Free money! Have we got your attention? Read on to find out how you too can get rewards from a cashback credit card.
Offers for cashback credit cards are always tempting, especially for rewards seekers. The Australian market has quite a few different varieties of cashback offers available. These usually take the form of one-off cashback payments as part of a special promotion, getting back a percentage of the amount you spent the end of each month, or the opportunity to convert earned rewards to cash on your account. Use this guide to learn how cashback credit cards work, to compare your options, and find out how you can get the best value from these cards.
When you use cashback credit cards, the issuer rewards you by placing some of the money you spent back on your account. The funds you get back can be a percentage of each purchase or a defined dollar amount, based on the bank’s offer. Some financial institutions, for example, will give you a cashback offer upon signing up once you spend a defined amount within a particular period. Existing customers can also participate in cashback promotions, for example, an issuer may offer $10 back on customer accounts if they shop at an affiliated store.
You can earn cash back on your credit card transactions in three different ways:
Promotional cash back offers on sign up. Some issuers offer cashback promotions to new customers. For these offers, you’re usually required to apply before a certain date and spend a specified amount during your first few months of owning the card.
Instant cashback for eligible purchases. If you make $500 in purchases, for example, and your issuer has a cashback promotion for 2%, you will get $10 back.
Cashback from credit card rewards programs. Some credit card providers give you the opportunity to convert your points into cash back on your account. You can also use points towards the purchase of merchandise or flights.
It’s important to know that the terms and conditions will be different for each of the different cashback offers available. Ensure that you read the issuer’s Product Disclosure Statement for additional information. Transactions such as balance transfers, cash advances, and purchase refunds are generally barred from generating cashback rewards.
It’s essential that you compare the numerous cashback credit card options on the market before you make a decision:
Clearing off your balance. Ensure that you have enough money to clear your balance before the end of the statement period, since most cashback offers call for you to spend significant amounts of cash. The value of the cashback offer will be diminished if you can’t repay the amount you spent and it starts to collect interest.
The amount of the offer. Needless to say, you should take into consideration the amount of money you’ll get back. Make sure that any purchase you make in order to redeem the offer fits within your budget, and that you’re not just buying stuff to take advantage of the cashback promotion.
Value of the rewards. Do your calculations before using your points to ensure that other rewards (for example travel upgrades, flights, or merchandise) don’t dwarf the cashback amount.
Ineligible transactions. The cashback offer does not apply to all transactions. Certain bill payments, cash advances (including ATM withdrawals), and gambling transactions don’t usually qualify for cashback rewards. Don't bother using your credit card for these transaction types if you want cashback offers for your purchases.
Terms and conditions of the offer. Ensure that you comprehend the terms and conditions before you sign up, because issuers usually offer cashback rewards only as a special promotion. You should look for the offer expiry date, the amount you’re required to spend, and participating stores and online vendors to make the most of the cashback reward offer.
Looking at a few of the pros and cons could assist you in deciding whether a cashback credit card is right for you.
Lots of features. Rewards programs, complimentary travel insurance, and concierge services are some of the features that come with cashback credit cards. These features can boost the value of your credit card, making it a premium product.
Extra money. With this offer, you have the opportunity to get back some money each time you spend. Any increase is a bonus, regardless of how small, especially if you had to make purchases anyway.
Interest rates. You may find that the interest rate on your cashback credit card is higher, because it is a feature of a premium product. If you don’t want interest payments to cancel out the benefits of your cashback offer, be sure that you can pay back the amount you've charged before the statement period ends.
Higher annual fees. Again, because this is considered a premium product, the fees will be higher. Ensure that the amount you spend annually is high enough that your rewards are more than your fees.
Limited rewards. In some cases, cashback credit cards limit the number of times you can redeem a cashback offer. Some issuers may only allow you to obtain a cashback only once, while other issuers may cap the number of times you can request cash back.
It takes only about 10-15 minutes to fill out the online application for a cashback credit card and send it through a secure web server. Be sure that you qualify for the promotion and that you have the required documents to complete your application. These will be different for each card, but the usual requirements are:
Residential status. Although some issuers offer cashback credit cards to certain classes of foreign account holders, most require cardholders to be permanent residents of Australia.
Cardholders should be 18 years or older.
Credit history. All issuers of credit cards in Australia require that applicants have a good credit history.
Minimum income. This requirement is usually $15,000 per annum for lower tier cards and between $60,000 and $100,000 for premium products.
Documentation and information
Proof of income. This can be in the form of payslips and/or a recent tax return, and you’ll also be required to provide your employer's details. You must include your accountant’s details if you're self-employed.
You can use your Medicare card, driver’s licence, and/or your passport as identification.
Financial information. Expenses, debts, and other liabilities must be declared.
You should get a response within sixty seconds once you've provided the required information and you click on "submit." If your application is approved, your card will be mailed to you within 1-2 weeks. Make sure that you read the Product Disclosure Statement if the card has a cashback offer, as this will tell you the terms and conditions, including when your account will be credited.
A cashback credit card offer can be added incentive to use plastic, especially if you're in the market for a new card. Make sure you understand the terms and conditions and weigh your options before applying.
Frequently asked questions about cashback credit cards
Can my rewards be used to make payments or to pay the annual fee?
Yes, usually you can use cashback rewards for your card's annual fee or pay them towards your card’s outstanding balance.
How much cash back will I get when I use my card?
Most credit cards return between 1-2 percent of the total transaction value, but rates differ from card to card. Some issuers have promotional offers – for example $50 for the first use. Merchant and retailer rewards are often higher than those offered by banks and other financial institutions.
Where can I get more information about cash back cards?
We have all the information you need about cashback cards and capping of rewards points on our application and review pages. You should also read the Product Disclosure Statement for any rewards program or cashback credit card you’re interested in applying for. This Statement will contain all of the terms and conditions of your offer.