Cashback Credit Cards

How Cash back Credit Card Work?

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Most of the credit cards used must have come across the word cashback. Cashback credit card is one of the attractive features offered by the companies to increase their sales. And those of you who have not heard of cashback credit cards, worry not.

Read through the article to know what is a cashback credit card? And best cash back cards.

What is a cash back credit card?

The meaning of a cashback credit card is pretty simple. As the name of the card suggests, it pays back a certain amount of money you spend. Credit card cashback and reward cards are a great feature. It is considered more of an asset, as it helps one earn money while spending.

Most of the credit card issuing banks or companies offer cashback cards. These types of cards differ from one another. It helps in meeting certain expenses, maintaining a good credit score and also adding to your savings.

How does a cashback credit card work?

If you have ever wondered about the working of cashback cards, then continue to read.

When applying for a credit card, the features and rules of using the card are given to the applicant. Certain types of cards come with a cash back offer. These cards allow you to earn a nominal amount of money each time you use it. With the best cash back cards, you can earn around 1 to 6 percent of your spending. But the conditions of getting cashback can vary and depends on the bank that gave you the card.

So, see whether the cashback card that you want to get matches the spending style. Some cards give you cashback for travelling expenses while others give you for buying at a specific store. Hence, read the fine print and see if the cashback offered goes with the spending habits.

Redeeming of Cash so Earned

The redeeming of cashback cards is based on the rules of the issuing authority. But the most common way of getting the cashback from such card is as follows:

  1. You can redeem the amount so earned as a statement credit or as a direct deposit into the account. Yes, the rewards earned in a cashback card can be received in the above two mentioned ways. But the option of picking one can be done only when the bank allows you to do so.
  2. On the other hand, some banks allow a person who earned reward through such cards redeems differently. It can be done by buying merchandise, or through a gift card. Sometimes certain cashbacks are redeemed through making travel reservations.
  3. In only a few cases, you can use the cashback to improve your credit score. This can be done by automatically applying the reward to the credit card balance.

Cashback money is not free money

One thing that all users of cashback cards should know that it is not free money. When you swipe your credit card for buying things, the seller needs to pay a transaction fee to the credit card company. And in case of reward or cashback card, the company shares a small portion of the merchant fee with the customer.

The main aim of promoting such a card is to encourage people to use it. But when using cashback cards, you need to be careful. As each purchase based through such a card increases your expenses and doesn’t add to income.

Best cashback credit cards

Here is a list of best cashback credit cards that you can consider.

  1. HDFC Moneyback credit card – rewards can be redeemed for cash.
  1. Citi cash bank credit card – rewards can be redeemed for movie tickets, utility bills and reward points.
  1. HDFC Bharat credit card – rewards are redeemed for fuel, groceries, phone recharge, Easy EMI, PayZapp and SmartBUY transactions.
  1. Standard Chartered Manhattan Credit Card – the rewards of this card are best and suitable for supermarket spends redeeming.
  1. Kotak Delight Platinum Credit Card– the card is mainly designed for entertainment purposes. It is suitable for movie and dining experience.
  2. HSBC Cashback Credit Card – HSBC cashback card is designed for people who love shopping. The card is best suited for online shopping and earning rewards.
  3. Flipkart Axis bank credit card – this cashback card is good for availing best co-branded profits.

All the above-mentioned cashback credit cards come with an annual fee of 500 rupees.

Also Read: 10 Reasons to Use Your Credit Card

Bottom Line

Cashback credit card is useful in earning rewards. But using these cards can increase your spending habits. This can, in return, increase your expenses rather than reducing it. So when opting for a cashback credit card ensure you use it wisely.

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