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Cashback Credit Card: 5 things you should know even before applying

Here are 5 important points you should know before applying for a cashback card for shopping

Cashback Credit Card: 5 things you should know even before applying
While Axis Bank has partnered with Samsung to offer a co-branded card, SBI Card is offering up to 5% cashback on all online spends.

Amid the festival sale season, credit card companies are trying to cash in on customers inclined towards instant gratification. Axis Bank and SBI Card recently launched new cashback cards. While Axis Bank has partnered with Samsung to offer a co-branded card, SBI Card is offering up to 5% cashback on all online spends.

If you are planning to get a cashback credit card, here are five important points that you should know even before applying:

Check whether the rewards match your needs

Cashback cards differ from normal credit cards only in terms of reward structure for the customer. Therefore, you should always check whether the rewards on offer fit your needs. You may prefer one over the other based on the utility you have in mind for the rewards.

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Some regular credits cards may be more rewarding

Sometimes, a normal credit card may be better than a cashback card. You should evaluate your spending habits and the rewards that can be earned over time as opposed to calculating cashback for each transaction. “One of the reasons cashback cards were introduced was to provide instant gratification to the consumer who was not sure of how reward programmes work,” says Gaurav Chopra, CEO and founder of IndiaLends, an online platform providing loans and personalised card offers.

“In most cases, cashback on regular purchases can vary between 0.2% – 2%, and up to 5%-10% on specific spends, such as with cards offered as co-branded cards.

However, there are certain reward programmes in the market, especially those by big banks that end up offering higher rewards.”

Compare all credit card options before applying

You should always evaluate multiple options to identify a card that can help maximise rewards based on your spending habits.  

Also Read: 5 reasons to avoid buying Digital Gold

Check if the cashback will be credited to your card or an online wallet

Cashback comes as a percentage of spends instead of reward points. “Customers should always check if the cashback is received as a statement credit or as credit in an online wallet like many co-branded card issuers do. While it’s still credit, the customer is restricted to using the cashback only at specific merchants.”

Don’t apply if you can’t afford it

Lastly, never apply for a credit card if you can’t afford to pay bills on time. Missing credit card due dates can affect your credit score.

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First published on: 10-10-2022 at 00:30 IST