Money Back / Cash Back Credit Cards - How to Choose the Right One?

25 JULY, 2023

Credit cards have become a convenient method of paying for goods and services. A credit card can help you improve your credit score if your spending is kept in check and you pay the total amount by the due date. You can also enjoy great discounts, cashbacks, and rewards that are often offered.

If you are a beginner with using credit cards or an experienced hand, aiming to make things easier with cashback or even how to earn cashback can be irresistible. Compared to other rewards schemes, though, cashback is quite straightforward. Eventually, the best money-back credit card is the one you will be able to use regularly, and that rewards you for the kind of expenditure you do the most. Therefore, it is recommended that you understand your reason for choosing a card. This will help you in your decision-making process for knowing the best cashback credit card.

Here’s all you need to understand about selecting an unlimited cashback credit card and some tips to get your hunt started.

What is a cashback Credit Card?

The cashback credit card, also referred to as a money-back credit card has taken over the market today. Who doesn’t want to spend money and get some cashback in the transaction? Of course, if you collect enough reward points, the rewards claim procedure will be the next step for all that you need. But if it reaches you as money that you can use for just about anything, then that might be the best credit card for you.

A cashback credit card is a reward-based credit card that gives back a certain percentage of every qualified purchase you make. So, for example, spending INR 1000 on a card with a 1% cash back rate would give you back INR 10. It may not sound overwhelming, but such rewards can speedily add up over time.

How do money-back credit cards work?

Before applying for a card, know how cash back credit cards work. When you use a Money-Back Card, you earn a cash reward in-lieu of air miles or reward points. Depending on the bank that issues your money-back credit card, you can earn cashback anywhere between 1% and 5% of your qualified spending. It further depends on the type of credit card that you use and where you use the card.

What are the features of Cash Back Credit Card

Cashback credit cards offer various features that make them attractive to consumers -

• They provide cash rewards that never expire, allowing cardholders to accumulate rewards over time and use them whenever they desire.
• Additionally, many of these best cash back cards have no annual fee, ensuring that users can enjoy their rewards without sacrificing a portion to maintenance costs.
• Moreover, some banks offer sign-up bonuses to new cardholders who meet specific spending requirements within the initial months, providing an extra incentive to apply for a cashback credit card.

What are the three kinds of cashback credit cards?

There are three kinds of cashback credit card in the market:

• Flat-rate cashback credit card
• Tiered cashback credit card

Bonus cashback credit card

Flat-rate cashback credit card

As the name indicates, this type of credit card pays the uniform cash percentage on every transaction, regardless of the category of spending. Therefore, such a credit card type is ideal for people whose expense is not limited to any specific category but spread across all or most shopping categories. In addition, this type of card has a flat reward percentage rate on every purchase you make.

Once you decide on the card, you can apply online for it, and that is very simple. Submit an online credit card form, along with necessary documents, and get quick approvals.

Tiered Cashback Credit Card

This cashback credit card differs from a Flat-rate cashback credit card. This cashback credit card provides best cash back credit card rates. There is a regular cashback rate on a certain kind of purchase, and they offer “Accelerated Rewards” on certain other types. Accelerated rewards cards are the points or cash or miles that you earn above the usual reward rate. Generally, accelerated rewards categories include groceries, fuel, dining, entertainment, and travel.

For example, this kind of Tiered cashback Credit Card may offer 2% on gas, 3% on groceries, 5% on entertainment, and a straight 1% on everything else.

So this essentially infers that you get cashback for different categories at different rates. It is the best credit card for those who spend more in specific categories. For example, let’s say you go out to eat a lot. Or spend more on fuel for your vehicle. Or you have a large/joint family and spend more on daily needs/groceries. In such cases, it makes a lot of sense to apply for a card that gives you accelerated rewards on these respective categories. The strategy to get the most out of a Tiered cashback credit card is by identifying the shopping categories that can get you accelerated rewards and spending on such categories to get the required benefit.

Similar to flat-rate cashback credit cards, here as well submit an online credit card form, along with necessary documents, and get quick approvals.

Bonus Cash Rewards Cards

A Bonus cashback credit card provides better cashback rates for specific shopping categories during specified periods. It keeps varying periodically– say every month or quarter or so. And it pays a uniform cashback rate on every other spend. To get the most out of a card, you need to be attentive to any literature, email, or any other promotional material that your bank might send you with the details where it tells you when the changes happen and what are these changes?

Eligibility Criteria for Money Back Credit Card

The eligibility criteria for the best money back credit cards typically include:

• Applicants should fall within the age bracket of 18 to 65 years.
• Additionally, they are generally required to demonstrate a minimum salary, which can vary depending on the credit card issuer.
• Eligible individuals can be either salaried employees of an organisation or self-employed professionals.
• Furthermore, maintaining a minimum credit score of 750 is often necessary to qualify for a Money Back Credit Card, ensuring a good credit history.

Meeting these criteria increases the likelihood of being approved for a Money Back Credit Card.

How to Apply for Money Back Credit Card

To apply for a Money Back Credit Card, follow these steps:

• Research and compare various credit card options to find the one that suits your needs and cash back credit cards offers attractive rewards.
• Visit the website of the chosen credit card issuer and navigate to the "Apply Now" or "Credit Card Application" section.
• Fill out the online application form with accurate personal, employment, and financial information.
• Submit any required documents, such as proof of income and identity verification.
• Await the bank's decision, which may take a few days.

If approved, you will receive the credit card by mail, and you can start enjoying the money back rewards on your purchases.

Conclusion

No credit card is better than all the others in all categories or for everyone. But by comprehending your options and seeking the right questions, you can find the card that's best for your spending habits and your credit situation. Now that you know the three types of cashback credit cards, which get you more cashback rewards as you spend more on specific categories.By understanding that different cash back cards cater to specific spending habits and credit situations, you can make an informed decision. Consider asking questions related to the rewards structure, annual fees, and redemption options. This will help you find the card that maximises your cashback rewards based on your preferred spending categories, ultimately providing you with more benefits as you spend more.