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What is the best cash-back reward credit card?

"If you use your card for around-the-house-type expenses, you're not running up enough charges to cover even a $79 annual fee," he says. "If you do, it's very close to breaking even."

Also, beware of expiration dates on points. Make sure to redeem points before time runs out on accumulated rewards. Nineteen of the 54 cards surveyed set an expiration date on points earned between three and five years out.

How much you need to earn before you can get cash back is also key for occasional users. For example, all five of Bank of America's cash-back cards set a minimum redemption amount of $25.

Big spender, big user

If you are a big spender, the best credit card might be one that offers tiered reward rates based on spending level. That is, they pay larger cash-back percentages once you reach an annual spending threshold.

Only four credit cards offer tiered reward rates. For instance, the First National Bank of Omaha Discover Card offers only a half-percent back for the first $2,500 in purchases. After that, the rate increases to 1 percent, and then to 5 percent between $10,000 and $13,000.

Not all reward tiers go higher than the 1 percent baseline. The Discover Motiva Card offers 1 percent cash back after $3,000 in total annual purchases, but before that, the card only offers 0.25 percent back.

Those who charge a lot and frequently should watch out for reward limits. Seven cards in the survey placed a limit on annual rebates. Also, check the ease of redemption. If you're going to be cashing in often, find out what the redemption process involves. Not all card issuers send checks or credit accounts automatically.

Bottom line

Cash-back cards can be a great way to get a small return on your shopping expenses, but only if you can control your spending. If you don't pay in full every month, interest charges will negate your savings.

Previously reported by Leslie McFadden.

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Product Rate Change Last week
Balance Transfer Cards 15.77%  0.01 15.78%
Cash Back Cards 16.48% --0.00 16.48%
Low Interest Cards 10.96% --0.00 10.96%
 
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