Cashback Credit Cards: All You Need to Know

You may find it difficult to draw a fine line between a cashback credit card and a cash rebate credit card. A cashback credit card is the one that returns you a small percentage of the money you have spent over the month in cash. On contrary, a cash rebate is the deduction of a small percentage of the money you have spent. This deduction takes place instantly at the time of payment of the bill at the store.

Cashback and Reward Points

Sometimes, a card may provide you with both cashback and reward points. For example, Public Bank Quantum MasterCard Card offers 5% cashback on dining and online shopping categories. In addition, the card also offers VIP Points on other retail transactions in Malaysia and abroad.

Each credit card will have a defined policy regarding the spend category and the percentage of cashback one can earn from these categories. Also, some cards offer you the choice to select the category on which you would like to earn the cashback.

Tiered Cashback

A card may offer cashback at different levels based on your monthly spend. For example, when you spend with Citi Cash Back Platinum Card, the percentage of cashback you earn varies with the amount spent. The table below shows the cashback you can earn on petrol, groceries and dining categories:

Monthly Spend

Cashback (%)

RM0 to RM1,499

0.2

>RM1,499

10

Monthly Spend

Different cards have different criteria set in terms of monthly spend. For example, HSBC Amanah announces that you can earn a cashback of RM288 if you spend a minimum of RM1,000 in the first 30 days from the date of receiving the welcome letter. Also, if you spend a minimum of RM1,000 in the first 60 days from the date of receiving the welcome letter, you can earn a cashback of RM228.

Do not blindly dive-into a card by just looking at the cashback it offers. When you are choosing a cashback credit card, you need to have an estimate of the monthly spend you would make. As discussed earlier, check for the card that offers high returns for the amount you spend in a month and then pick the right card. Otherwise, you will end up spending on unnecessary things just to each the minimum monthly spend, which is not wise to do.

Capping

Do you think you can get higher cashback if you spend more? No. It isn’t always true. Most cards have a maximum limit set on the cashback one could earn. For example, Public Bank Quantum Visa Credit Card offers 5% cashback when you spend on entertainment or at a departmental store. However, the bank has set a maximum cashback limit at RM30 per statement cycle. So, even if you spend more than RM600, your cashback will not grow higher than RM30.

Illustration

Consider that you have HSBC Amanah MPower Platinum Credit Card-i. So, if you spend RM500 on groceries and RM750 on petrol in the month of September, the total spend for the month of September will be RM1250. Therefore, your total spends for the month is less than RM2000. The cashback rate applicable is 2%.

Cashback = RM1250 x (2/100) = RM25

So, the total cashback you earn over September’s expenses is RM25.

In another case, if you spend RM500 for grocery, RM750 for petrol and RM1000 for online shopping, then the total amount spent in September is RM2250. Since this amount is greater than RM2000, you are entitled to a cashback of 8% of your spend.

Cashback = RM2250 x (8/100) = RM180

However, the cashback one can earn is capped at RM50. So, you will receive a cashback of RM50 when you spend RM2250 in a month.

Be aware of the terms and conditions and capping policies of the card. Make sure you are not spending money only to earn higher cashback.

I am damiazara an avid reader and a prolific writer. I used to Write the articles for Bsiness