An Introduction To Cash Back Credit Card

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With so many different categories of credit cards in the market all with distinct benefits and advantages; choosing the right one has become a daunting task for the consumers. But for those whose main concern remains in squeezing every ounce of savings from your card transactions, there’s a type that’s probably most suited for you, and that’s the cash back credit card.

What is it?

As the name suggests, it gives you rebates in cold hard cash. Every time you make a purchase with it at an approved outlet* , you earn a predetermined percentage (which may be as low as 0.2% all the way to a whopping 20%) of cash rebate.

*An approved outlet can be a petrol kiosk, a supermarket, an airline, a retail outlet or any other place where transaction takes place, which is determined by the card issuer for that specific card.

Here’s how it works:

If the amount you pay is RM100

And your rebate percentage is 10%

The cash paid back to you is = 10% X RM100 = RM10

Commonly, all such cash rebates are tabulated at the end of the month and credited back to your account in the subsequent month.

What is the biggest difference compared with other credit cards?

Most conventional credit payment cards come with a point-based reward programme where you acquire reward points for every Ringgit you spend with the card. These points can, in turn, be redeemed for products, vouchers and gifts.

The one key difference between cash back cards and other types of credit cards is that it usually does not come with such a programme. If you prefer a no-nonsense cash rebates, rather than redeeming products with the accumulated points, this type of credit facility may just work for you.

The good news is due to escalating competition in Malaysia’s financial sector, a number of banks are now issuing cash back facility attached to reward point programmes – which means you enjoy the best of both worlds with just one card! At present, some of such cards include, among others, the Alliance Bank Classic, Alliance Bank Gold Credit Card and Platinum cards, as well as the Hong Leong Platinum card.

Who should apply for it?

Technically, everyone is well suited for this incentive programme. After all, who wouldn’t be able to do with that extra bit of cash every month?

Though the rate of rebate , say 10%, from your average monthly spending may not sound like much, but that very same 10% could add up to become thousands of Ringgit or more over the course of a year. Those are monies you could be putting to good use elsewhere, such as saving in a fixed deposit account or investing in a property or an investment scheme.

A final word of warning: Do not treat the cash rebate as money you could use to offset the interest you incur for not paying your bills in full because the interests are usually much, much higher!