What is a Cashback Credit Card?

Unlike regular credit cards that just help you make purchases, cashback cards return a small percentage of your spending back to you. It’s like getting a tiny discount on everything you buy!

For example, imagine you’re out shopping for groceries. You spend ₹5,000 using your cashback card that offers 2% back on all purchases. Boom! You’ve just earned ₹100 back. It might not sound like much at first, but these small amounts can add up quickly, especially if you use your card for most of your daily expenses.

“Why are these cards suddenly everywhere?” Well, it’s simple – people love getting something back for their spending. In recent years, more and more Indians have been catching on to the benefits of cashback cards.

Difference between Cashback Credit Cards & Regular Credit Cards

The main difference is that cashback cards give you a little something extra with each purchase. It’s like getting a small discount on everything you buy. Regular cards might offer rewards points or miles, but cashback cards keep it simple- they give you cold, hard cash (well, sort of).

For example, if you have a card that offers 1% cashback and you spend ₹10,000, you’ll get ₹100 back. It might not sound like much, but it can add up quickly, especially if you’re a big spender.

Another key difference is that cashback cards often have specific categories where you can earn more. So, a card might offer 5% back on grocery shopping, 3% on fuel, and 1% on everything else. This means you can maximize your rewards by using the card strategically.

Types of Cashback Credit Cards

Flat-rate cashback cards

Imagine a credit card that keeps things simple- that’s what flat-rate cashback cards are all about. These cards offer a fixed percentage of cashback on every purchase you make, no matter what you’re buying or where you’re shopping.

For example, you might get a card that gives you 1.5% cashback on all your purchases. So, whether you’re grabbing your morning chai, filling up your car with petrol, or buying a new smartphone, you’ll always know exactly how much cashback you’re earning.

Tiered cashback cards

Now, if you’re looking to maximize your cashback in specific areas, tiered cashback cards might be right up your alley. These cards offer different cashback rates depending on the type of purchase you make.

Let’s say you’re a foodie who loves to eat out and order in. A tiered cashback card might offer you 5% cashback on restaurant and food delivery purchases, 3% on grocery shopping, and 1% on everything else. This way, you can earn more cashback on the things you spend the most on.

The trick with these cards is to choose one that aligns with your spending habits. If you spend a lot on travel, look for a card that offers higher cashback rates on flight bookings and hotel stays. It’s all about making your everyday expenses work harder for you!

Rotating category cashback cards

For those who love a bit of variety and don’t mind keeping track of things, rotating category cashback cards can be an exciting option. These cards offer higher cashback rates in different spending categories that change periodically- usually every quarter.

For instance, from January to March, you might earn 5% cashback on grocery purchases. Then from April to June, it could switch to 5% on petrol and travel expenses. The categories keep rotating throughout the year, giving you the chance to earn higher cashback in different areas of your spending.

Advantages of Cashback Credit Cards

Direct savings on purchases: Imagine walking into a store and seeing a sign that says, “Everything 2% off!” Sounds great, right? Well, that’s essentially what a cashback credit card does for you, but across multiple stores and purchases.

Every time you swipe your card, you’re putting money back into your pocket. It’s like having a tiny, invisible piggy bank that fills up with every purchase. Whether you’re buying groceries, filling up your car, or treating yourself to a new gadget, you’re earning a little something extra.

Simplicity and transparency: Let’s be honest- some reward programs can be as confusing as trying to understand cricket rules for the first time. Cashback cards, on the other hand, keep things refreshingly simple.

There’s no need to juggle different point values or worry about blackout dates. With cashback, what you see is what you get. If your card offers 1.5% cashback, you know exactly what to expect. It’s like having a straightforward friend who always tells it like it is – no fuss, no muss.

Flexibility in reward usage: Now, here’s where cashback cards really shine – they give you the freedom to use your rewards however you want. Unlike some other reward programs that limit your options, cashback puts cold, hard cash (or its equivalent) back in your hands.

Got a big bill coming up? Use your cashback to offset it. Want to treat yourself to something nice? Your cashback can help fund that little luxury. Saving up for a rainy day? Add your cashback to your savings account and watch it grow.

How to Apply for a Cashback Credit Card?

Eligibility criteria for Cashback Credit Cards:

• Age: You should be at least 18 years old. Some banks might prefer applicants who are 21 or older.
• Income: Banks want to know you can handle the responsibility. For most cashback cards, you’ll need a minimum annual income of ₹3 lakhs to ₹5 lakhs. High-end cards might ask for more.
• Credit score: A good credit score (usually 750+) shows you’re trustworthy with credit. Don’t worry if yours isn’t perfect – some banks offer cards for those building credit too.
• Employment: Having a steady job or running a business for at least a year gives banks confidence in your financial stability.

Documents required for Cashback Credit Cards:

• Identity proof: Your Aadhaar card, PAN card, or passport will do the trick.
• Address proof: Utility bills, rental agreement, or your Aadhaar card can serve this purpose.
• Income proof: Recent salary slips or IT returns for the self-employed folks.
• Passport-size photographs: A couple of these never hurt.

Application process for Cashback Credit Cards

1. Choose your card: Research different cashback credit cards and pick one that suits your spending habits and lifestyle.
2. Online or offline: Most banks now offer online applications, which are quick and convenient. But if you prefer the personal touch, you can visit a branch.
3. Fill out the form: Whether online or on paper, you’ll need to provide your personal, professional, and financial details. Double-check everything before submitting!
4. Submit documents: Upload scanned copies if applying online, or provide photocopies at the branch.
Verification: The bank will review your application and might call to confirm some details.
5. Credit check: They’ll run a credit check to assess your creditworthiness.
6. Decision time: Based on all this information, the bank will approve or reject your application.
7. Card delivery: If approved, your new cashback credit card will be delivered to your address, usually within 7-15 working days.
8. Activation: Give the bank a call or follow their online process to activate your card.