Cash Back Credit Cards: Are They Worth It?

By SiliconIndia   |   Monday, September 30, 2013   |    2 Comments
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Bangalore: At the time of inflation where prices of all products are rising and haunting the common people, the only solution is to cut down on expenses and opting for cash back or reward offers on credit cards, reports Rediff.

One should always remember that, credit card companies find such strategies to woo the customers. However, these days’ credit cards are introducing new schemes to customers to engage them and engage and make them spend more time on a regular basis.

Advantages of Cash Back Credit Cards

Having a cash back credit cards will enable the card holder to by earning free cash whenever he makes a purchase. There it’s good to use cash back cards for regular transitions and get benefitted by the card issuer.

This will also in turn help your credit card rating since, cardholders pay for goods using a card and settle the balance in full and on time, it enhances their credit rating.
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Reader's comments(2)
1: Not a right suggestion. Need to analyse the cash back strategy first.

Critical points:
1. Cashback Limit: Most of the banks have cash back cap of Rs. 100-200 max in a month.
2. Cashback delay: Cash back can take 15-30 days to reflect in account.
3. Specific stores: Cash back is provided on specific stores/merchant. Sometimes bank say cash back is applicable on supermarket/apparel stores but you do not get any cash back as merchant might not have registered with Visa/Mastercard in particular category entitled for cash back.
4. Almost all cash back card charge a annual fee of between 500-1000 which is basically nothing but the sum of all cash back in a year multiplied by probability of cash back for all customers.

My suggestion is to go for cards which gives you options to redeem rewards point into cash settlement of bill or purchase in stores e.g. Citi Bank Rewards card. Thus you get practically unlimited points and later can covert into cash (in terms of bill payment or store purchase). Such cards are also not chargable or have very less annual fee which is also waived off if you have transaction of specific limit or more.

Don't fall into trap of cash back by banks. Remember there is no free lunch in the world.
Posted by:Deepak - 29 Sep, 2013
I agree
Krishna Chaitanya Replied to: - 04 Oct, 2013
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