Is a cash back credit card right for you? Answer the following questions to figure out your options.

The more you buy, the more money you can earn with a cash back credit card, but that's just the beginning. You also have to manage your payments properly to reap the cash back benefits.

If you practice the financially responsible practice of paying off your bill each month before the interest is calculated, you can really cash in on the money paid to you in the form of a cash back balance. That's because you’ll be earning while you shop but not paying interest.

On the other hand, if you typically don't pay off your balances each month, or you make just the minimum payment, the amount you earn on a cash back card could quickly be canceled out by the interest that accrues.

Once you get a cash back credit card, chances are you'll be motivated to pay off your balance monthly and enjoy the rewards that accumulate. However, if you have a tendency to add up credit card debt by excessive shopping, it's probably in your best interest to set a goal to control spending with a plan to buy only what you can afford to pay off each month. This will help you get the most benefit out of your new line of credit.

Not all cash back credit cards are created equal. Different cards have different reward payout amounts and structures. Here are the three main categories to choose from as you search for a cash back card.

Flat-rate rewards: Cash back credit cards that offer flat-rate rewards on purchases are the most straightforward to understand and use. Basically, the category says it all: with this type of card, you enjoy a set percentage back on any purchase you make. This type of card works best for anyone who shops from many categories and likes the idea of the simple reward structure.

Rotating rewards: These cash back cards provide higher cash back percentages, or accelerated benefits, for specific categories that change periodically, typically each quarter of the year. They may include restaurants, gas stations, and grocery or retail stores. Items bought in categories off rotation provide lower cash back percentages, often referred to as the “base” rate.

Shoppers' habits typically change each season, so the categories or rotating rewards cards are geared toward these variances. Think summer activities and travel, with accelerated rewards in those categories during the time frame. However, not everyone likes the strict rotating schedule of these cards, especially people who don't shop much from certain categories.

Tiered rewards: These cards offer varying percentages for different categories, as well as the option for the cardholder to choose which category gets accelerated benefits. For example, if you have this type of card and drive frequently, you may be able to choose 3% back on fuel while receiving 2% and 1% on other categories such as online shopping, hotels, and restaurants. Most cards give you the option to change your favorite category during a specific time period, typically once per billing cycle.

Cash back percentages: Most cash back credit cards offer percentages that range from 1% to 5%. Flat-rate cards typically offer 1% to 2% rewards, while those with rotating or tiered rewards provide accelerated percentages on specific categories. Keep in mind that even when rewards are accelerated, 3% is typically the highest percentage you'll earn. Cards with higher cash back rewards are available, but they often come with annual fees and higher interest rates.

Balance transfer offers: Just like other credit cards, some cash back cards come with introductory rates on balance transfers. These may come with no transfer fees and 0% APR for a limited time. However, if you take advantage of this offer, you may not want to use your new card for cash rewards until you pay off your promotional balance.

Interest rates: The annual rate you pay for a cash back card is likely to vary greatly depending on your credit score and the bank you choose. Check with the card you choose before you apply. Remember that the interest rate won't affect you if you plan to pay your balance in full each month to make the most of your cash back rewards.

Annual fees: Not all cash back cards have annual fees, but as mentioned above, those with higher reward payouts are more likely to come with this charge.

Penalty and other fees: Cash back credit cards are just like other cards when it comes to fees for late payments, over-limit spending, and foreign travel. Banks vary, however, so check on these fees when you apply. Better yet, avoid late and over-limit fees by managing your account responsibly.

Some cards require you to have a specific score before you are approved. Check with the banks you’re considering to find out their policies, then check your score to see if you’re a candidate for approval.

There are so many credit cards on the market, choosing the right one can be confusing. First of all, make sure any companies you’re considering offer cash back cards — not all of them do. Next, check the terms of the cash back cards you find to make sure that the terms fit your lifestyle and spending habits.

You might be excited to find numerous cards that offer cash back rewards, but don't get carried away by applying for several cards at once. Potential creditors pull your credit reports, which can result in what is called a “hard hit” and a reduction of approximately five points off your overall credit score. It's best to choose the best card and then apply.

Having a cash back credit card can certainly be a positive step in your financial well-being, but not if you’re already deeply in debt. In fact, a new card may tempt you to spend more, plus you may not be able to pay off your balances in full each month to reap the total cash back benefits when you have too many other debt obligations. If you have other credit card debt, work on paying it down before you apply for a new card.

• Be prepared to pay your balance off each month before applying for a cash back credit card. Remember that if you don't, the interest on your purchases will add up and negate the benefits of your reward balance. And just like with any credit card, always pay your cash back card on time each month or you’ll be charged late fees.
• Use your cash back card for necessities. When you pay for items like groceries or household items that you would have purchased with cash, it's easy to train yourself to pay them off each month.
• Check the terms of a cash back card to make the most of your purchases. Each bank's terms vary, but many offer rewards for purchases you might not expect, such as paying utility or medical bills.
• Set a goal. Don't get discouraged if you can't pay your balance in full during a billing cycle on your cash back credit card. By setting a goal to get the balance paid off, and not charging more on the card until you do, you'll get back on track and be able to use your card again and continue racking up reward dollars.
• Find the lowest interest rate. Search your available options for cash back cards to find the lowest interest rate possible. This will reduce the amount you owe should you ever not be able to pay your monthly balance in full.
• Keep track of your purchases when you open a cash back credit card account. Check your statements regularly so you don’t overspend and you’re always aware of amounts due when it’s time to make your payment.

Q. Should I take advantage of a balance transfer offer on a cash back credit card?
A. If you’re accepted for a cash back card that offers a limited-time promotional rate on balance transfers, this is another way you can save money. But keep in mind that purchases may not receive the same benefit. Ask customer service about the terms of your new card before you use it to get the most out of the special offer and cash back rewards.

Q. Can I use my cash back rewards card to splurge on a special purchase?
A. Absolutely! Many people build up their rewards to use for a trip or big-ticket item. It may take a while to accumulate your cash rewards, but it's worth the effort when it's time to enjoy them.

Q. Do cash back reward balances expire?
A. Not likely. Most reward balances have no expiration date, but it's always a good idea to check the terms of the issuing bank to be sure.