Cashback credit cards are credit cards that offer a percentage of cash back on purchases made with the card. Some cashback credit cards offer a flat rate on all purchases, while others offer different rates for different categories of purchases. For example, a card might offer a higher cashback rate on groceries and a lower rate on gas.
Some detailed points on cashback credit card categories and caps:
- Flat rate vs. tiered rate: Some cashback credit cards offer a flat rate of cash back on all purchases, while others offer different rates for different categories of purchases. For example, a card might offer a flat rate of 1.5% cash back on all purchases, or it might offer a higher rate (e.g. 5%) for purchases in certain categories (e.g. groceries) and a lower rate (e.g. 1%) for other categories (e.g. gas).
- Bonus categories: Some cashback credit cards offer temporary or rotating bonus categories that offer a higher cashback rate for a limited time. For example, a card might offer a 5% cash back rate on groceries for the first quarter of the year and then switch to a different category (e.g. gas) for the second quarter.
- Caps: Many cashback credit cards have caps on the amount of cashback that you can earn in a particular category. For example, a card might offer a 5% cash back rate on groceries, but only up to a maximum of Rs.1,000 in cash back per year. This means that you would earn 5% cash back on the first Rs.20,000 you spend on groceries each year, but any spending beyond that would not be eligible for the 5% rate.
- Activation requirements: Some cashback credit cards have activation requirements for certain categories or bonus offers. For example, you might need to enroll in a bonus category each quarter in order to receive the higher cashback rate.
- Exclusions: It’s important to carefully read the terms and conditions of a cashback credit card to understand any exclusions or limitations on cashback. For example, a card might exclude certain types of purchases (e.g. gambling, balance transfers) from earning cash back, or it might have a minimum purchase amount for cashback to be earned.
By understanding the categories and caps for cash back on a cashback credit card, you can make informed decisions about your spending and maximize the value of your card.
Bottom line:
Cashback credit cards offer a percentage of cash back on purchases made with the card. The cashback rate and categories can vary widely from card to card. Some cards offer a flat rate of cash back on all purchases, while others offer tiered rates that are higher for certain categories of purchases (e.g. groceries, gas). Some cards also offer temporary or rotating bonus categories that offer a higher cashback rate for a limited time.
It’s important to carefully read the terms and conditions of a cashback credit card to understand the categories and caps for cash back, as well as any activation requirements or exclusions. By understanding these details, you can make informed decisions about your spending and maximize the value of your card.