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 cashback percentage?
It makes a lot of sense to first consider the cashback 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), all the way up to 10% (Citi Cash Back Card) for selected purchases.
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 5% cash rebate with all petrol stations every day of the month.
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. For instance, the UOB Lady’s Classic Card offers 10% cashback on groceries from selected merchants.
There are also credit cards that reward you for making purchases overseas or online. Which is something to think about should you find yourself traveling frequently or doing a lot of e-commerce transactions.
3) Is there a limit on the cashback amount?
A high cashback percentage doesn’t mean much if your card has a low rebate limit. A majority of credit cards place a cap on the amount of cashback that can be earned each month. A higher cashback rate with a low cap might mean that you would benefit less than if you chose a lower rate with a higher cap.
These cards will have different amounts that you will need to spend to qualify for their advertised cashback.
For example, the HSBC Amanah MPower Credit Card-i provides the highest amount of cashback at 8% across all categories. However, the total amount that you will actually receive for each category is RM15. Additionally, you will need to spend a minimum of RM2,000 through the card each month in order to qualify for this amount.
Despite this, some of the credit cards do offer unlimited cash back, albeit at lower rates. The Citi Business Platinum Card does this with a 1.2% cashback rate. However, the card also requires a minimum income of RM10,000 a month, and comes with a RM200 annual fee.
Before you sign up for one, it is essential that you take the above into consideration. If you spend well above five-figures every month, it might be worth your while to choose a card with unlimited cashback, 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.
