Cashback can be termed as a reward in which a fixed amount is returned to you (customer) in the form of statement credits. When you use your card for purchases, you could be rewarded in the form of cashback. When accumulated, they can be used to offset your future purchases.
If you are yet to apply for a card, then make sure that you apply for the one which is based on your spending requirements. For instance, if you are a food blogger, opting for a dining credit card would make more sense as this will include higher cashback, dining privileges, and perks when you use your card for dining.
However, if you have a card that offers higher cashback on dining, and you use this card to book your air tickets, it is unlikely that you may be benefitted highly. Therefore, you need to select a card that aligns with your interest, shopping needs, and lifestyle.
Often, promotional offers during year-end sale or during the festive season could offer higher cashback. Based on the card you are using, you can capitalise on these promotional offers to maximise your savings.
For example, if you have a co-branded card that offers higher cashback on fuel purchases or online shopping, you can make use of these cards to get maximum savings. You will need to remember that cashback is earned when you start using your card for your purchases. The more you spend, the higher you earn.
Certain cards will have a monthly cap on the cashback you can earn. You will need to remember that when your cap is reached, your earn rate will most likely be reduced to a base rate (usually from 0.25% to 0.3%)
For instance, suppose your card offers 6% cashback on online shopping up to S$60 (cap), after which you will earn a flat rate of 0.25% on all purchases. So, if you have spent S$1,000 on shopping before the month end, then you have already earned S$60 worth of cashback. Say you spend another S$200, then you will only earn S$0.5 (0.25% cashback) instead of S$12 (6% cashback).
Many cards give you greater cashback benefits when you use your card to shop online, some even include booking tickets online as online purchases. You will need to capitalise on these deals and offers to maximise your returns.
The terms and conditions associated with cashback cards can be confusing and tricky at times. You will need to get a thorough understanding of the terms and conditions before going ahead with your purchases. For example, you don’t want to spend S$500 on fuel only to learn later that 5% is offered for shopping and 0.5% is actually offered for fuel.
Most card issuers will require you to spend a minimum monthly amount in order to be eligible for a cashback. If you are sparingly using your card for purchases, you will need to start using it more frequently. By doing so, you can increase your savings.
When you use your card to shop at select establishments, you are likely to receive more cashback. Cashback can be earned when you use your card to book your travel tickets, groceries, online shopping, fuel, merchandise, etc.