably the last time you watched television. When was the last time you received an offer to apply for a new credit card? Most likely the last time you checked the mail. These days, the competitiveness of card companies works in favor of consumers, who benefit from the ever-increasing incentive plans offered.

Considering that the average family holds seven credit cards, and the credit card debt held by Americans reaches $800 billion, there are things to consider before sending off an application for yet another credit card. Among them is this key: If you're going to use a credit card, use it wisely. Second, choose the card that is going to work for you (low interest rates, incentives, and services), rather than allowing the credit card company to reap all of the benefits (annual fees, late fees, and high interest charges) from you.

Now that you have committed that one to memory, here are more useful tips:

Tip #1: Put yourself in the driver's seat

When it comes to choosing credit cards, it pays to be proactive rather than reactive. Credit card offers through the mail might be a good place to start shopping, but they are certainly not your only options. According to credit expert Gerri Detweiler, author of The Ultimate Credit Handbook, consumers should not rely strictly on mail solicitations to offer the best choice in credit cards.

Not convinced? You may be surprised to know that those pre-approved credit card offers that you get in the mail are actually advertisements. Your name was retrieved from a mailing list and the letter sent to you is a direct mail marketing tool. Yes, even the special low introductory rate or 0% balance transfer offers-they're a marketing strategy used to get you as a customer.

So where to start looking? Information on credit card plans can be found on the Internet, personal finance magazines, and newspapers. If comparing several different cards, use an unbiased resource. A great place to start is CardRatings.com, the most comprehensive free source for credit card rankings. With reviews from actual card holders, CardRatings.com strives to present an unbiased, yet accurate picture of the best and worst cards out there. Card holders rank cards based on various criteria including fees, rewards, and customer service.

Tip #2: Develop a good understanding of terms, fees and APRs

It's so important to really understand the terms of a credit card. To do this, read the disclosure chart included with every credit card solicitation-usually toward the back or on the reverse of the offer. It lists the purchase interest rate (APR), the length of the grace period, the annual fees, the minimum finance charges, the transaction fees, and late fees. Please consult a credit glossary if you need help understanding these and related credit terms. Also, the Federal Reserve Board has a thorough description of how to translate these terms.

Tip #3: Develop an understanding of credit card features and how they relate to you

Do you prefer travel rewards or cash rebates? Do you prefer better rewards or lower rates? Before choosing a card, ask yourself a few questions to help determine which card is the better choice for you.

1. Which type of card will I qualify for? There are three main categories of cards: secured, regular and reward or rebate. Where you fall on the scale depends upon your credit history. If you're in the process of trying to rebuild your credit, a secured card can help you achieve that. The other categories are differentiated by the types of services they afford. While reward cards generally have great perks, the higher interest rates that they normally charge can be costly if you do not pay your balance in full every month.

2. How do I intend to use the card? Will you carry a balance or pay your bill in full each month? This question carries the most weight in your decision: if you pay your bill in full, interest charges will rarely, if ever, be applied. Therefore, you can take advantage of those cards that offer attractive rewards at the price of a higher interest rate.

If, however, you intend to carry a balance, pick the best card with the lowest interest rate that you can get. Since the rate will be applied each month, you want the very lowest rate you can get, regardless of the lack of incentives available. Please bear in mind that you must have a good credit rating/score in order to qualify for the lowest rates. As a result, we suggest that you know what you credit score is prior to applying for a new credit card.

3. What features can benefit me the most? If you rarely travel, then travel rewards, such as air miles, won't be very useful to you. There are a large variety of reward cards available: Cash back incentives; air miles or frequent flyer miles; rebates towards future purchases on gasoline, gift certificates, and even cash rebates for a higher education savings plan. Be aware that some cards charge annual fees and some don't. If you are looking at one that does, do some math to make sure that the benefits outweigh the fee you will be charged each year.

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CashBack Credit Cards -- Consumer Tips Part-II

Top Tips for Making Cash Back Cards Work for You
1. Never carry a balance.
2. Know the rules and keep them.
3. Always read all the fine print.
4. Be responsible with spending.
5. Charge, charge, and charge.

You've considered the basics, NOW... ...it's time to consider the particulars.

* What is an Everyday Purchase? Some cash back cards offer a higher rebate for common consumer purchases, such as supermarket, gas station, and drug store purchases. The definition for these type of purchases is usually clearly defined in the terms and conditions.

For example, the Citi Dividend Platinum Select MasterCard (featured card) states it this way, "Supermarkets are defined as stand-alone merchants that primarily sell a complete line of food merchandise for home consumption. Drugstores are stand-alone merchants that primarily sell prescription and proprietary drugs and nonprescription (over-the-counter) medicines. Gas stations are merchants that primarily sell vehicle fuel for consumer use." Other terms and conditions make it clear that supermarkets are not departments of superstores (i.e. Wal-Mart) or warehouse clubs (i.e. Costco).

Typically it is up to the merchant to make sure the purchase is coded correctly to qualify for an enhanced rebate. The bottom line is to read the fine print to know exactly what merchants qualify and who is responsible for making sure transactions are coded correctly.

In addition to reading the fine print, you may want to post a message on our message board to find out if the store you shop at qualifies for your particular card. This is a great way to get real information from people who use the card you are considering. Visit CardRatings.com's message board to post your question.

* Other qualifying merchants you need to be aware of. Sometimes cashback credit cards will have a list of specific merchants where you will earn a higher rebate and/or have no cap on the amount you can earn. If you shop often with the merchants on this list you will earn more cash.

