Cash Back on Credit cards - a foggy path

Credit card companies often lure customers with as high as 100% cash back offers on shopping, but do they really provide you with all that they promise? Is it all fake and just marketing strategies or is there any truth to the propaganda that they do.

The market today boasts of thousands and thousands of credit cards, ranging from secured cards to check cards to debit cards to cash cards to traditional credit cards. Every company wants you to use its credit card and in trying to capture you as a customer they are ready to offer from 10% to 100% cash back offers. However, before you benefit from these offers, it is important that you examine them well.

The companies make money from you not only through your annual fees and finance charges, but the "system" also takes a bite out of each purchase you make - usually somewhere between 1% to 3% depending on your card and network.

So, what we need to do today is to find a company that is willing to give you some of that "built-in profit" back. That means if you pay off your credit cards each month, you need to be smart enough about which cards you use because you should always use the ones that give you the most back.

Let us take an example. ICICI Bank has an offer where you may be lucky to get 100% cash back and in this offer, there is no particular limit on cash back or shopping. On first sight, it seems that the offer is for all users but to get benefit from this offer, you need to shop for minimum Rs 2,000.

This is not the only criteria, you need to check out the six-digit approval code number on your payment slip because based on the total of the code; you will get your cash back. If the total is between 21-30 points, you will get 1% cash back and if the sum is between 0-5, you will get 75% cash back. To get 100% cash back, your total must be more than 51 points.

Rajiv Sabharwal, GM, Retail Assets, ICICI Bank says, "We have done some research and it is clear that the customer will win some cash back. But the probability of winning higher cash back is lesser. However, there could be a lot of people who can win 75% or 100% cash back. It is a game of probabilities."

Similar is the case with HSBC credit card which offers you 10% cash back. But here again, you have to be very careful while going through the terms and conditions. If your bill amount is between Rs 1,000 to Rs 5,000, you will get 3% cash back. If it is between Rs 5,000 to 7,500, you will get 5% cash back. To get 10% cash back, you bill amount should exceed Rs 7,500.

So the next time you go for these offers, do check out the small print before hoping to get all your shopping costs refunded.