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Using a credit card is useful with your shopping, but a card can give you greater value if you use one that gives you some type of rebate. Knowing what rebate credit cards are, how they work, and what they can do for you will help you make sound financial decisions on which cards to apply for.

Before You Choose a Rebate Credit Card

credit card rebate

Before you apply for a credit card, you need to have a good credit history and a history of properly using credit. When you don’t have a credit history or have a bad credit history, you are less likely to be eligible for a rebate credit card.

Credit card providers usually need to see a credit history, a good credit history, and proof of employment or another source of income before they will issue any credit card to an applicant. So how do you get a credit history and a good credit history? 

How do you find your credit history score? Answering these critical questions is necessary before applying for a credit card rebate card. There are several ways you can build credit if you are a first-time credit user. Credit cards that build your credit history are: 

  • Secured Credit Cards: Secured credit cards are cards that require a deposit of money to secure credit. The credit you have is limited to your deposit. For example, if you deposit $500 on the secured credit card then you have only $500 worth of credit. Staying within the limit of your secured credit card shows a credit bureau that you can budget. While secured credit cards rarely offer rebates, they are useful to your credit history.
  • Retail Credit Cards: Retail cards are limited cards that you can often only use at a single retailer. They are still useful in creating a good credit history if you pay off your credit card on time and remember to check that the retailer is reporting your credit history to a credit bureau. You won’t build a credit card history if the card provider fails to report your credit card history. Retail cards often do not offer rebates except for the issuing retailer, but not for general outside of the retailer purchases.
  • Student Credit Cards: A student credit card is for college students with little to no credit history. It is easier to get these cards because it’s a first-time credit card. The card usually has a lower credit limit and higher interest rates. Some student cards are secured cards, while others are unsecured with annual fees and higher interest rates. Student credit cards may or may not offer rebates on gas, travel, or offer cashback rewards.

A Card to Avoid

Avoid subprime credit cards when you are trying to build your credit history. Subprime credit cards are often the worst credit cards for building credit toward a credit card rebate card. Even if you have no or bad credit history, subprime credit cards could get you into greater financial trouble that will negatively affect your credit card history score. Subprime cards often have high-interest rates and expensive fees with interest rates running as high as 30%.  

While approval is quick for subprime credit cards, these have lower credit limits and less purchasing power. The interest rates for subprime cards may spike if your payments are late or if you exceed borrowing limits. Some subprime credit cards may require a deposit similar to secured credit cards. High annual fees may also be a problem in subprime cards, often cutting into your purchasing power. Subprime credit cards often do not offer rebates for the cardholders. Choose a secured credit card or a retail credit card over a subprime card to build your credit card history score.

Credit Card History and FICO Score

When you apply for a rebate credit card, the issuing banks will look at your credit history. This is essential to know because this score can affect whether you get a card. To see if you are eligible for a credit card, you should request a credit review report. 

The main providers of credit history reviews are Experian, Equifax, and TransUnion. The FACT Act (Fair and Accurate Credit Transactions Act) allows legal U.S. residents to have a free copy of a credit report from each credit-reporting agency one time every twelve months if it is a FICO score. FICO is a score introduced by the data analytics company of Fair, Isaac, and Corporation, thus the acronym. The score is based on:

  • Payment History: A payment history looks at the presence or lack of bad information such as bankruptcy, judgments against a person, liens, and foreclosures. All of these can lead to a bad FICO, bad credit history and score. 
  • Debt Burden: Having a lot of debt can lower a credit history score with such reasons as the amount owed across various and different types of accounts, or the amount paid down on installment loans.
  • Length of Credit History: A person with a short credit history will have a lower FICO score. It’s important to build your credit card history score as early as possible. For example, getting a student card or a retail card may be the first steps when you are younger for a record of appropriately building your credit card history. The average age of the accounts matter and the age of the oldest account matter to this portion of the score.
  • Types of Credit Used: Not all credit is the same and credit card users should use different types of credit such as revolving, mortgage, and installment to build their FICO score.
  • Recent Searches for Credit Score: Limit your requests for credit card history. Too many requests can lower your FICO score.