* Do you have to reach a threshold before receiving any cash? If you charge less than $10,000 each year, the best deal in cash back cards is usually one in which you earn a flat rebate percentage with your first purchase and with every purchase thereafter. A flat 1% rebate on all purchases is the industry standard.

Other cards are tiered-meaning the more you spend the more you earn-so be sure you read the fine print and clearly understand the amount you must charge to earn a certain percentage. Tiered cards normally favor cardholders that charge over $10,000 a year. Your first clue to a tiered card is the "up to" clause. For example, with the Blue Cash from American Express (featured card) you can earn "up to" 5% cash back on your purchases. But reading the fine print you'll find that it is only once you charge more than $6,500 on "Everyday Purchases". Before that you'll receive a 1% rebate. And all other purchases start at 0.5% and go "up to" 1.5% depending on your spending level.

* You get great rewards for 90 days, but then what? You may come across a card that is offering an amazing rebate, but when you read the fine print it only applies to purchases within a set time frame (the first 30, 60, 90 days, etc.). Pay close attention to the terms of the cards after the set time is over. Does the rebate drastically decrease? Does an annual fee apply? Will the interest rate increase (hopefully you will pay your balance in full each month, but if not, this is an important consideration).

If the secondary set of terms is as agreeable as the primary set of terms, you may consider making any previously planned, large purchases during the introductory time frame. Again, keep in mind your ability to payoff such purchases. If you end up carrying a balance you will have to calculate the cost of paying interest against the rebate you earn-usually this scenario works in favor of the card issuer.

* Is there a limit to how much you can earn? There is usually an annual limit, but it depends on the card. Some cards earn cash at a higher rate, but have a relatively low cap on the amount of rebate. Other cards earn at a lower rate or have rate tiers (the more you spend the more you earn), but there is no limit to how much you earn. You'll need to figure out how much you plan to charge and how quickly you can get to the higher tiers to determine which card will benefit you most. Cash reward card user Ira Stoller, a senior member of our credit forum, likes to have more than one card so if he does reach the rebate cap on one, he can start earning cash with another.
How is the cash issued? Occasionally the credit card issuer will issue a check, but more often than not, a credit will appear on your next statement. Also keep in mind that some cash back credit cards require you to request a check, while others will send the reward out automatically. In some cases you will have to earn a set amount (usually around $50) before you can receive a check. Know the details before signing with any card; after all, if your goal is to pay your mortgage down, a credit on your card may not be very helpful.

* What do they mean by a year? A year is a year is a year...right? Not necessarily. It could be a calendar year or an anniversary year that starts when you are approved for the card. Know how the credit card issuer defines your year so you can reach the yearly thresholds needed for reward levels because at the beginning of your year you will start at zero again.

* The terms and conditions can always change. Credit card issuers reserve the right to change the agreement at any time for little or no reason. This includes the merchant list where you can earn a higher rebate, the rebate itself, interest rates and grace periods, along with any other details of the card. Ira Stoller, who uses only reward cards, says it is vital to read all those fine print notices you receive in the mail. It's all about staying what he calls "eternally vigilant" so that what the credit card issuer gives you with one hand is not taken back with the other.

You may also want to CONSIDER...

...a type of cash back card where your rebate is directly applied to your mortgage, deposited into a brokerage account, or deposited into a college savings account.

Pay down your mortgage. Does anyone want to stop paying their mortgage a little earlier? According to Citibank you can shave off as much as 12 months of a $250,000, 30-year mortgage @ 6.25% if you use a credit card that applies rebates toward your mortgage. Please bear in mind, though, that this type of return takes a long time to achieve. This particular example assumes monthly charges of $1,500 on the card for 30 years (the entire life of the loan in this example). Currently,only two cards are available in this category, The Citi Home Rebate Platinum MasterCard (featured card), and the MBNA GMAC Mortgage Equity Rewards (not available online). The Citi card allows you to apply the rebate directly to any mortgage, but the MBNA card is only for those with GMAC mortgages. Both programs offer 1% on all purchases with no annual cap.

Start saving today. We've all been told the importance of setting aside money for emergencies or retirement. But when it comes right down to it, at the end of the month there may not be much left over. These cards offer a great way to help set aside a little more money at the end of the month. Your rebate can be put in taxable brokerage accounts or tax-deferred retirement accounts. Keep in mind that if you choose to contribute to a tax-deferred account, the rebate normally counts against annual limits set by the IRS. At the same time, if the account is a tax-deductible IRA, then you may be able to deduct the rebate as a contribution to the account (consult your tax professional for more info.).

Increase your college savings. If you know you will be paying college expenses in the future, then this might be a good option. Although you probably won't earn enough for full tuition, every little bit helps. These programs normally have no annual fees, but the rebate and contribution limits vary from program to program. And any rebates you earn go against the maximum allowed contributions to a 529 Savings plan or a Coverdell ESA, whichever one you are using. For more info., see our article Saving for Your Child's Education with a 529 Rebate Credit Card.

When all is said and done, in the END...

...keep the fear-the fear of losing your reward because of penalties for charging over your limit or interest for not paying your bill in full and on time. Campbell says if you start charging more to earn higher rewards, you need to know that if you are unable to pay the balance in full each month you have gone too far. On the other hand, if you remain aware and responsible, then you should be fine and be able to enjoy cash back reward cards. More importantly, you can feel really good about managing your money well.

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