Cash Back Credit Cards
Each time you spend on your credit card, if it is not a cash back credit card, you don’t get anything in return in terms of money or cash. There are a range of benefits that you can avail– from discounts to exclusive deals, to coupons–on a variety of credit cards but there are no ‘return gifts’ in cash. The credit cards that offer return ‘cash gifts’ on spending, in pre- agreed shopping locations and products, are called cash back credit cards.
Cash Back in Singapore
Money in cash back arrangements are paid through credits to the account, checks issued in favor of the card user and most popularly through rebates on the bill. In Singapore the rate ranges from .05% to 2% , though there are some in the market that offer even as high as 5%.
In an attempt to attract customers and to encourage customers to spend more on their cards, banks and card issuers are now offering cash back options, knowing fully well the effects of cash promises on the customer. As modern day shoppers, with a healthy shopping habit, few Singaporeans would be able to turn down a cash back offer. After all it’s cash, and invariably cash seems to hold more promise than any deal or offer.
Where does the bank or card issuer get the cash back money from, to give it to the customer?
The processing fee charged by the bank or card issuer to the merchant, at whose location the card is used is called the commission. Now for a cash back arrangement, to attract customers, a portion of this processing fee amount is set aside to be given to the customers and this is where the cash back amount comes from, usually. Though there are other modes and mechanisms, and it varies from bank to bank.
Benefits of Cash Back Credit Cards
Something is better than Nothing approach-For many users, who anyways use cards to shop, this cash back option is an extra something that is always welcome. The user in this category doesn’t necessarily pursue cash back deals, but takes whatever comes as a benefit. For them , some cash is better than no cash.
The complete balance pay off- If the complete balance is paid off and the card is maintained in such a manner that it does not attract any late fee or finance charges, then the cash back actually gives you a noticeable benefit towards the end of the cycle. A rebate, or a cash credit in these cases stands out as a proper benefit that cannot be denied. While an unpaid balance on the other hand, will accumulate enough charges to out weigh the cash back figure. One mistake can undo months of cash back rewards, so be careful.
For the card users, a cash back definitely is an extra something that they can benefit from.