What you need to know about cash-back card offers

Many people are drawn to credit cards that promise cash back rewards in the hopes of getting returns for an act as simple as making a purchase. Sometimes, the rewards offered by cash back cards are worth it, if you are able to limit your spending and know exactly what types of conditions will allow you to earn back money. However, there are also many caveats to keep in mind when looking for a cash-back rewards card, and depending on your financial situation and discipline with money, you may find that these cards can be a great asset or a financial liability.

What some cardholders might not realize is that many cash-back rewards cards do not actually accumulate cash back on all purchases. Take time to look over the specifics of a cash-back rewards plan. Some cash returns are only earned when you spend on certain categories of items, such as gas, restaurants, or travel. These categories tend to rotate throughout the year, and what earns you money back might not always make sense to be purchasing at the time.

Also keep in mind that using your card at certain popular retailers may not earn you money, either. Excluded locations from earning cash back include discount "big box" type stores, like Sam's Club, which for some cardholders may be where they spend much of their money each month. Make sure that the locations you tend to shop at are ones which are not excluded by the card issuer before applying for a cash-rewards card; you don't want to end up with a card that doesn't earn you any money!

Finally, different categories of purchases may have spending caps. If you spend more than the limits set by the caps, you will not earn any extra money. For some major spending categories, these limits may be rather low, but the card will promise a higher percentage reward to entice the consumer. Cards which promise a 5 percent return on gas purchases may not allow you to earn any money after the $250 mark.

While cash-rewards cards can be a nice way to reward yourself for wise purchasing, make sure that you do not start buying items you don't need just to reap rewards; the cash you earn back will never outweigh the costs of paying off a high card balance.

-Seth Berger