Cashback Credit Cards in India (2024)

What is Best Cashback Credit Cards?

A Best Cashback Credit Card is a fantastic option that rewards you with cashback on your purchases. Essentially, every time you use this credit card, you earn a percentage back of the amount you spend. This cashback offer typically applies to specific categories like online shopping, utility bill payments, and fuel expenses. It's common to find many credit cards that feature these cashback rewards.

How Does Cashback on Credit Cards Work?

It's quite straightforward: when you spend INR 1,999 in an eligible category, your card will give you a percentage of that amount back. For example, with a 2% cashback offer, you could receive around INR 40. If your yearly credit card expenditure is INR 1,00,000, you could save INR 2,000 with a 2% cashback rate.

The only thing to keep in mind is that different credit cards offer cashback for specific categories. For instance, one card might give you 1% cashback on online purchases and 2% on dining out. It's important to review the details and align them with your spending habits before applying for a card.

Regardless of the cashback percentage, it's essential to make timely payments on your cashback credit card to truly benefit. Remember, failing to pay on time will result in interest charges, which could cancel out the cashback you've earned.

Typically, the cashback is credited to your card on a monthly basis. This means that your cashback credit card statement will show a lower amount than what you spent (which is a nice surprise!). Some issuers provide annual cashback credits, while others transfer the amount to your bank account.

Benefits Of Cashback Credit Cards

Besides earning cashback on various categories, cashback credit cards offer a multitude of benefits that you should consider, including signup bonuses and 0% APR. Let's explore further.

• Welcome Perks: Upon activating your card, you unlock the exciting world of credit card welcome benefits. Whether it's a shopping voucher worth INR 1000 or 2000 reward points, owning the card comes with a delightful gift. Some cards may require you to pay joining fees or meet minimum spending requirements to enjoy this perk, so be sure to check out the welcome bonuses available on different cards to make an informed decision.
• Milestone Benefits: Certain cashback credit cards reward you for reaching minimum spending thresholds within a quarter or annually, known as milestone benefits. Make sure to review the milestone benefits offered by your preferred credit card, and don't forget to check the minimum purchase requirements as well.
• Travel Benefits: Even if you don't have a dedicated travel credit card, you can still enjoy a range of perks for your travel plans with a cashback credit card. From discounts to airline vouchers, these cards offer various benefits for all your travel needs. Plus, you can earn cashback on your next travel transaction, adding to the savings.
• Dining and Entertainment Benefits: Another highlight of cashback credit cards is the dining and entertainment perks they offer. Whether you're planning a weekend outing or simply looking for a reason to indulge, these cards provide discounts on a variety of restaurants, free movie tickets, cashback, and more to enhance your spending experiences.

Types of Cashback Credit Card Rewards

Not all cashback credit cards are created equal, as they may not suit everyone's needs and preferences., each offering its own unique rewards system. Whether it's a flat rate or a tiered cashback system, understanding the different types of cashback rates is crucial before filling out that online application form. These rates can greatly impact your annual savings.

• Flat-Rate: The flat-rate cashback system is one of the most common you'll encounter with cashback credit cards. Typically, these cards offer a fixed percentage (usually between 1-3%) of your spending back to you. What's great about this system is that you know exactly what to expect in terms of cashback rewards.
• Tiered: On the other hand, tiered cashback systems offer varying rates depending on the spending category. For example, a credit card might offer 5% cashback on online purchases and entertainment, while only giving 3% cashback on travel expenses.
• Dynamic Bonus Categories: Credit cards often feature accelerated cashback rewards in specific categories, which may change periodically. This dynamic system allows you to maximize your savings based on your spending habits.
• Rotating Bonus Categories: Certain credit card issuers rotate cashback categories every quarter, offering higher rewards on different spending areas. While these cards usually don't have an annual fee, meeting spending requirements is necessary to fully benefit from the cashback offers.
• Choose Your Own Category: Some cashback cards allow you to customize your rewards by selecting the category in which you'll earn higher cashback rewards. This feature ensures that you can tailor your savings to align with your specific spending preferences.

Way to Maximizing the Benefits of Your Cashback Credit Card

Looking to make the most of your cashback credit card? Here are some valuable tips to help you do just that:

• Always Pay Your Balance in Full: The key to fully enjoying your credit card perks is to always clear your statement balance. By avoiding interest charges, you not only save money but also unlock more rewards and cashback opportunities. Keeping a budget handy is crucial to ensure you never carry a balance that you can't pay off in full.
• Grab a Lucrative Sign-up Bonus: When choosing a cashback credit card, don't overlook the sign-up bonus. Many issuers offer enticing bonuses for new cardholders, so be sure to find a card that offers a great sign-up offer – just be mindful of any minimum spending requirements.
• Activate Bonus Categories Every Quarter: Identify where you spend the most each month – whether it's on utility bills, groceries, or online shopping – and make sure to activate the bonus category on your credit card each quarter. This way, you can maximize your cashback earnings by taking advantage of higher rewards in specific spending categories.
• Consider Pairing Your Cards: Enhance your cashback potential by combining your credit cards strategically. By using each card for the categories where it offers the most benefits, you can optimize your rewards and cashback earnings.
• Explore the Card's Online Shopping Portal: Keep an eye out for special credit card offers whenever you shop online or in-store. Whether you're shopping on Amazon or ordering food online, your card may have exclusive deals waiting for you. Don't miss out on these opportunities to save and earn extra cashback.
• Avoid Unnecessary Spending: While earning rewards is great, it's important not to overspend just to earn more cashback. Always prioritize responsible spending and budgeting to ensure that you're not accumulating unnecessary debt in pursuit of rewards. Remember, it's about maximizing benefits without compromising your financial well-being.

Pros and Cons of Cashback Credit Cards

Cashback credit cards offer a plethora of benefits, but it's essential to weigh the positives and negatives before diving in.

Pros

• Reward Earnings: The concept is straightforward: the more you spend with your cashback card, the more rewards you accumulate. It's a simple way to earn while you spend.
• Flexible Rewards: Unlike travel credit cards, cashback rewards offer versatility. Use your cashback for anything you desire – be it groceries, fuel, or even paying off your card balance.
• No Restrictions: Unlike points-based rewards, cashback doesn’t impose restrictions on redemption. Use your cashback for any purpose you choose.

Cons

• Higher Interest Rates: Some cashback credit cards come with higher interest rates compared to other credit card types. This can diminish the value of your cashback rewards if you carry a balance.
• Annual Fees: Certain cashback cards have annual fees, which could offset the benefits if you don't earn enough cashback to cover the fee.
• Limited Benefits: Cashback rewards may not be as valuable compared to the perks offered by other types of credit cards, such as travel or lifestyle cards.