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How Credit Card Cash Back Programs Work?
Posted on Saturday, April 27th, 2024 | By IndusInd Bank
Credit card cash back programs enable cardholders to receive a portion of their purchases back as cash rewards and maximise the benefits of daily expenses.
Credit card spends surged 27 per cent year-on-year (Y-o-Y) to Rs 18.26 trillion in financial year 2023-24 (FY24) from nearly Rs 14 trillion in the year-ago period, according to the latest data released by the Reserve Bank of India (RBI).
Credit cards are pivotal in managing day-to-day expenses and unlocking an array of benefits. Credit card cash back programs stand out among the various benefits, as they allow every swipe and transaction to result in tangible rewards. Keep reading to understand how credit card cash back programs work and discover tips for maximising rewards on everyday purchases.
How Do Credit Card Cash Back Programs Work?
Credit card cash back is a rewards program offered by many credit card issuers that allows you to earn cash back in exchange equivalent to a predetermined portion of your purchases. The cash back can be redeemed in several ways, such as using it as a statement credit, depositing it into a bank account, or using it for other financial transactions.
Types of Cash Back Programs
- Flat-rate cash back programs: These offer you a fixed percentage of cash back on all your transactions, regardless of where you shop.
- Bonus-category cash back: Here you earn higher cash back percentages on specific types of purchases. For instance, you might receive 2-3% cash back on categories like petrol or groceries and 1% on other purchases. You need to keep track of which categories offer the best rewards and use the card accordingly.
- Rotating-category cash back: Similar to bonus-category, this program provides greater cash back percentages, often up to 5%, on specific categories. However, these categories change every few months, and you need to activate them in order to earn higher rewards.
Tips to Maximise Cash Back Programs
Here are some practical tips to maximise cash back programs:
| Know Your Spending Style | Check your spending habits to determine where your money is typically spent. If you shop for groceries frequently, get a cash back program that gives you better rewards in that category |
| Choose a Card with a Welcome Bonus | Seek out cards that provide a welcome or sign-up bonus. It allows you to earn cash back by spending a certain amount within the first few months after the card’s activation |
| Keep Track of Your Cards’ Reward Categories | If you have a bonus or rotating category cash back program, make sure to use the right card for each purchase to maximise rewards |
| Beware of Card Fees | Pick a credit card with no annual fee or additional fees like foreign transaction charges. Excessive credit card fees can cancel out your rewards even if you have a strong cash back rate |
| Avoid Carrying a Balance | Do not carry a balance on your card to avoid paying interest charges that could exceed your cash back rewards. Spend no more than you can afford to repay in full by the end of the month |
Apply for a Credit Card with IndusInd Bank
IndusInd Bank offers a selection of credit cards with enticing perks. With an IndusInd Bank credit card, you can enjoy cashback rewards across various categories. This makes your spending more rewarding than ever.
Apart from cashback offers, you can also earn reward points that never expire on every purchase. Moreover, with an IndusInd Bank credit card, you get a waiver on your fuel surcharge at all petrol pumps across India and free access to airport lounges across several domestic and international airports.
Don’t miss the opportunity to maximise your savings! Explore our range of credit cards and apply online to begin enjoying the benefits right away.
Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.
