Benefits and hidden costs of cash-back credit cards

Consumers with bad credit history or a large debt may want to make use of their credit cards in the most efficient and cost-effective way. One common type of credit card that many consumers favor is the cash-back card, which gives consumers the chance to recoup in cash whatever they spend on certain goods and services.

The downside of such cards, according to MSN, is that they often carry high interest rates that can exceed 20 percent for consumers with bad credit history. Those that can keep their balance at zero at the end of every payment cycle only have benefits to reap from such cards, of course, as the interest rate never becomes an issue. Since most consumers cannot reasonably expect to commit to paying off their balance in full every month, they may want to carefully consider if the cash rebates exceed the extra interest paid on their balance.

Additionally, such cards sometimes make potentially misleading promises. The goods and services that the rebate is offered for may rotate with every season, leaving consumers in a state of perpetual confusion about what they should be buying to attain a rebate.