This festive season, brace yourself against the marketing and promotional tactics of credit card companies wherein you are lured with several different offers, facilities and schemes, and the latest and most tempting of all, the concept of cash back. While cash back may seem like an idea of giving you the torch of cashless freedom, remember the golden rule that ‘there are no free lunches in the credit card industry!’ Cash back is a simple facility that offers to give back a fixed percentage of money on the total amount spent by you on your card. But you need to be careful to separate the bad offers from the good ones, in order to make the most of this facility. Often, cash back is a scheme that can be availed only on select sectors and areas. Thus, it is better to verify the same with your credit card firm before opting for such a scheme or card. Credit card companies can come out with a list of shopping malls, stores, and boutiques where you will be entitled to receive cash back on all your purchases. Sometimes, cash back is also offered on certain products as a part of their inaugural or promotional marketing strategies. Be informed of the various terms and conditions that are a part and parcel of these lucrative deals.
Sometimes, credit card companies do not offer the cash back facility if your card has been swiped at a machine that belongs to another bank. This is because when banks spend a huge sum of money to acquire a terminal in order to facilitate convenience for the customer, then they expect their customers to use it for all or most of their transactions. Also, you may be surprised to find that credit card companies may expect you to spend a certain sum of money in all your purchases at various outlets, in order to avail the cash back. While this will be reflected in your monthly statement, you will be deprived of such offers if you do not meet such statutory requirements fixed by the bank.
Sometimes, credit card companies may use cash back as a tool to trap customers in a larger debt trap of sorts. Many banks offer a certain percentage of cash back for carrying forward your payment to the next billing cycle, with an even higher percentage of cash back if you carry forward the pending amount again to the next cycle. While customers may not see any wrongdoing on the face of this, you are merely being pulled into a debt trap by these firms, in order to draw greater funds out of your pockets. Sometimes, credit card companies can offer cash back whenever you withdraw money from your credit card. You must refrain from indulging in such practices as withdrawing money from credit cards can be quite a costly affair owing to the high interest and transaction costs.
While credit card companies also offer reward points to attract customers, cash back is a scheme that draws a large influx of customers. This can be due to instant gratification as customers enjoy the feel of cash in hand more than other offers and deals. The reward points system has also not gained much momentum as people are concerned that they may not get a gift of their choice in the aftermath of their spending. Thus, in order to enjoy the maximum benefits of a cash back scheme, acquire all information on the terms and conditions of the credit card company, for in the end, it is your money that is being spent in the long run. You obviously do not want to borrow more debt like a personal loan or a loan from a private money lender to pay your credit card debt. It will simply add up to your financial woes and make your happy life a little too uneasy.