How Does Cashback Work On Credit Cards?

When you use a credit card for making payments you earn rewards in different forms like miles, points, vouchers, discount coupons, etc. One of the most famous forms of rewards is the cashback rewards or 'cash points' which can be converted into real money. Every qualifying purchase on a cashback credit card earns you a percentage of your money back.

If you wish to enjoy the advantages of some of the top cashback credit cards available, you must know how does cashback work on credit cards:

What is a cashback credit card?

A cashback credit card provides you with a certain portion of your money back on almost every transaction you make with the card. The percentage of the cashback varies across categories as per the policy of the designated credit card.

The rewards earned on a cashback credit card are known as 'cash points' and each cash point holds a certain weightage in terms of money's worth.

What are the types of Cashbacks earned on a credit card?

A cashback credit card can be of three major types, depending upon the percentage of cashback earned by these credit cards. Let us study the types in detail:

● Flat Rate Cashback: A flat-rate cash back credit card is one that offers a single rate for cashback rewards, commonly represented as a percentage of credit card expenditure.

● Tiered Cashback: A tiered credit card provide different percentage of cashback in different categories.

● Revolving Cashback: The most difficult one on the list is rotating cash back credit cards. The payback rates for different categories may fluctuate as the seasons and holidays change.

Also Read - Benefits of Credit Card You Should Know

Cashback Redemption

One of the main reasons why people apply for a cashback credit card is that the reward points earned can be directly converted into real money. To redeem your cash points, you are required to accumulate a minimum number of points and only after that, you can move forward with the redemption process. You can utilize the points in two ways:

- Transfer the points to your bank account.

- Use the cashpoints to help lower your credit card bill.

You can redeem your cash points via the official website or the mobile application.

Some of the top Cashback credit cards available:

There are many cash-back credit cards available for you to choose from. Read about the terms and conditions of various Cards attainable to know about the rewards, expiration period, minimum withdrawal limit, etc. Some of the top Cash back Cards are mentioned hereunder:

● HDFC Bank MoneyBack Credit Card

● Citibank Cashback credit card

● SBI Signature Credit Card

● American Express Payback Credit Card

● Axis Bank ACE Credit Card

Additional Reading - 8 Common Credit Card Mistakes And How To Avoid Them