Cash-back cards can work to your advantage if you read the fine print.
Are cash-back schemes limited to credit cards?
No, several banks offer the cashback facility on their debit cards as well. While the HDFC Bank EasyShop Gold debit card returns Re 1 for every Rs 100 spent on it, the Deutsche Bank Visa debit card promises to return 10% cash on bookings for domestic flights and hotels till April-end. In addition, look out for seasonal promotions, like last year's 3-6% cash-back offer between June and September from SBI. Says a senior official at the Axis Bank: "A two-three month campaign can increase debit card spends by 10-20%. Higher spends also spell more income from the interchange fee." But do keep an eye on the validity of the promotional offers before you loosen your purse strings.
Does cash-back credit card earn on every purchase?
The fine print holds the answer to this question. There are some cards that extend the offer to all purchases. For instance, the ABN AMRO Titanium One credit card has a cash-back offer of up to 3% across all categories, or Rs 3 saved for every Rs 100 spent. However, many like the HDFC Bank Woman's Gold card limit themselves to spend in categories like travel, groceries, restaurants, departmental stores, hospitals and utility bill payments. In addition, you may have to restrict your shopping to a list of pre-set establishments, which are in the banks' approved list.
Are there any ceilings?
Apart from the limits on the cash-back offer, the maximum amount that you can typically earn back is Rs 500 per month. Most banks also demand a minimum spending threshold to make you eligible for the offer. On the other hand, the Citibank Cash Back card requires you to earn over Rs 250 as cashback amount before redeeming the points against outstandings. While most banks have done away with the expiry date for such offers, it won't hurt to reconfirm. Also check if the offer applies only to the outlets having point-of-sale terminals by the card-issuing bank, which limits your playing field.
How is the cash returned?
Do not expect a cheque for the cash-back amount. Typically, the bank calculates the amount you are entitled to in a billing cycle and credits the appropriate sum in the next statement.
