Cashback credit cards have always been a popular choice among customers for their comparatively easy to understand value-back system and simple redemption process. However, no matter how appealing the cashback benefits may seem, if you do not choose your card wisely, you may end up missing out on several perks and savings.
Leading credit card issuers offer different credit cards with considerable cashback benefits on your spends. Some may offer higher cashback rates on co-branded spends, while others might be inclined towards certain spending categories like online shopping, groceries, utility bills and others. So, not every cashback card would be a suitable choice for you. You should only get the card whose features best align with your lifestyle so that you are able to make the most out of its benefits and maximise your savings.
Here are some key points to consider when applying for a cashback credit card to help you select the most suitable one:
Review Your Spends and Analyse Your Needs
Before diving into the credit card options, it is important to first look into your past spending patterns. This will help you realise which spending categories and brands you frequently spend on. Moreover, you should also analyse what your future spending requirements might be. Depending on your spending behaviour and lifestyle, you can look for a card that offers good returns on the categories you generally spend the most on.
Select the Card Type
Though all cashback credit cards offer cashback on your card spends, there are still some variations in cashback earning rate and preferred spending categories that you must take into consideration while choosing your card. Some cashback cards are co-branded with popular platforms and offer higher savings on the partner brand spends.
For instance, Amazon Pay ICICI Credit Card offers up to 5% cashback on purchases made on Amazon, irrespective of the category of the item you buy on Amazon, and that too at zero annual fee, while Swiggy HDFC offers up to 10% cashback on Swiggy purchases. These cards offer a base cashback rate on other spends. On the other hand, some generic cashback credit cards, like Cashback SBI and HDFC Millennia, are not associated with any brand and offer similar cashback rates on general spends or multiple brands. So, if you often spend on select brands or are loyal to any particular shopping portal, then opting for a co-brand card would be a good option, however if you do not have any such preference, then getting a generic cashback credit card would be a better option.
Understand the Cashback Program
While selecting your cashback credit card, you should go through the detailed terms and conditions associated with the cashback program of the card you are considering. Though most cards offer cashback as statement credit, some may let you use the earned cashback only via the co-branded wallet. You should also check what spending categories are excluded from cashback earning or whether there is any capping or other limitation on the maximum monthly cashback you can earn on your spends.
Look for Additional Benefits
Merely comparing the cashback benefits of the cards is not enough. You should also look out for any other benefits that the card might offer. These can include joining or renewal bonus, complimentary lounge access, spend based milestone benefits, brand discounts, travel benefits and many more. Such features and benefits can help elevate your overall savings considerably if you can make use of them without overspending. So, opt for the card that offers additional benefits that you can avail to save more on other lifestyle-related spends.
Check the Card Fees and Charges
Card joining and annual fee is another feature you can compare. The benefits and value-back that you can earn via the card should be worth the annual fee charged. You can also check whether you can satisfy the spend-based fee waiver condition through your average annual spends. If you do not wish to pay any such fee, you can also explore the lifetime free credit card options instead. If you shop internationally, then you can also check the forex mark-up fee charged by the card. However, if you frequently travel and shop internationally, then getting a travel centric card would be a smarter choice than a generic cashback card.
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The right cashback credit card is the one that offers accelerated cashback on your preferred spending categories or brands with a decent base cashback rate. It should also come at an affordable annual fee and offer the benefits that compliment your current spending needs and lifestyle. With the right credit card, you should be able to maximise your savings while staying within your spending limits.
