How to Save Money with Cashback Credit Cards

Spend less than you earn - this small piece of advice is given to almost every shopaholic person or those who spend more than they earn using their card. I'm sure every frugal advice site out there stresses on this advice and expects you to take action in order to keep credit chargebacks to minimum. If you can't control your shopping habits or don't want to starve yourself from spending on things you like then you should definitely check cashback credit cards. These cashback credit cards can save a lot of your money and in turn keep you in safe belt to avoid getting into chargebacks that you can't afford.

What are Cash Back Credit Cards ?

These credit cards are issued by banks or credit card companies to return percentage of cashback on your every purchase. Every time you shop on their merchant outlet you get some percentage of your spending back on your card. Some cashback cards have points system while some cards offer return in terms of percentage of spending. How they afford it ? Well, this is completely different topic but you can view this as deal between merchant and credit card companies or bank.

Cashback Cards - Points or Percentage System ?

In order to minimize risks and keep the profits, merchants always prefer point system instead of percentage of spending as cashback. But if you look at point based system then you'll realize that the prizes or discount which you get at certain points level makes it really hard to reap the rewards unless you're shopaholic. So if you've choice to choose between percentage based cash card or point based cashback card then always go with percentage based cashback card unless you've some beneficial reason to select point based card.

Cashback Cards - Fees, Requirements and Limits

There are some important things like fees, credit limit etc to which you need to pay attention before getting cashback credit card. Let's take a look at these things.

  •     Joining Fee - This fee should be free, in some banks this fee is labeled as 'Setup fee'. Never pick any card with setup fee because they charge you a lot for yearly fees already.
  •     Renewal Fee - This fee should be low or free. Some banks charge for it to cover their service charge while some bank simply waive it.
  •     Interest Rate - It should be lower than 3.5%/month or 40%/annum. Anything above these percentages is like making a crack to your savings account.
  •     Credit Limit - This varies as per your card provider and you should always select the card with high credit limit if you regularly spend using card.
  •     Online Features - Make sure this card has feature to connect or add your card to payment processor like google checkout, amazon web payments or paypal. Limiting this feature means you can't use this card to spend on shopping sites which is not good feature at all. Maestro or Visa (Non-electron) cards have limitation of usage to offline merchant outlets only. If you spend your money on online shopping sites then make sure you either get mastercard or Visa electron cashback card. Your card also needs to have feature of balance inquiry, ATM withdrawal and other typical credit card features.
  •     Fuel and Meal Discount - Some banks and credit cards offer 0% fuel surcharge on their cards while some offer discount on limited number of times per month. In such case you can select your card based on your need of these discounts, some people care for fuel discount and some don't at all. 

 How to select the RIGHT cashback credit card ?

Use the template below to find the right cashback card for yourself. Print out the below table or create your own using open office or microsoft excel sheet and input values in it from banks to compare the rates before selecting any card.

 Use Cashback Credit Card

  •     for your online purchases if those sites are covered by your Cashback deal
  •     for your daily spendings like - Fuel, Meal, Shopping mall etc. on discounted places
  •     for air-plane tickets or train tickets if there is any discounted price on your card
  •     for utility payment if card company offers cashback or discount for online payment