The Basics of Cashback Credit Cards
Finding a credit card that is best for your needs can be very challenging, as there are so many different options available in the market. However, if your main concern is saving as much money as possible from your credit card transactions, the Cashback Credit card is most likely the best choice for you.
Cashback Credit Card – What Does it Mean?
Simply put, with a cashback credit card you earn rebates in cash: As soon as you use your cashbak credit card at one of the partnering merchants, you get a certain percentage of cash rebate accredited to your account. This predetermined percentage can range from 0.3% up to incredible 20% for certain approved merchants. The partnering outlets can be supermarkets, airlines, retailers or gas stations, depending on the bank’s cashback program.
To illustrate how easy cashback credit card works, consider the following example:
If you spend PHP2000.00 at a partnering outlet
and the cashback percentage is 10%,
then you earn = 10% x PHP2000.00 in cashback.
Typically, all those cashback rebates are accumulated over the course of the month and transferred back to your credit card account in the following month.
How do Cashback Credit Cards Differ from Other Cards?
The biggest difference of cashback credit cards compared with other cards lies in the reward system: Conventional credit cards offer point-based reward programs that allow you to earn reward points on every Peso you spend. You can then redeem those points for products, gifts or vouchers.
However, with cashback credit cards you usually CAN’T redeem items with accumulated points, but get rewarded in cold hard cash.
If you’re still contemplating whether to get a cashback card nor not, there are some good news: Because of the growing competition in Philippines’s financial sector, various banks are now issuing cashback credit cards combined with a reward point program. That way, you can benefit from both with just one card!
Should I Apply for a Cashback Credit Card?
Generally, a cashback credit card can be beneficial to EVERYONE. After all, who couldn’t use some extra cash every month – which is exactly what you’ll get with a cashback card.
If you think a cashback of, let’s say 5%, from your average spending every month does not sound like much, keep in mind that those 5% can easily add up to thousands of Pesos over the course of the year. This money can certainly be put to good use elsewhere. For example, you could save it in a fixed deposit account or invest in a property or investment scheme.
One last word of advice: Be careful not to treat the cashback rebate as money that you could use to offset the interest payment you incur for not paying your credit card bills fully… because those interest rates are typically much higher!
Interested in getting a cashback credit card? Try our comparison table and compare credit cards in the Philippines to find out which one is the best for you and sign up now.