4 Things To Consider When Signing Up For A Cash Back Credit Card
By using a cash back credit card wisely, you can save tons of money using its inherent cash rebate mechanism. If you intend to apply for one now, here are a few considerations you should take note of to help you make the right choice:
1) What is the rebate percentage?
It makes a lot of sense to first consider the rebate percentage as it directly impacts the amount of savings you’ll be getting.
Currently, cash rebate credit cards in Malaysia offer rebates from as low as 0.2% for certain spending categories (such as the HSBC Amanah MPower Platinum Credit Card-i for local spending), all the way up to 10% (such as the Mach Visa Credit Card or the UOB Lady’s Classic Card) for various purchase categories.
2) What are the cash back categories?
Most cards offer rebates on specific categories, which could be on petrol, groceries, entertainment outlets (such as cinemas), dining or even insurance premium, just to name a few. Prior to applying for one, you should consider exactly which category of items you’ll be spending the most.
For example, if you spend the most on petrol, it helps to get a Maybank Visa Signature, which offers up to 10% cash rebate with all petrol stations, every day.
However, if you are in charge of groceries for your family, getting a card that offers high cash back rates for groceries, every day will be a smarter choice. The Maybank Visa Signature also offers 10% cash rebate for groceries daily.
For those who do not have a specific category spending or if you don’t want to keep up with your spending for different categories, they can always opt to sign up for a Citibank Cash Back Platinum as it offers up to 5% cash back on all retail spending.
If you love to eat out, getting a card that specifically rebates you for your dining spending can help you save quite a bit of money. One such card is the Maybank 2 Cards, which comes with a Visa/Mastercard and an American Express card. The American Express card offers up to 5% cashback on weekend dining and 5x TREATpoints for your expenses.
Not sure which card is the best for you, make the necessary comparison before you take action by using our credit card comparison tool.
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3) Is there a limit on the amount of rebate?
A high cash back percentage is useless if your card has a low cash back limit. One of the highest cash back limit offered by a credit card in Malaysia is the Hong Leong Wise Gold Card at RM100. However, you are required to fulfil the criteria of making a minimum of 10 transactions of RM50 and above per transaction every month to be entitled for the RM100 cash rebate.
Although some of the credit cards do offer unlimited cash back, the percentage of cash back is usually low at about 1.2%, such as the Citi Business Platinum Card. However, the card requires a minimum income of RM10,000 a month, and RM200 in annual fee.
The common cash back limit offered by most banks is RM50 per month. It is important to check if the cash back limit stated is per month or per quarter, and if there are any criteria to fulfil to be entitled for the cash back.
Before you sign up for one, it is essential that you take the above into consideration. If you spend well above five-figure every month, it might be worth your while to choose a card unlimited cash back every month even though the rebate may be lower. But if you spend only a moderate amount every month, you may not need to factor in the maximum repayment amount as it would not affect your savings at all (as you wouldn’t be spending enough to hit that limit).
4) Are there any additional terms and conditions?
Ultimately, as of all things related to money, you’ll want to make sure you’ve read the terms and conditions before you sign on that dotted line. Among others, these are some of the things you might wish to ascertain with the banks:
- Are there any annual fees? If there is, how much?
- Are there any pre-requisites to qualify for the cash rebate (e.g. minimum spending)?
- What is the interest rate?
A cash rebate card can come into handy in Malaysia, but only if you found one that matches your lifestyle, and you make your payment promptly to avoid incurring interest.