It is evident that a credit card has become an essential financial tool. The wide range of benefits and convenience of usage has made a credit card indispensable for most individuals. There are various credit card types available in the market, like travel cards, rewards cards, cashback cards, etc. One of the most important and beneficial facilities offered on a credit card is the Cashback, where the cardholder is provided a significant amount of money in return on the purchases made using the card.
How does Cashback work?
Usually, cashback is a great deal as it makes the cardholder get some money back every time they spend some amount using the card. If an individual does most of their shopping using a credit card, then cashback will help them save a good amount of money.
For example, if the card is providing you a cashback of 3 per cent on your expenses at groceries, spending Dh2000 at groceries will earn you Dh60 (3 per cent of 2000) back. This way when you use your cashback card on most of your purchases that are eligible for cashback, you can save a good amount of money on a monthly basis.
The cashback gained can be in the form of cashback points or even in the form of money credited back to your account
There are some variations in the cashback as well. The cashback gained can be in the form of cashback points or even in the form of money credited back to your account. The cashback earned will be credited to the account by the end of the billing statement.
How to redeem the Cashback generated?
The redemption of the cashback generated is simple.
Cashback Points - If the cashback is earned in the form of cashback points, it can be redeemed to cash that will be credited to the account. The point to be noted here is that the cashback points earned can have a validity. Hence, the cardholder must redeem the points at the earliest.
Flat Cashback - Flat cashback is where the cashback will be credited directly to the account as money back.
How to choose the right Cashback card?
While applying for a credit card, the applicant must check the cashback earning factors for a particular card and then proceed with it. The cashback can be provided on various expenses like movie tickets, dining bills, travel tickets, groceries, regular expenses, etc.
If you pay with your credit card while purchasing movie tickets, then a movie ticket cashback will be beneficial for you. If you dine out frequently, then earning cashback on dining will save some money on your dining bills. In a nutshell, getting a credit card according to your spending needs and interests will be financially worthy.
The card applicant must not overlook the fees and charges on a credit card. Amongst the various charges, the Annual Fee is an important fee to be considered. Though there is a good cashback and other perks are provided on the card, paying a hefty annual fee can be disadvantageous. Paying the annual fee can be beneficial if the amount spent on the credit card is high which will subsequently earn good cashback.
Some banks also waive off the annual fee if more than a certain amount is spent in a year. In simple terms, getting a cashback card according to your spending habits will gain you cashback and compensate for the annual fees as well. And if you are getting a no annual fee credit card, then it is a win-win situation where there is cashback earned and no annual fee paid.
Along with the spending habits, you must ensure that you fit the eligibility criteria of the card and consider the annual fees charged. Ultimately, you must understand your spending behaviour, check eligibility, fees and charges and pick the card accordingly.
Best Cashback credit cards in the UAE
There are several credit card providers in the UAE that provide cashback rewards. Here are the best Cashback credit cards in the UAE:
ADIB Cashback Platinum Card
ADIB offers a flat 1 per cent cashback on every purchase made using the Cashback Platinum Card. This is a perfect card for frequent credit card users. Getting 1 per cent money back on all your expenses can make a huge difference in your monthly spending. It also offers free valet parking service, roadside assistance and no annual fees are charged in the first year while from the second year, Dh1,000 is charged.
Minimum salary required: Dh5000
Standard Chartered Platinum X Credit Card
Standard Chartered Platinum X Credit Card claims to provide up to Dh1,000 cashback per month. It offers up to 10 per cent cashback on purchases made online, via mobile wallets and on foreign currency purchases. Along with the cashback, it also offers free access to airport lounges, Buy 1 - Get 1 Free offer at Costa Coffee. No annual fees are charged in the first year and from the second year onwards, Dh525 is charged.
Minimum salary required: Dh5,000
Emirates Islamic Cashback Card
Emirates Islamic Cashback Card provides 1 per cent assured cashback on every domestic and international expense, 5 per cent cashback on electronics purchases and 10 per cent cashback on telecom spend. This card comes with zero annual fees forever and does not have a minimum spending requirement.
Minimum salary required: Dh5,000
RAKBANK Titanium Credit Card
RAK Bank Titanium Credit Card is one of the best credit cards for regular credit card users. This card offers 5 per cent cashback on dining and at supermarkets. Movie lovers can benefit by getting up to 50 per cent cashback on movie tickets throughout the world. Frequent travellers can also benefit from the free airport lounge access and travel accident insurance provided. One important benefit is that there are no annual fees charged lifelong.
Minimum salary required: Dh10,000
Mashreq Cashback Credit Card
Mashreq Cashback Credit Card suits individuals who dine out frequently and use a credit card regularly. Cardholders can get 5 per cent cashback on dining expenses, 2 per cent cashback on international purchases and 1 per cent cashback on local purchases. As a welcome bonus, it also provides double cashback for the first 3 months. Travellers can profit from free travel insurance and there are no annual fees charged for life.
Minimum salary required: Dh10,000
Najm One Cashback Credit Card
Najm One Cashback Card offers cashback on every expense like groceries, school fees, utility bills, dining bills, online purchases, shopping, travel, fuel and much more. The cashback offered is 10 per cent. It also offers Buy 1-Get 1 free offers on VOX Cinema tickets and popcorn along with a 30 per cent discount on shopping, travel and dining. An annual fee of Dh313.95 is charged.
Minimum salary required: Dh8,000
HSBC Cashback Credit Card
HSBC provides 10 per cent cashback with no minimum spending requirement on its Cashback Credit Card. It also offers Buy 1 - Get 1 free offer at VOX Cinemas, discounts on dining and travel, Careem offers and access to golf clubs. Dh299 is charged as an annual fee on this card.
Minimum salary required: Dh5,000
Things to remember while getting a cashback credit card
Choosing and applying for a right credit card can be easy but in order to make the best use of the card, you must understand certain aspects.
Minimum spending requirement
Some credit cards might have conditions like a minimum spending requirement in order to avail the cashback bonus monthly or the welcome bonus as well. The cardholder must ensure he’s not overspending just for the sake of cashback. Overspending might increase the credit utilisation ratio and end up with a negative impact on the credit score. Hence, keep your credit limit in mind along with the minimum spending limitation and spend wisely.
Validity of cashback rewards
The cashback rewards earned may have a validity. The cardholder must check if there is an expiry date for the cashback earned and make use of the rewards before time.
Caps on the cashback
On some credit cards, there will be limitations on the cashback that can be earned. The cardholder must check the limit of maximum cashback that can be earned and spend accordingly.
Spending areas
Not all the expenses the cardholder makes are eligible for cashback. The cardholder must check the outlets which offer cashback.
- The writer is Co-Founder and Director at MyMoneySouq, a marketplace for personal finance products in the UAE.
