Cash back bonus credit card: 5% back on everyday purchases

By Ben Woolsey

There's an old adage that if something seems too good to be true, it probably is. And the new 5 percent cash back credit card offers that are becoming popular have a lot of people scratching their heads and wondering if they are a mirage in the desert. But these cash back programs are real, good and true. Lucky cash back bonus credit card customers can now earn a full 5 percent return on purchases made for everyday purchase transactions at grocery stores, gasoline stations and drugstores. Since these types of purchases tend to be required spending to obtain life's necessities, it is especially rewarding to have a chance to earn extra-strength cash back rebates.

Another nice thing about these reward programs is that they pay a full 1 percent on all other purchases. When combined with the 5 percent for everyday purchases, the cash back savings can really pile up quickly. So, whether you want to look at it like you're only paying $95 for something that costs $100, or perhaps as a simple surprise reward later down the road, it's a great feeling.

Popular cash back bonus credit card offers featuring the 5 percent bonus include the Blue Cash card from American Express. Even small business owners can earn 5 percent cash back rewards from credit card offers such as American Express' Business Cash Rebate Card from OPEN: The Small Business Network and the Platinum with Rewards card from Advanta.

If there is a dark lining around the 5 percent cash back silver cloud, it's that purchases at certain major superstore retailers, such as Wal-Mart and Sam's Club, are excluded from the higher percentage calculation. These retailers have chosen not to code their purchase transactions in a way that allows the credit card issuers to properly identify gas, grocery and pharmacy-related purchases. Maybe in time this restriction will be eliminated, but for now it's best to stick to the major grocery, drugstore and gasoline retailers to ensure earning the extra 4 percent on those vital purchases.

Credit card issuers have become more generous for competitive reasons: By paying a little bit more, they hope to capture those extra market share. Another motivating factor for card issuers is the fact that many Americans have resisted using credit cards for everyday necessities, preferring to pay by cash or check. Perhaps it's been a reluctance based on the perception that credit cards are fine for impulse purchases, but not for food, home and health purchases. But behavior trends are changing, and with incentives such as the ones currently on the cash back credit cards market.

Retailers are helping in this area as well, by providing express self-service check out isles that really speed the check out process. And while some still accept cash, plastic is the preferred means of payment to get in and out quickly.

If you're in the market for a cash back bonus credit card , these new cards are worth considering.

To comment on this story, write Editors@CreditCards.com.

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Published: June 10, 2005

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