Bankers realise this and take the opportunity to push a credit card in your hands – a credit card that gives you cash back because some times small discounts matters a lot for peoples. The proposition is very simple, every time you pay a bill, say your electricity bill using the cash back credit card, you are eligible for cash back.
Assume you have paid Rs 2,000 towards electricity bill and the bank offers you a 5% cash back. In that case, your monthly credit card statement will ask you to pay Rs 1,900 only. Though the opportunity to save on your bills using a credit card is rather attractive, it’s better to know the details.
Some banks offer cash back on utility bills whereas some offer cash back only on discretionary spends such as – three-star rated and above restaurant bills. Always check if the service provider is empanelled with the bank for the cash back credit card programme. Even under utility bills, check if the banks have empanelled the utility service providers you are paying to. For example, your internet service provider or DTH service provider need not necessarily be a ‘utility service provider’ for your bank as far as the cash back credit card is concerned.
Limits & Sub Limits
many banks introduce a limit in rupee terms, says Rs 2,500, as to how much cash back one can get in a month. Then there are sub limits like no single transaction can get cash back of more than a particular amount, say Rs 500.
Eligibility of Transactions
Banks can also prescribe a minimum transaction value, say Rs 500, to get cash back. If you pay a bill of Rs 350, you won’t be eligible for cash back on that transaction. Some banks can introduce varying minimum transaction value for different categories, such as utility bills and bills at retail outlets.
Cash back credit cards may have a joining fee and an annual fee. Some banks waive such fees, subject to conditions such as using the card at regular intervals or spending a minimum amount in a year, say Rs 25,000. Also check the interest rate at which the banks are offering you credit, if in case you cannot pay on due date, that should not be a burden. Though the idea of saving on your bills is good, never over spend to ensure that you maintain a good financial health.