Using cash back credit cards is rewarding in two specific ways. First, you’re earning money when you spend. That’s the obvious part. But when you know that you’re getting a rebate when you use your credit card, you also feel better about spending than you would otherwise. Feeling good can be dangerous, as you might make mistakes like spending more than you should while chasing that good feeling.

That’s why I’ve identified ten traps for using cash back credit cards. The issuers know that many people will fail to handle their credit cards properly, and the resulting profit from customers’ mistakes helps pay for those cash back rebates.

Credit card users are generally aware of these traps and can avoiding them, but sometimes other problem occur, beyond the spenders’ control. Consumerism Commentary reader SteveDH recent encountered a problem with his cash back credit card.

Here’s his story:

When I received my last VISA statement it showed that I had redeemed $275 in Cashback awards — I hadn’t. I got in touch with my bank and also started looking at all of the web pages and we found the someone had added a “Transfer Account” from GE Capital Retail Bank in Draper Utah to the redemption page and apparently requested the redeemtion. The information that they had to enter was the ABA number and account number. That’s how I know which bank it is even though only the last four digits of the account number were there. How they got to the redeemtion page without going through my login (which my bank says wasn’t compromised) is a mystery.

Although my bank killed the credit card and promised to apply the missing money to the new VISA card, I’m stilling waiting for final resolution. I download into Quicken almost everyday but I hadn’t even thought of checking rewards balances. In fact I’m amazed I noticed it on the statement this month. Yet another example of the crooks out there — some are pretty darn creative.

This is insanity. Cash back rewards should be something consumers should be able to forget about; they should be able to trust that each purchase earns the correct cash back amount (it occasionally doesn’t) and that the cash back will be there when you retrieve it. It’s a mystery how this redemption bank account was added to the cash back rewards page without SteveDH’s account being compromised. Perhaps it was an inside job.

I confess that I rarely look at my accrued rewards balances. As I primarily use airline miles rewards cards now, I generally see my rewards only when I visit Continental’s and United’s websites. The miles I earn from spending are deposited monthly, and I’ve not yet noticed any discrepancies. Cards that earn cash back, however, can be less organized.

Since cash back information is not downloaded into Quicken or reported in other software like Mint.com, it takes extra effort to verify your cash back is accruing correctly and is available according to the rules of your agreement. Don’t forget to check once in a while. You won’t be able to prevent every problem, but you’ll be able to report it to your issuer promptly, and hopefully have the problem resolved without difficulty.

Thanks for staring the story, SteveDH. If any other readers have stories to share, please contact me.

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Cash back credit cards can help consumers practice responsible spending while earning a little extra for their efforts when used properly. It wasn’t long ago that the best cash back credit cards were offering rewards as high as 5% for all purchases, but that is unfortunately no longer the case.

Today’s cash back credit cards are all similar in nature, generally offering 1% cash back on all purchases. However, if you look hard enough, you’ll find a number of credit cards with higher cash rebates than just 1%. This article lists the best cash back credit cards you can find today, and I update the article when there is new information to share. Along with a brief description of each of these best cards, I have included the cash back percentages and any tiers or restrictions, so there are no surprises if your cash back credit card isn’t earning as much as you first thought. Keep in mind that in order to make credit card with rewards program worthwhile, you must avoid interest charges and late fees by paying your bill on time and in full every single month.

Editor’s choice

Chase Freedom® Visa – $200 Bonus Cash Back. The Chase Freedom Visa – $200 Bonus Cash Back offers a standard 1% cash back on all purchases, as well as the opportunity to earn 5% cash back on select purchases throughout the year, subject to a maximum. Every three months, the categories in which you can earn 5% cash back change, so for example January through March could be gas stations and Amazon.com, April through June might be grocery stores and movie theaters, July through September could be gas stations and restaurants while October through December could be hotels, airlines, Best Buy and Kohl’s. In order to qualify for the 5% cash back, you must have an account in good standing and follow the terms and conditions set forth by Chase. Categories will be announced to cardholders before they happen, so look out for updates from Chase.

The Chase Freedom® Visa – $200 Bonus Cash Back also offers up to an additional 10% cash back (up to 11% total cash back) on purchases made at select merchants when you shop online through the Chase website. The card also carries no annual fee. To qualify for the $200 cash back, you must spend only $500 during the first three months, making it the easy choice for best cash back credit card.

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In my review of the best credit cards for 2012, I lamented the fact that for the most part, no credit cards waive balance transfer fees in their introductory offers. In years gone by, some cards offered no-fee 0% APR introductory offers on balance transfers, and offers like these can, if used properly, go a long way to save customers lots of money while climbing out of debt. Savvy financial mavens also used these opportunities for free money. They transferred a balance to a credit card with the offer, but the other side of the transfer was a bank account. With savings interest rates as high 5 percent, they borrowed money at a 0 percent interest rate, kept the 5 percent interest, and paid back the balance to the credit card.

The balance transfer fees all but stopped that practice. Even with a 3 percent fee, however, people getting out of debt could still save money compared with the 10 percent or 15 percent they were paying on another card.

Last year, card issuers began competing diligently to attract new customers, and, although it was rare, a few cards offered relief from the balance transfer fee coinciding with 0% APR introductory offers. Early last year, Discover was the first card brand to eliminate the balance transfer fee in a special offer, but it was only for a limited time. Until recently, the only card continuing a reprieve from the balance transfer fee was Slate from Chase, but now Discover’s offer is back.

The Discover® More Card – No Balance Transfer Fee offer provides consumers with a 0% introductory APR on both purchases and balance transfers for 12 months. While that introductory period may not be as long as other offers available today, this card does not charge a balance transfer fee. If you have $5,000 to transfer, that’s exactly what you will pay to Discover over time. You will have 12 months to make interest-free payments, potentially saving thousands of dollars.

This free balance transfer offer is scheduled to end on January 31, 2012. It could be extended if it proves to be successful for Discover, but it’s too early to say.

This card comes with a rewards program, available during and after this limited-time offer. Discover includes a great rewards program, with 5% cash back on several expense categories that change throughout the year. This type of offer, with rotating categories, is currently standard practice. In addition to the 5% cash back you’ll earn on spending within those categories, you will earn 1% cash back on all purchases after spending $3,000 annually. If you don’t meet the $3,000 threshold, you will earn 0.25% cash back rather than 1%.

The standard APR on this card after the introductory period has expired is a variable rate between 10.99% and 19.99%, depending on the applicant’s credit history.

Additionally, there is no annual fee on any version of the Discover More Card, making this brand one of the best around today. This deal is scheduled to expire January 31, 2012, so take advantage of the Discover More Card – No Balance Transfer Fee offer now.

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