Cashback reward program facts for kids

When payment is made with credit card, sellers pay small percentage of the transaction to their bank or merchant. Many credit card companies, especially those in the United Kingdom and United States, share the commission with the owner of card by giving him money bonus, points that can be exchanged for prizes and discounts once some level of purchases is reached. A monetary benefit is known as cashback, sometimes pronounced as two separate words in the United States - (cash back). Usual cashback amount is between 0.5% and 2% of buyers net spending (purchases minus refunds and tax) as a yearly bonus, which is either added to the credit card account or paid by cheque, cash or wire to the participant.

Recently, major card issuers have increased cashback amount to 5% for purchases especially in grocery stores and petrol stations.

In most cases bonuses like cashback are offered to customers that pay off their credit debt on time every month.