How to Maximise Cashback on Your Credit Card

Cashback credit cards offer a great way to save money as you spend money. If used properly, these cards can save you thousands of dollars every year. However, these cards usually come with an annual fee. You have to pay this fee, regardless of the usage of the card. That’s why it’s important that you make the most of your card and take every possible step to earn the maximum cash back, without overspending.

How Do Cashback Cards Work?

Cashback is probably the simplest type of reward among all types of rewards offered on credit cards. You earn back a certain amount of money that you spend on an eligible transaction. So, if your card offers 5% cashback and you spend $100, you will get S$5 as cashback – it’s that simple. The best part: it’s credited directly to your account and can often be used to offset your credit card bill.

Some Ways to Maximise the Cashback on Your Card

1. Read the fine print of the cashback

Credit cards often come with numerous terms and conditions, just like the Versailles Treaty. Make sure you read the fine print before buying the card.

For instance, some cards may offer high cashback only if you shop at participating outlets. If you don’t shop at those outlets, the card won’t have any value for you, no matter how big the rewards are. Also, check for the minimum spend criteria as some banks start giving cashback only if you spend a minimum amount on the card in a month.

2. Shop and spend smartly

If you have a card that rewards you on groceries, make sure you use it every time you go grocery shopping. If your transaction is eligible for cashback on your credit card, avoid using your debit card or cash.

Also, consider your card’s shopping benefits at online and offline stores. If your card offers attractive rewards for online shopping, try and make maximum purchases online instead of going to a physical store. For instance, several banks in Singapore offer high cashback when you shop from e-commerce websites like Lazada or Agoda.

3. Consider your relationship with the bank

You can earn additional rewards on your card if you have a preferred banking relationship with the bank. For instance, HSBC offers an additional 1% cashback and perpetual annual fee waiver on certain cards if you are an HSBC Advance Banking customer. So, if you are looking to maximize your rewards, consider your relationship with the bank. If you can qualify for the preferred banking relationship, apply for it.

4. Know your spending patterns

It is important to know your spending habits in order to earn more cashback. If you spend a lot on restaurants or groceries, look for a credit card that gives high cashback on these categories. In such a  case, you should not pick a credit card that gives flat rebates across categories.

Also, make sure you know your monthly spend. This is important as some cards limit the cashback you can earn in a month, while there are others that don’t.

5. Make use of the promotional offers

While it is not advisable to switch cards every time you hear about a bonus offer, it is a good idea to keep a lookout for promotional deals, particularly when you are signing up for the first time. This way, you can earn high cashback and rebates on credit cards simply by spending a particular amount within a certain period of getting the card. Existing cardholders should also look out for seasonal offers during holidays. Several banks offer special cashback in the months of June and December.

Things to Remember

Make sure to sign up for a cashback credit card only if you can pay the bills in full every month. Credit cards come with high-interest charges. If you don’t settle your dues in full each month, you will probably end up paying more as interest than what you might have earned in cashback.

Also, do not overspend with your card just to earn more cashback. Consider your monthly budget and your spending requirements, and just stick to it.