It would definitely make a lot of difference to your finances if you get to pay only about 50% of the total expense that you incur on a product or a service with your credit card. Especially during these inflation ridden times, this attribute can be treated as a bounty. This belief has been acknowledged by banks who are trying to package their credit cards such that this motive is satisfied. Although the main feature of this cash back credit card is to provide you a cash back each time you shop or pay your utility bills, you need to be aware as to where you can use this service.
The cash back credit cards works in the following manner. Suppose for example you are required to pay an electricity bill of Rs1800 and the bank for which you have signed up for your cash back credit card offers you a cash back of 5% then your card settlement bill will ask you to pay only Rs.1410. Although this is seen as a lucrative deal, it is important for you to read through the terms and conditions carefully to understand the intricate expenses that can be cut from your account to successfully avail this service.
The Item List
Before you start utilizing the Cash back credit card, it is important for you to understand as to what are the items on which the bank allows the cash back policy. Also do ensure that the service providers from whom you are availing your product or service from are also in sync with your respective bank’s service for the cash back credit card program. Banks usually provide cash back offers not only on utility bills but also on the expenses that you might incur on your 3 star rated or above restaurant bills or for paying your DTH service provider bills etc. Therefore it is important for you to know the items on which you can swipe your cash back credit cards, since it is not always that such service providers be the utility service provider for your bank when it comes to cash back credit cards.
The limitation on your card
This varies from one bank to another. Apart from the main limit, you as a valued customer are also provided sub limits. But most banks have the practice of introducing their limits in terms of rupees and specify the details as to how much can the cash back credit card holder get in a month. Sub limits, for example, no single transaction shall be entitled for cash back of say Rs 600.
Eligibility of Transactions
Apart from the limits, banks also provide the minimum transaction value based on which you are guaranteed cash back. For example, banks can set a minimum transaction value of Rs 700 on which you get cash back. But again this policy varies from one bank to another. Some banks provide for varying minimum transaction value for different categories like the bills at retail outlets or utility bills etc, whereas some banks may restrict it to the number of uses.
Charges
The charges you might have to incur for holding the cash back credit cards is the joining fee and the annual fee. Subject to certain conditions banks may waive off such fees depending on how often and at what intervals have you used your card or the minimum spending amount that you incur in a year for example if you spend Rs 20000 in a year you might avail such waivers.
Unlike other types of credit borrowing, it is important that you be watchful of your financial health. Before you sign up for any credit it is important that your read the terms and conditions mentioned in the offer document carefully so that you get to know the hidden expenses that you might incur along with the interest rate that your bank charges. You do not wish to default and end up borrowing a personal loan or any other type of loan to repay the credit card loan that is already burdened with a huge interest rate.