Cashback credit cards are imperative financial products, particularly for those consumers who are savvy about enhancing their card reward benefits.
The allure of availing yourself of a part of your spending back in the form of cashback is difficult to resist. Such cards are highly appealing as they can directly lower the purchase expense, making them a practical option for daily spending.
Pros of Cashback Credit Cards
The fundamental benefit of cashback credit cards is the instant savings on expenditures. Imagine you are using a no-joining fee and zero annual fee card, which endows you with a 3% cashback on your grocery shopping. Each time you spend Rs 1,000, you effectively save Rs 30.
Over a month or a year, these savings accumulate, acting almost like a discount on your regular expenses. In a country like India where savvy spending is a way of life, getting cashback can feel like a smart win. It is real money that can either decrease your next credit card bill or be saved up for a larger purpose.
Beyond cashback, these cards often come with additional credit card rewards like discounts, vouchers, or access to exclusive sales, etc., adding more value to your purchases. These additional rewards can make a significant difference, particularly during special occasions or festivals when expenditures are high. They are like unanticipated gifts that make your spending more enjoyable and sometimes, more affordable.
Enhanced Credit Score
Periodic and responsible use of a cashback credit card can be a stepping stone towards building a good credit score. By using the card frequently and ensuring timely repayment, you demonstrate financial discipline and reliability. This prevents you from incurring unnecessary credit card charges such as late payment fees. Also, it has a positive impact on your score, making it simpler for you to avail loan approvals in the future.
Cons of Cashback Credit Cards
Complex Reward Structures
Some cashback credit cards have complex reward structures, with differing cashback rates depending on the type of purchase or merchant categories. This can be confusing and less straightforward than it appears.
Temptation to Overspend
The lure of cashback can sometimes lead to unnecessary spending, as you might buy more to earn more cashback, resulting in financial strain.
Limited Cashback Categories
Certain cards offer cashback only on specific categories or merchants, which might not line up with your regular spending habits, lowering the overall benefit.
Best Cashback Credit Cards in the Market
IndusInd Bank’s Legend and Platinum Aura Edge credit cards are among the best cashback credit cards in the market at present. Let’s go through their benefits.
Legend Credit Card
The Legend Credit Card offers a lucrative reward scheme in which you receive one reward point for every Rs 100 spent during the weekdays and two reward points for the same amount on weekends. A 1.8% currency markup rate is a distinguishing characteristic that is beneficial for regular travelers.
The credit card even has a 1% fuel surcharge waiver, which increases the card’s savings potential. Accumulated reward points can be redeemed in a variety of ways, including air miles, vouchers, credit card debt repayments, cash in your card account, and others, providing a high level of flexibility and value.
Platinum Aura Edge Credit Card
The Platinum Aura Edge Credit Card endows a rewarding system, tailored to cater to distinct spending habits. As a card user, you get the flexibility to earn distinct reward points on various spending categories.
For example, if you choose Platinum Aura Shop Plan, on spending every Rs 100, you get savings points as follows – four reward points for shopping at departmental stores, two reward points for electronic and consumer durable purchases, 1.5 reward points for books and restaurant bills, and 0.5 reward points for other spends.
Such savings points are extremely advantageous as you can either convert your accumulated reward points into cash in your card account or air miles or via the indusmoments portal.
While cashback cards provide several benefits such as improved rewards, direct savings, and credit score development, they also have drawbacks such as the temptation to overspend and a reward system that can be confusing.
As a result, it is important to conduct thorough research to choose a card that is compatible with your spending patterns. Cards like IndusInd Legend and Platinum Aura Edge provide distinct advantages and can be considered based on your lifestyle and preferences.