Credit cards were earlier known for charging the customer for using the product. However, today we have credit cards that give incentives, known as rewards, for the amount of money you spend through the card, in certain areas and for making certain purchases. A rewards credit card makes you earn cash backs, travel rewards and other perks on your everyday purchases. Rewards can fall into one of three categories, cash, points or miles. However, it is the cashback reward that is highly popular in India.
Best Credit Cards in India for Cashback Rewards
- Standard Chartered Manhattan Platinum Credit Card: This is indeed one of the best credit cards in India, offering 5% cashback on supermarket & departmental store purchases, including Reliance Fresh, Big Bazaar and Food Bazaar, along with much better reward points on fuel, dining hotel reservation and airline ticket booking. You can easily apply for the Manhattan Platinum Card online.
- SBI’s Elite Card: This is a premium credit card offering up to 2% cashback. It also gives you spend-based milestone reward points, which can then be converted into cash credit against statement.
- HDFC Business Moneyback Card: This business variant of the HDFC Moneyback Card, issued for self employed and business individuals, holds 3X reward points on online expenditure, which can be converted into cash credit on statement in a matter of a few clicks. You also get cash back of up to 1.2% on your purchases.
- Indusind Pinnacle Credit Card: This card is available at an affordable joining fee, and is a blessing for online shoppers, since the customer is being offered cash back of up to 2.5% on online spends and 1% cash back on all other spends.
- Citibank Cashback Credit Card: This one from Citibank lets you enjoy a 5% cashback on movie & telephone bill payments, whereas 0.5% cashback is offered on all other spends.
- American Express Gold Charge Card: Now comes one of the prestigious cards, with an affordable joining fee, enabling you to stack up to 18k or 24k points, which you can convert into cash credit against your card bill. Not to forget, you also get a good 2.2% cashback.
Things to Consider Before Choosing a Reward Credit Card
Although cashbacks and rewards are lucrative, they shouldn’t be the sole criterion while choosing a credit card. The choice of credit card should be based primarily on the purpose for which it is required, then comes the interest rates, your income, expenses, needs, lifestyle and the fee charged.
The interest rate or the APR (annual percentage rate) for a credit card could be fixed or variable. A fixed-rate card keeps you prepared for the monthly interest payment, whereas a card with a variable rate can mean fluctuating payment amounts. However, the issuer can decide to change the interest rate for a fixed card as well. All you can look for is that they notify you about it in time.
Spending too close to maxing out your credit limit can hurt your credit score. It is better to determine your requirements properly before settling for a credit limit.
Fees and Penalties:
Fees for transactions, including balance transfers and cash advances, increasing your credit limit or making a payment by phone are chargeable service. Moreover, there are penalty charges for late payments and exceeding the credit limit. It would be wise to find a card with a reasonable and transparent fee structure.
Balance Computation Method:
To determine the financial charge, the average daily balance is calculated by adding your daily balance and dividing it by the number of days in the billing cycle. Beware of credit cards that compute the balance using two billing cycles.
Credit cards, when chosen wisely, can offer great benefits. They should not be used as alternatives to personal loans or money (you can but try to avoid it). But use them to build credit score and history and get rewards from various offers available. They can provide you more value that way.
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