Credit cards have become a widely used financial product today. They bring to you the convenience of making payments through a plastic card anywhere and at any time. Over and above, you enjoy a range of benefits and offers as a part of this payment method.
So what are cash back credit cards? As the name suggests, cashback credit cards offer you cashback rewards when you make a transaction. The rewards are lucrative and can add to your earnings.
Cashback credit cards make for the most popular type of credit card. This is because of the obvious reason that they let you earn. How does it work? Each time you purchase through you cashback credit card, you receive a percentage of the price that you paid. The cashback may be rewarded to you instantly or at the end of the billing cycle. You must note that cashback can be enjoyed only through eligible purchases. Typically, these purchases are as defined by your credit card issuer.
Redeeming your cashback
There are different ways through which the credit card issuer lets you redeem your cashback
- Statement credit – The most common way used to redeem the cashback is through a statement credit. This means that the rewards are used to lower the credit card bill in the following cycle. The earned cashback rewards is adjusted into the following bill.
- Account Deposit – The direct account deposit allows you to have the cashback directed straight into your bank account. For example, if you have earned INR 2000 as cashback reward through your monthly eligible spends, then the same value is added to your linked savings or checking account. This is yet another option that is popular among cashback credit card users.
- Gift card or shopping vouchers – Depending on the brand partners, the cashback rewards can be received through gift card rewards for different brands. This can include restaurants, shopping sites, resorts, clothing brands and much more.
It is essential to pick a credit card that meets your requirements. Ensure that you can strike the right balance between your spending while effectively earning through the rewards. Additionally, be mindful of the fees attached to the card and these include the annual fee, repayment duration and more.
Cashback rewards are great if you can commit to making repayments on time and keep all the fees in check. It is most important that you avoid making unwanted purchases while being lured by the lucrative cashback offers.