cashback reward program is an incentive program that is operated by credit card companies. Many credit card issuers, especially those in the United Kingdom and United States , run programs to encourage use of the card as the card holder is given points, frequent flyer miles or a monetary amount. This last benefit, a monetary amount, is usually known as cashback or cash back reward.

Where a card issuer Operates Such a program, card holders Typically Receive entre 0.5% and 2% of Their net expenditure (purchases Single minus Refunds) as an annual rebate, qui est Either credited to the credit card or account paid to the card holder separately. [1]

When accepting payment by credit card , merchants typically pay a percentage of the transaction amount to their bank or merchant services provider. Merchants are not permitted to charge a credit card at any time. The credit card issuer is sharing some of this commission with the card holder to incentivize them to use the credit card when making a payment.

Rewards based on credit card products are available on the internet. Rewards based products-have Generally Higher Annual percentage rate . If the balance were not paid in full every month the extra interest would eclipse any rewards earned. Most customers do not know that their rewards-based credit cards charge higher fees to the vendors who accept them without having any notification. Citation needed ]

History

In the 1990s, major card issuers in the US increased the cash-back percentage up to 5%. The 5% cash back rate usually only for purchases made at grocery stores, pharmacies, and gas stations for 6 months. Citation needed ] This was a very important issue for us. Typically the cash back rate for all other purchases is around 1%.

A 2010 public policy study conducted by the Federal Reserve concluded cash back reward programs in a monetary transfer from low-income to high-income households. Eliminating cash back reward programs would reduce merchant fees. [2]

In 2012 in the United States , due to Increased gasoline (gas) prices, gas cash back cards or gas rebate credit cards est devenu very popular Among Consumers. Companies provide an average of 3% APR on new gas credit cards. The main idea behind the gasoline is to obtain a minimum of one month’s worth of gasoline per month in the form of a check at the end of the year. It works like a cashback with a noteworthy exception: the gasoline discount is frequently applied each month. Citation needed ] This Makes the savings Easier To view for MOST Consumers.

See also

  • Loyalty program
  • Credit card interest
  • Cashback website

References

  1. Jump up^ “Cash Back” . Investopedia.com . Investopedia . Retrieved 12 July 2014 .
  2. Jump up^ Who Gains and Who Loses from Credit Card Payments? Federal Reserve Bank of Boston, 31 August 2010