Cash Back Credit Cards

Cash back credit cards have a unique feature wherein the card holder is given cash back as a percentage of the total outstanding or on some specific purchases. Most companies provides a discount or cash back of 1 percent on the purchases made though some credit card companies provides cash back up to 5 percent on purchase of drugs, groceries etc. In most of the cash back credit cards, the percentage cash back offered by cards have a maximum cap limit and cash back is provided only to that extent. The actual cash back varies from one card provider to another and is governed by rules and regulations put down by the credit card issuer.

Cash back credit cards are often co-branded with some specific merchant outlet or service providers and purchases done using the card at such merchant outlet or services taken from such service provider fetches more cash back which can be as high as 10 percent.

Cash back credit cards are very much similar to traditional credit cards and are generally are offered in unsecured card form with or without co-branding. Typically speaking, based on the cash back offers, the cash back credit card can be classified into three broad categories as follows:

  1. Flat Rate cash back credit cards: This type of cash back credit cards offers a flat percentage of outstanding balance as a cash back reward to the card holder. Mostly these type of cards do not differentiate on different purchases made and offers a flat percentage of cash back for all the spending you incurred using the card.
  2. Tiered rate cash back credit cards: This type of cards offers cash back as a tiered percentage i.e., a fixed percentage on certain amount of your spending and another percentage for spending above that amount. There are two types of tiered cash back credit cards, one which encourage lower outstanding and one which encourages higher outstanding for your billing period.
  3. Cash back with selected retailer: Sometimes the cash back is offered only on purchase of some specific brands or purchases made at some specific merchant outlets. E.g.: 1% of purchases made from a certain store or on purchase of clothing items of a particular brand. This happens in mostly in case of co-branded cash back credit cards where the co-branding is done by partnering with selected retailers.

To apply for cash back credit card you should first do your research on the available offers to find out the best fit. Once the best card is finalized you should approach the bank offering the card and fill in the application form and provide the bank with all the documentary evidence and financial data to determine your eligibility and to approve the credit card. The bank after checking the financial data and other mandatory checks approves the credit card once it is satisfied about the income stability and repayment capability of the applicant. Once approved the card is processed and sent across to the registered address of the applicant.