How Do Cashback Credit Cards Work?

Are you somebody who shops on a daily basis, be it for groceries, apparel, food, etc and want to earn rewards? You use your credit card to make all the transactions, but there are no perks. In comes the cashback credit cards—the savior!! Cashback credit cards are taking India by storm, offering a great way to earn rewards on your everyday purchases.

Imagine receiving a percentage of your spending back as cash rewards. Sounds amazing, doesn’t it? Cashback credit cards offer cardholders a percentage of their spending back in the form of cashback, making them an attractive option in the credit card society for those who want to make the most of their purchases. In this article, we will explore how cashback credit cards work and how they benefit cardholders.

What is a Cashback Credit Card?

A cashback credit card is a special type of card that gives you back a small percentage of the money you spend on purchases. So, if you use a cashback credit card to buy things like groceries, clothes, food, or anything else, you get some of that money back as a reward. For example, if you spend ₹100 on online purchases and your credit card offers 2% cashback, you will get ₹2 back as a reward. It’s like getting a little discount on everything you buy using the card. Cashback credit cards are popular because they let you earn rewards on your daily spending, making them a good choice for people who want to get something back from their purchases. One needs to remember that the cashback credit card that he is choosing matches his spending habits and is beneficial for him.

Workings of Cashback Credit Cards

When you use a cashback credit card to make a purchase, you earn a percentage of that spending back as a cash reward. For example, if a card offers 1% cashback and you spend ₹1,000, you would receive ₹10 back as a reward. Some cashback credit cards in India may offer higher cashback rates for specific categories of spending, such as groceries, fuel, or dining out. This means that you can earn more cashback on certain types of purchases, allowing you to maximize your rewards based on your spending habits. For example, the Swiggy HDFC Bank Credit Card offers 10% cashback on orders including DineOut and Instamart from Swiggy.

Once you have collected a certain amount of cashback on your credit card, you can redeem it in various ways. Many cashback credit cards in India allow you to redeem your rewards as a statement credit, which reduces the balance on your credit card. Some cards may also offer the option to deposit the cashback into a linked bank account or provide vouchers for shopping or other rewards. For example, the Amazon Pay ICICI Bank Credit Card offers a 5% cashback on purchases made through Amazon. The cashback earned will be directly credited to the cardholder’s Amazon pay balance by the end of the statement cycle.

It’s important to be aware of the terms and conditions associated with cashback credit cards. Some cards may cap the amount of cashback you can earn in specific spending categories, and others may have a minimum redemption amount or an expiration date for cashback rewards. It’s important to carefully review the terms and conditions of the card to understand how you can earn and redeem cashback rewards.

Benefits of Cashback Credit Cards

Rewards on Everyday Spending

Cashback credit cards offer rewards on everyday purchases such as groceries, fuel, dining out, and online shopping. By using a cashback credit card for your daily expenses, you can earn a percentage of the amount spent as cashback, effectively getting a discount on your purchases.

Savings on Eligible Purchases

By using a cashback credit card for eligible purchases, you effectively receive a small discount on each transaction. This can lead to considerable savings over time, especially if you consistently use the card for daily purchases.

No Need for Points Conversion

Unlike other reward programs, cashback is simple and easy to understand. There’s no need to worry about point conversions or complex reward structures. With cashback credit cards, you can easily track and utilize the rewards you’ve earned without any confusion.

Top Cashback Credit Cards in India

Below are some of the top cashback credit cards in India that are in the wallets of many and are desired by countless people.

• Cashback SBI Credit Card: The Cashback SBI Credit Card offers cashback benefits on a wide range of spending categories, both online and offline.

• Flipkart Axis Bank Credit Card: The Flipkart Axis Bank Credit Card offers great benefits for online shoppers. It provides a 5% cashback on purchases on Flipkart and a welcome gift voucher worth ₹600, making it a great choice for frequent online shoppers.

• HDFC Millennia Credit Card: The HDFC Millennia Credit Card offers great benefits such as CashPoints on all transactions, especially on shopping and bill payments. With its reward points system and interest-free credit period, it’s a good choice for everyday expenses.
• HSBC Live+ Credit Card: The HSBC Live+ Credit Card offers great benefits such as cashback on everyday spending and access to exclusive dining and entertainment. It offers 10% cashback on dining, food, and grocery shopping, making it a very useful card for everyday shopping.

Click here for more details on the best cashback credit cards.

Bottom Line

Cashback credit cards offer an easy way to earn rewards on your everyday spending. By using these cards responsibly and understanding the terms associated with them, you can make the most of the cashback rewards they provide. Remember to pay off your credit card balance in full each month to avoid any interest charges that could offset the value of the cashback rewards. With the right approach, a cashback credit card can be a valuable tool for earning rewards on your purchases in India.