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Cashback Credit Cards

There are all sorts of credit cards out there. Some offer reward points, while others boost your frequent flyer count. But a cashback credit card mainly rewards you with cold, hard cash. Read on if you’re interested in choosing a cashback credit card.

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Advertised ProductProduct Image For Kogan Money - Black Credit Card

Kogan Money - Black Credit Card

A $0 annual fee and an interest rate of 20.99% p.a. on retail purchases. Earn up to $300 Kogan credit within 90 days of card approval.
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  • Rewards Rate
  • Longest Purchase Period
  • Longest Balance Transfer Period
  • Lowest Cash Advance Rate

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What is a cashback credit card?

As with any form of rewards credit cards, the cashback credit card is offered by providers as an incentive to sign up with them.

The name says it all, but essentially, instead of earning points as you use your credit card, you earn a cashback amount. However, some providers offer a combination of both reward points and cashback.

Cash back credit cards, like most rewards cards, usually have an annual fee. This varies between cards depending on the percentage of cashback offered, as well as other services the card provides.

What is a cashback credit card?

As with any form of rewards credit cards, the cashback credit card is offered by providers as an incentive to sign up with them.

The name says it all, but essentially, instead of earning points as you use your credit card, you earn a cashback amount. However, some providers offer a combination of both reward points and cashback.

Cash back credit cards, like most rewards cards, usually have an annual fee. This varies between cards depending on the percentage of cashback offered, as well as other services the card provides.

The cash can come back to you in four ways:

  1. Some lenders will return the cash as a credit to your card balance on a regular basis, but check to see if this amount is capped each month.

  2. Retailers that partner with your lender may offer you rewards, so if you regularly shop at stores like Coles, Woolworths, or Kmart, you could be eligible for gift cards or store vouchers.

  3. Some lenders may only offer cashback under a limited introductory period, which means you’d be able to take advantage of cashback in the first few months of using your card.

  4. And some lenders provide cashback through rewards points, which you would use to exchange for cash.

How do cashback credit cards work?

Generally, the amount of cash you get back as a reward is a percentage of the amount you spend on your card. Often this is around 1% of your spend, but this varies between cards. As with rewards, some cards may offer higher cash back for spending at certain retailers or on specific products.

How do cashback credit cards work?

Generally, the amount of cash you get back as a reward is a percentage of the amount you spend on your card. Often this is around 1% of your spend, but this varies between cards. As with rewards, some cards may offer higher cash back for spending at certain retailers or on specific products.

What are the pros and cons of a cashback credit card?

Like every credit card, choosing a cashback credit card is a matter of weighing up the pros and cons with your individual lifestyle and budget.

Some of the pros include:

  • If you use your credit card frequently, you could be rewarded with cash which you can use either to help pay your monthly credit card bill, or you could cash in for a bigger sum at a later date.

  • Some cashback cards offer extra cashback for purchases from certain retailers.

  • Using cashback credit cards in a smart way can be a form of saving, as you might find that your cashback will accumulate if you don’t frequently redeem it.

Some of the cons:

  • Like any reward scheme, a cashback credit card can often come with higher interest rates.

  • There may also be a higher annual fee for these types of credit cards.

  • The cost of higher interest and annual fees may outweigh the benefit of the cashback on offer for your circumstances.

What other features are worth considering when comparing cashback credit cards?

You might like to keep the following questions in mind when comparing cashback credit cards:

  • Is there an interest free period on this card, and how long will it last?

  • What is the interest rate on purchases made, if I don’t pay it off on-time?

  • What is the cashback rate as a percentage of my spend?

  • What is the annual fee and is a higher fee worth the extra points for me?

As cashback credit cards may have higher interest rates than other credit cards, think about whether you can budget to pay off your balance each month.

You can also ask these questions to your prospective lender:

  • Is there any cashback on balance transfers from a previous credit card?

  • What is the minimum repayment required each month? (It’s generally around 2%-4% of the balance, or a flat fee.)

  • Is there a fee for ATM withdrawals with this particular card?

For more advice, you can check out the Australian Government’s Moneysmart guidelines on choosing a credit card.

Sold on cashback?

If you’re ready to compare cashback credit cards, you can start here online with iSelect.* See the range of providers and simply click on an option that suits you to begin your application.

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