The features and benefits associated with credit cards have become the most significant reason behind people’s attraction to these cards nowadays. Individuals don’t just look for a good credit limit, but they also want to get more and more additional advantages with their credit cards. This is why all the major card issuers are now offering a wide range of credit cards across different categories, including shopping, travel, rewards, cashback, and many more. Cashback Credit Cards are among the most desired credit cards in the Indian market as these cards generally don’t have a very high annual fee, but the cashback benefits associated with them are really great. One can save a lot using cashback credit cards if they have chosen their card correctly and they know how to use a card wisely to get the maximum benefit out of it. In this article, we are going to talk about some very important points to remember while spending on a cashback credit card. Continue Reading for more information:
Important Points To Keep in Mind
If you are thinking of getting a cashback credit card or if you are already having one, you need to understand a few points before you spend using your cashback card. From choosing your credit card to earning the benefits through it, you need to keep a lot of things in mind as discussed further in this article:
It’s Essential To Know Your Spending Habits First
Several card issuers offer cashback credit cards, but not all of them have the same cashback rate. Different cards come with different reward rates across various categories. Before you get a cashback credit card, you should analyze your spending habits and understand what categories you spend the most on. Once you analyze your spending behavior, you should try to find the cashback cards that are best suited to those particular categories. Some cashback credit cards offer the maximum benefits on shopping, and others offer the maximum reward rate on travel, and this is how different cards are advantageous over different categories. If you randomly get a cashback credit card without understanding your spending habits, you will not be able to get the maximum benefit out of it.
There Is A Capping On The Cashback
Generally, the cashback that you earn using a credit card is not unlimited, but you can only earn cashback up to a certain limit. For example, if your cashback card offers 5% cashback on all your spends and there is a maximum cap of Rs. 2,000 per month on the cashback. Now, if you spend Rs. 75,000 using this card in a particular month, you will not earn 5% of it as cashback because 5% of 75,000 is Rs. 3,750, which is more than Rs. 2,000. Therefore, you will only earn Rs. 2,000 cashback, which is the maximum limit up to which you can get cashback in a particular month.
So, if you ever spend a large amount expecting that you will earn a lot of cashback on it, you might be wrong. You must check the detailed terms and conditions of your credit card’s reward/cashback structure in order to understand whether there is a maximum cap on the cashback or not.
Cashback Might Not Be Applicable To Certain Categories
Another very important thing that you must be aware of before spending on a cashback credit card is that there might be a few categories on which your credit card doesn’t offer cashback. In general, most of the credit cards in India don’t offer reward points/cashback on certain spends, including cash withdrawals, wallet reloads, fuel spends, EMI spends, and many more. To confirm the same for your cashback credit card, you should go through its detailed terms & conditions and understand what all categories are not eligible for cashback so that you don’t unnecessarily overspend on those categories.
Understand The Redemption Procedure
Though the reward redemption process is considered the easiest with cashback credit cards, but you should still be aware of it. In general, cashback credit cards do not need any redemption as the earned cashback is directly adjusted against your card’s outstanding balance. But, there are some credit cards where you might need to convert some sort of points into cashback or the redemption process might be entirely different. For example, the co-branded Amazon Pay ICICI Credit Card is also a cashback credit card that offers up to 5% cashback on your spending. But, this cashback is not adjusted against your card’s statement balance, but it is credited to your Amazon pay wallet where it can be used for Amazon purchases, mobile recharges, and payments to merchants accepting Amazon Pay.
Credit Cards can be the best financial tools if you use them wisely and responsibly, but not everyone is able to get the maximum benefit out of their credit card. It is because they probably don’t choose the right credit card or they are not responsible enough to use a credit card in the right manner. Cashback Credit Cards can help you save a lot if you have correctly analyzed your spending habits before getting a credit card. But, whichever cashback card you are having, you should keep the above-mentioned points in mind so that you don’t make any mistakes while using your card. If you have any additional doubts, you can freely ask us in the comment section below!