It sounds like a no-brainer: Use your charge card and get cash back from your credit card company. The more you spend, the more cash you get back. Cash-back cards are offered by banks, oil companies, and merchants.
Bankrate's Greg McBride says it's important to find a card that's tailored to your spending habits.
"They are a lot of credit cards and cash-back cards that give you bonuses for certain categories of services, and very often these are the categories we're spending on a regular basis -- gasoline stations, supermarkets, convenience stores, even home improvement stores," said McBride.
Cash-back cards are not all created equal. Bankrate says American Express offers several rewards cards.
With Blue Cash there's no annual fee and you get back from 1 to 5 percent with everyday purchases such as grocery stores, drugstores and gas. You'll earn 5 percent only after spending $6,500. Other purchases earn 1 half to 1 percent.
There's no annual fee for American Express's One Card the first year; then it goes up to $35. You earn a straight 1 percent for all purchases.
And Costco members get rebates of 1 percent for most purchases, 2 percent back for travel, and 3 percent for gas and restaurants. Every February, you'll get a certificate redeemable for Costco purchases.
Some other top-ranked cash-back cards:
- Citi CashReturns MasterCard pays back up to 6 percent at 400 retailers.
- Discover Open Road Card pays back 5 percent for the first gas and auto maintenance purchases each month.
- Chase PerfectCard MasterCard which offers 3 percent gas rebates, 6 percent for the first 90 days.
Cash-back and other rewards cards often charge higher annual percentage rates then other cards. So even a card that pays back 5 percent could end up costing you.
"The cardinal rule is that if you're going to get a rewards credit card, you have to pay your balance in full every month. If you carry a balance, even just occasionally, then you're better off looking for a card with the lowest possible interest rate so you can accelerate your debt repayment," said McBride.
The bottom line: Cash-back rewards cards are worth it if you pay off your credit cards balances each month and avoid cards with no annual fees.
- Get more L.A. breaking news, weather, traffic and sports
- Have a news tip? Send your tips, video, or pictures