Cashback credit cards help simplify your finances and let you earn rewards on spending while also having you take advantage of the additional perks that your debit cards don’t proffer. Since the cash back rewards are quintessentially more facile to understand over travel rewards, so, a cashback credit card is a smart option as your first rewards credit card. The most generous perk of cashback credit cards is that you receive money for utilizing a credit card as you already would. A cashback credit card is an excellent choice if-
- You wish to start earning rewards points using a simple, hassle-free credit card
- You wish to collect some attractive cashback for a purchase that you would make anyway
- You wish to augment your rewards points by smartly targeting your spends in distinct areas
Do remember that not all cash back credit cards are suitable for everyone. As you peruse cashback credit cards, do ensure that you entirely perceive their traits and functionalities and know whether they are the perfect choice for you.
Here are a few benefits of using a cash-back credit card.
- Cashback rewards- Every cashback credit cards have their customized earning scheme. However, most of these cashback credit cards offer similar straightforward, easy-to-use perk rewards for every buck that you spend. The term cashback can come in many different forms, including the ones mentioned below.
- Actual cash back– This is a deposit that goes right into your bank account comprising the money you earned from using your cashback credit card
- Gift cards- Here you retrieve your cashback earnings for gift cards to different retailers and even restaurants, mostly for a discount that you will be paying for these gift cards someplace else
- Statement credit- This will help you save a wee bit of money off what you owe on your credit card. It is not a direct cash deposit; however, it alleviates the amount you owe on your bill
- Travel points- Certain cashback credit cards will allow you to transfer your money back as travel points to redeem on lounge accesses, flights, hotels and more
Before signing up for a cashback credit card, do ensure that the redemption options are in line with your requirements and needs. Some cashback credit cards offer rewards at a flat rate, such as 1.5% money back on all purchases. Others may provide higher levels of cashback on specific categories, such as gas, groceries, and so on. These bonuses are something you can get with credit card processing but something you can’t get by paying with a debit card or cash.
- There are sign-up bonuses- Several cashback credit cards offer a sign-up bonus or perks when you meet the minimum spending criteria during the first couple of months. In simpler words, when you sign up for most of these credit cards, you get a reward. With cashback credit cards, these will usually be in the form of sign-up bonuses such as a higher return on spending within a short period or a waived annual fee for the first year
- Shopping perks- Many top cashback credit cards offer benefits that can safeguard your spendings or save you some money. These perks may include the lowest advertised price match or extended warranties or even return guarantees- maybe even a refund in case a store doesn’t accept a return- along with purchase perks in some renowned online shopping sites and more. Do note that not all credit cards extend these features. You can read up your chosen card’s benefits guide for a comprehensive breakdown. Majority of these prime cashback credit cards offer abundant rewards through a manifold of shopping ventures which includes-
- Cab bookings
- Restaurants
- Shopping perks with online stores like Myntra
- Grocery hauling
- Amazon
- Wholesale clubs
- Fuel Benefits
- Online streaming services
Within specific categories, you may have a cashback card that offers bonus rewards rotating each quarter. For instance, you may earn 5% cashback in restaurants this quarter over your standard 2-3%. Remember, every time you swipe such credit cards, you will probably gain a minimum of 1% on everything else
Is a Cashback Credit Card Ideal to meet your Requirements?
Before applying for a cashback credit card, do ascertain that you are more interested in earning cash over travel rewards. Also, do ensure that you have the discipline in you to earn rewards on your purchases without racking up debt. Note that paying interest on a balance may instantly negate cashback, but it will leave you vulnerable to a plausibly high APR. Furthermore, do keep in mind that there may be hidden credit card perks you can take advantage of, depending on the cashback credit card that you decide for yourself. You can even expect an enhanced cashback of up to 8% on specific purchases you make with a particular credit card.
In recent months, primarily due to the havoc caused by coronavirus pandemic, some of the cardholders may have cut back on their cashback spends and offers. On the contrary, due to the massive shift in online purchasing, you should be using your cashback credit card more than ever. This reduces the amount paid or, in some instances removing it altogether. Do note that, if you want to earn cashbacks, it is crucial to shop around, and not just respond to the first offer that drops unsolicited into your inbox. You can find the best cashback credit card for your needs by comparing the reward schemes, the sign-up privileges, and perks. With enough homework done, you will find a cashback card that is right for your needs and fits your spending pattern and rewards preferences.
Veeramachineni Lalitha
I am Finance Content Writer. I write Personal Finance, banking, investment, and insurance related content for top clients including Kotak Mahindra Bank, Edelweiss, ICICI BANK and IDFC FIRST Bank. My experience details : Linkedin