Traditional wisdom says “a penny saved is a penny earned.” But if you ask credit card companies, they will say “a penny spent is a penny earned.”
And this festive season, they’re gearing up to make this thought even more enticing. For those not clued in, 'cash back' is another right that comes along with cashless freedom.
Simply put, it means that of the total spent on your card, you’ll be returned a fixed percentage. But are these offers just another gimmick or have they really something in-store for you? Here is a brief insight on how to separate the chalk from the cheese and make the most out of the cash back offer on your credit card.
Today, all credit cards such as SBI, ICICI, HDFC, Standard Chartered and HSBC come out with a cash back offers either during the festive season or in their promotional schemes. A card offering a cash back scheme always scores high with consumers, a fact that credit card companies have been quick to realise.
Cash back offers are steadily gaining popularity in the Indian market. “Our queries in the metros indicate higher inclination towards cash back,” confirms R L Prasad, head - credit cards & personal loans, Standard Chartered Bank.
Reality check
Though cash back offers often seem alluring, its better that you check out on what and where you can avail the scheme. Often there is a list of shops, stores and other specific outlets, where you are entitled to get a cash back. It’s also important that before you satiate your splurge desires, find out whether spending on that particular product will entitle you to a cash back.
“Many cards have various conditions attached with them. For example, you will only get to enjoy the cash back offer if you make a purchase at some specific departmental stores. Other conditions could force you to spend on apparel, consumer durable or electronic goods. Hence, it’s important that you go through the rider before you start using the card,” says Nirupam Sahay, V P marketing, SBI Cards.
Currently, SBI Gold card offers a flat cash back offer of 2% when you make a purchase in departmental stores or make your utility payments besides spending on groceries and on restaurants. “The cash back offer should be of relevance to the consumer with no frills attached,” adds Sahay.
Swipe in
It’s important to check wheter the offer could be availed if the card is used at any swipe machine. Some card companies don’t credit the discount if the transaction is done on a different bank’s swipe machine. This means that if you’ve a XYZ bank card and it is swiped at a machine installed by ABC card, than you’ll not be able to avail the offer. “This is so because terminal business falls under a different category. If a bank has spent a certain amount in providing a terminal, it would like that the transactions from their card be done on the same,” reasons Parag Rao, head - product & portfolio, credit cards, HDFC Bank.
Minimum spend
This often comes as a disappointment when you go through your month-end statement. Some credit card companies have this rider attached that you will have to spend a certain amount in a particular number of transactions and only if you meet that statutory requirement, you’re entitled to get the cash back.
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