On purchasing something, you are given a proportion of the cost as a refund on using cashback credit cards. There are a number of pros and cons of Cash Back credit cards which will be further discussed. Cashback is frequently available on various purchases, like shopping, travel, fuel, entertainment, etc.
The amount you make on most cash back cards is credited to your account, lowering your credit card cost. Certain cards allow you to deposit cash back into a bank account or change it to points or vouchers.
Let us discuss some of the pros and cons of cash back credit cards at a glance:
Pros:
Below mentioned are the many advantages of a cashback credit card that may give you a reason to apply for Cashback credit cards:
- Real money: One of the primary benefits that should entice you to apply for cashback credit cards is the fact that the points earned can be easily converted into real money which you can directly deposit into your account.
- Cashback on a wide variety: Cashback credit cards have expanded their area of operation across different categories. Now you can earn cashback points or ‘cash points’ while shopping, on your travel spending, fuel, etc.
- No annual fee: Most Cash Back Credit Cards do not come with an annual fee which reduces the cost of the credit card significantly.
- Relaxed Eligibility criteria: The benefits of a cashback credit card can even be enjoyed by lower-income groups due to relaxed eligibility criteria.
- Bonus categories: There are certain selected categories (as per the bank’s policy) on which you can get accelerated cashpoints.
- Welcome benefits: On activation of your cashback credit card, in most cases, you earn certain cashback points as a bonus.
- Variety of cashback cards: There are three major types of cashback credit cards that you can choose as per your preference and experience: Flat rate, Tiered cashback Credit Card, Rotating Category.
- Can't be devalued: Unlike other benefits and rewards provided by a credit card, cashbacks can not be devalued.
Cons:
- Limited total value: As compared to other categories of credit cards, the cashback category provides limited total value simply because there are fewer or no other major benefits provided.
- Minimum limit: There is a minimum withdrawal limit on the amount that one can redeem as real money, For example, Some credit cards only allow withdrawals of a minimum of Rs. 2500.
- Redemption fee: Most credit card companies levy a redemption fee on cashing out the earned reward points. So, it can be a little costly to redeem points.
- Reward expiration: If you are not able to accumulate the minimum number of reward points needed to be redeemed, then they can expire after a certain amount of time.
- Earning caps: A cashback credit card surely lets you convert your rewards into real money but that does not mean that this benefit is limitless, there are cashback earning caps too.
