Although credit is not a very like able term for conservative money spenders, it can prove to be beneficial if utilized wisely. Apart from the security and convenience benefits that credit cards provide, most banks have managed to attract and widen their credit card users’ base by offering them cash back on their purchases.
This feature can be availed by those credit cards who have tie ups with certain brands, apparels, department stores, restaurants, movie theatres etc. You can also view the brands/ stores your respective bank has a tie up with by sampling surfing your respective bank’s or credit card company’s website.
How does this feature work? The answer is simple. You are entitled to a certain percentage as cash back depending upon your total purchase. But this feature is only applicable in those stores that have a tie up with your bank or the credit card company and not with unauthorized dealers. If, for example, you have shopped for Rs100, and your banker or the credit card that you hold provides you cash back of 5%, you are entitled to cash back of Rs5. However, it is important to know that, the hidden disadvantages also prevail on such offers.
- You are not entitled to cash back unless and until you manage to spend their minimum amount to be entitled for such an offer. The minimum amount to be spent to be entitled for cash back differs from each bank to bank or from each credit card company to another. But the minimum general range under which you can be entitled for a cash back is on purchases made within the bracket of R1000 – Rs3000. In such situations if you spend less than Rs1000, you obviously will not be entitled for cash back.
- In certain other situations the vice versa of the point mentioned above, can be possible. For example, sometimes certain banks may cap Rs1000 to be the maximum limit upon which you will be entitled for cash back. For example, if the bank provides you with cash back of 5% on Rs1000, even if you spend Rs. 40000 on your total purchases, you will be entitled to only 5% on Rs1000, i.e. you will be entitled for a Rs500 as your cash back and not Rs 2000 (5% of 40000).
- There are some other banks that provide you with the facility of cash back, only if you manage to produce the card and get it swiped at the PoS (Point of Sales). Generally, under such cash back schemes and offers, banks have tie ups with merchandizes and see to that their own PoS terminal is at a cost advantage.
But apart from all these lucrative benefits, what should be understood is that it is important for you to not spend much more than what you can pay back. Temptations are hard desires to resist. However by constantly reminding oneself about their current financial situation you will be in a position to take control over your unwanted desires and save a lot of money. To borrow another debt like a personal loan to pay another loan like a credit card can annoy your financial stability for quite some time since it will be difficult to pay your debt back over the years due to high interest rates. Therefore, cultivating reckless shopping habits is not a good option unless and until you have ways to provide for your repayment capacities. However, if you ensure you to use just a little precaution while utilizing your debt, it can help you a long way through the future in availing further debt for fulfilling your own personal requirements.