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Are Cash-Back Cards, Reward Cards and Prepaid Cards worth it?

Consider Usage rates and Convenience versus the Annual Maintenance fees, Activation fees and other fees.

One can obtain so many types of credit cards, cash-back cards, Reward cards and prepaid cards these days. They all promise great rewards but you may find that they are not worth as much as they are advertised for.

Cash-Back Cards

Cash-back cards are credit cards which promise as much as 6% rebate on every dollar spent on groceries using the card, Some of them also offer 1% rebate for purchases made on supermarkets above %$5,000 per year.

There are other Cash-back cards that offer 3% rebate on purchases made on Gas Stations and Department stores.

However, these cards come with an annual fee, usually about $80 per year. So you would have to be spending a lot of money to justify that fee. For example, if you Charge $15,000 per year, you could earn rebates or discounts of up to $400.

Most people will not charge that amount on a single card hence you may not even get rebates worth the annual fee of $80 that you pay to get these cards. You therefore have to estimate how much you will charge on your card before deciding if to accept it or not.

Rewards Cards

Some Reward cards offer you points for every dollar you spend using their card, then you can redeem the points for cash later.

An example is a card that offers Two points per dollar on travel and dining and one point per dollar on all other purchases using their card. Some even offer a bonus of 50,000 points if you spend over $3,750 in the first three months.

The points you accumulate can be redeemed for cash (usually 100 points for $1) and you can also redeem them for gift cards, merchandise and travel costs.

There is also an annual fee for these cards, usually $90 per year. So with 100 points redeeming for 1 dollar, you would need to spend at least $9,000 per year to break even. So if you expect to spend a lot more than $9,000 using the rewards card, then you will benefit. Otherwise it is not worth it.

For some of these cards, you have to submit a form for each purchase you make and this is an additional hassle that you don't have time for.

Prepaid Cards

Some of the new Prepaid Cards don't charge an activation fee or monthly fee and you can use online bill pay and also have an application for your phone to deposit checks.

They have a feature where you can authorize up to a maximum of 4 users, each with their own spending limit. You can also withdraw money for free at National wide network of ATMs. However this is on condition that you have direct deposit to the Prepaid Card where money comes directly from your monthly or biweekly check to the prepaid card.

You should however be careful because some of these Prepaid cards charge lots of fees, like Activation Fee of almost $5.00 and Monthly maintenance fee of almost $5.00.

So in the end, they may end up costing you more than they are worth.


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