Cashback credit cards allow you to earn some money back when you swipe your card to buy things. This money might come as points or cash that goes into your account. Most credit cards offer cashback for spending on groceries, food, lifestyle, entertainment, electronics and bills payment. Cashback is one of the key benefits credit cards offer to consumers as it’s a tangible reward, offering actual cash for regular expenditures.
One gets different types of deals on one’s credit cards. Some credit cards provide a fixed percentage cashback, while others offer a comparatively higher cashback rate on specific purchases. Your choice depends on your preferences and the type of cashback offer you prefer. Cashback benefits help you to retrieve a percentage of your spent money.
Also Read: How to use credit cards wisely in financial emergencies
Choose the Right Card
It is important to get the card that fits your needs and help you earn rewards at the same time. Look for cards that offer cashback on categories aligned with your regular spending habits like groceries, dining, fuel, or utility bills. Explore different credit card options available.
Adhil Shetty, CEO, Bankbazaar.com, says, “Cashback features on credit cards in India offer significant advantages to users. They provide a tangible way to save money on everyday expenses. By earning a percentage of the spending back, individuals can effectively reduce their overall costs, making purchases more economical.”
Annual Fees
Consider the annual fees of the card against the potential cashback benefits. Sometimes, higher-fee cards offer better cashback rewards, but they might not always be the most cost-effective option based on your spending patterns.
Reward Structure
Pay attention to specific categories that offer higher cashback percentages. Some cards might offer 5% cashback on groceries but only 1% on fuel or dining. Certain cards offer rotating or changing cashback categories periodically. Plan your purchases around these categories to maximise benefits during those times.
Pay on Time
Avoid interest charges by paying the entire credit card bill on time. Interest payments can negate any cashback benefits. Stick to a budget and spend within your means. Overspending just to earn cashback defeats the purpose and might lead to financial trouble.
Welcome Offers
Utilise welcome offers and sign-up bonuses provided by credit card issuers. These offers often come with boosted cashback rates for initial spending. Some credit cards have tie-ups with certain merchants or brands. Take advantage of these partnerships to earn extra cashback or discounts when shopping with those partners.
Monitor and Redeem
Review credit card statements regularly to ensure you’re receiving the correct cashback rewards for your transactions. Report any discrepancies promptly. Understand the redemption process for your cashback rewards. Some cards might have expiration dates or specific redemption methods. Redeem your cashback on time to maximise its value.
Combine Benefits
If your credit card offers cashback alongside a rewards program, combine both to amplify your benefits. Earn points and cashback simultaneously. Use your cashback credit card for significant purchases to earn substantial cashback rewards. However, ensure these purchases are planned and align with your budget.
Shetty adds, “Cashback on groceries, fuel, dining, or utility bills helps in trimming expenses while carrying out essential transactions. It encourages prudent spending habits, incentivising individuals to use their credit cards responsibly.”
Stay Updated
Keep an eye on updates from your credit card provider. They often introduce new offers, promotions, or changes in cashback categories that can benefit you. Some credit card companies may offer mobile apps with features to track spending, redeem rewards, and receive notifications about special offers. Leverage these apps to stay informed and manage your cashback effectively.
Cashback credit cards offer an excellent opportunity to earn while you spend. However, it’s essential to use them judiciously, considering your financial habits, needs, and payment discipline. By choosing the right card, you can make the most out of your cashback credit card.