Cashback Credit Cards: How They Work and How to Maximize Benefits

What is a Cashback Credit Card?
Cashback credit cards offer a percentage of your spending as a reward, credited back to your account. You can earn up to 5% cashback on select categories, like online shopping, dining, groceries, and more. Let’s dive into how these cards work and how to make the most of them.

How Does Cashback Work?

  • Cashback is credited to your account through your monthly statement.
  • You can use it to pay off part of your credit card bill.
  • Some banks allow you to request cashback redemption or set minimum cashback thresholds for redemption.

What Are the Benefits of Cashback Cards?

  • Cashback on Daily Spending: Earn on categories like food delivery, movie tickets, and e-commerce.
  • Easy Redemption: Most issuers allow you to apply cashback toward your statement balance or deposit it into your bank.
  • No Expiry: Cashback typically doesn’t expire, but watch for time limits on cashback points with some issuers.

Important Things to Remember

  • Category Restrictions: Cashback often doesn’t apply to EMI, fuel, or utility payments.
  • Cap on Earnings: Some cards have a monthly limit on cashback earnings.
  • Exclusions: Cashback isn’t offered for rent payments, insurance, e-wallets, jewelry, and other transactions.
  • Timely Payments: Pay your credit card bill on time to enjoy cashback benefits.

Who Should Get a Cashback Credit Card?

  • Everyday Spenders: Ideal if you want rewards on groceries, food delivery, and online shopping.
  • Simple Rewards: Unlike air miles or reward points, cashback can be used directly to pay your card bill.

Where Cashback Doesn’t Apply

  • EMI transactions (Merchant/Flexipay)
  • Fuel purchases
  • Rent, insurance, education expenses
  • Railway bookings, toll fees, and more