Pros And Cons Of Cashback Credit Cards
Users can get a portion of the amount they spend on purchases back through a rewards program called cashback. There are many cashback credit cards readily available in India, and the majority of them give additional rewards on specific types of purchases.
However, there are advantages and disadvantages to using a cashback credit card:
Pros of having a cashback credit card:
- 0% APR:
For a short duration, several cash-back credit cards provide 0% APR on transactions or balance transfers. Choose a credit card having a 0% APR term on transactions if you wish to make a large-ticket transaction but are unsure regarding the high APR of a cashback credit card. As a result, you have sufficient time to pay the item off without incurring interest.
- Simple to understand:
The most basic perk a credit card can provide is cashback. The terms of a cashback credit card are very straightforward because rewards are accrued and redeemed in rupee amounts, which effectively nullifies any potential for confusion. Rather than earning incentives and then exchanging them for cash, gift cards, or other products, you spend money and get real value in return. India has a large selection of cashback credit cards, the bulk of which offer extra cashback on particular kinds of transactions.
- Welcome bonuses:
Credit cards with cashback typically provide cash joining up incentives. Even while these typically have minimum spending criteria, a cashback credit card will repay you for a portion of your spending in addition to the cash incentive.
- Shopping benefits:
Getting a cashback credit card may be advantageous for you if you are a frequent buyer who shops often. You basically get paid to shop if you use cashback credit cards, which offer cashback on your purchases.
Cons of having a cashback credit card:
- High APR:
As most credit card offers, if you have a cashback credit card that offers 0% APR it won’t stay that way forever. APR only stays at 0% for a definite period of time. If you don't really have excellent credit, your continued APR may be on the upper side of the card's range because it will be determined by your reliability. Many of these cash-back rewards credit cards have APRs as high as 30%, which adds up quickly and can have a big negative impact on customers who carry balances.
- Limited benefits:
Most cashback credit cards solely offer benefits that are focused on cashback. Even while many banks have upgraded the extra features of cash-back cards recently, they still cannot compete with some of the best cards currently offered.
Also Checkout: Best Rewards Credit Cards in India 2022
- Cashback limit:
Although several cash-back credit cards allow you to earn rewards at no restrictions, many have requirements that must be met in order to qualify for cash-back on either regular or special category purchases.
- Cashback may expire:
If somehow the credit card isn't used for a specific timeframe, some cash back points may vanish.
BOTTOM LINE:
Prior to applying for a cash-back credit card, be certain that collecting cashback is more important to you compared to receiving other benefits, and that you possess the will to collect rewards on your purchases without building debt.
Additional Reading: Factors To Compare Credit Cards
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