What are Rebate Credit Cards and How Do They Work?

There are plenty of credit cards to from which to choose when it comes to earning some type of rebates from your spending. Usually, rebate credit cards offer cash back, accumulation of points toward travel, or accumulation of points toward discounts on things such as gas.

Just like normal credit cards, the need for good credit history, interest rates and/or annual fees depend on the cards you are eligible for and that meet your rebate needs. 

The Upside of Credit Card Rebate Cards

The benefit of applying for and using a rebate credit card is you can earn cash back, gas rewards or travel miles depending on your personal preference, credit history, and ability to pay your credit card bills.

The Downside of Credit Card Rebates

Rebates depend on the terms and limitations set by the credit card provider. A credit card provider may limit you on certain purchases you can make and set a certain threshold that you must meet in purchases before you earn the rebates.

Furthermore, some credit card providers may limit how much you can earn in rebates. Some rebate credit cards require an annual fee in addition to paying interest rates. Annual fee cards can be expensive. 

Some rebate credit cards have variable interest rates. A variable interest rate for a credit card is an interest rate that is unsteady, moving up and down with the interest rate the Federal Reserve raises or lowers. Calculate the hidden expenses of a credit rebate card before applying for a card. Rebates for some cards may expire. 

Keeping track of your rebates and/or any expiration dates for rewards the provider sets is important. Some credit card providers offer internet sites or paper statements so credit card holders can track their rebates and the expiration dates for the rebates.

Types of Credit Card Rebates

There are different types of credit card rebate cards such as gas, cashback, and airline travel rewards credit cards.

Gas Rebate Credit Cards

Gas credit cards are often limited credit card rebate cards that provide rebates on gas purchases. The credit cards are issued by fuel companies with fuel companies also partnering with major credit card companies. The first card type will carry the logo of the issuing fuel company. It can only be used for the fuel company’s business. A partnering gas rebate credit that has the backing of a major credit card company can be used at more businesses such as grocery stores. 

Gas credit cards work by giving cardholders a percentage of cash back for every purchase of gas, motor oil, or gas station services. The percentage is usually small. For example, you might get $1 for every $100 spent on gas. However, for some cardholders, this is a benefit when every bit rebated counts toward a tight budget. The downside of a gas credit card is that it might be limited to a single fuel company and therefore not as flexible as a regular rebate credit card.

Cash Back Credit Cards

Cash Back rewards credit cards usually give you points when you make a purchase. The points are redeemed as cash back, statement credits, or gift cards. The cards often offer cardholders flat percentages for cash back. The benefit of a cash back rewards credit card is that you earn cash back for your purchases. The downside to these cards is that the cashback cards that have the highest paying rewards often charge an annual fee for the card in addition to interest on the balance. There are also credit card providers that cap how much cash back you can get in a year. Read the terms for a cashback credit card before applying.

Travel Award Credit Cards

Travel rewards credit cards are cards that offer air miles, hotel, or other travel-related rebates when you make purchases. This card type may be associated with an airline, or hotel, or a combination of these. The benefit of a travel rewards credit card is you earn miles on flights, hotel stays, or other travel-related rewards. The downside of some travel rewards credit cards is that air miles or other rewards have expiration dates.

Credit Card Benefits

Credit card benefit cards are not credit cards that offer rebates, but a different type of reward in the form of services or perks. Some cards offer price protection on purchases. Price protection is a service where that credit card will rebate you the difference of an item if you later find a lower price for an already purchased item. Claims for lower prices, depending on the specific cards and their issuing banks, have time limits on the rebate usually 60 to 120 days after your initial purchase. 

Other protections several credit cards offer are extended warranties on electronics, special access to services or insurance such as accident insurance on rental cars or airport lounge access. Other cards offer services such as concierge services that assist you in buying tickets for flights or events, or that help you book reservations to hotels or restaurants.

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