If cash is king, then cashback is his PR manager. An important fact to keep in mind when you’re looking for your first credit card. Retail and financial services now use it to entice customers to spend more; promising to reward their willingness to shop with actual money.
Cashback as a whole is simple enough to understand. A percentage of whatever you spend in a single purchase is returned as cash. This usually varies between 1% and 5%, but some credit cards offer cashback as high as 8%.
Maximising returns
To maximise credit card cashback rewards, one must first understand the mechanisms at work. Most will advertise the maximum percentage that you are entitled to claim each month. Operating on a sliding scale that increases the portion as your spending increases.
For instance, the HSBC Amanah MPower Platinum Credit Card-i offers 0.2% cash back on your monthly purchases. This number increases to 8% if you spend at least RM2,000 a month on the card. Here’s how the cashback works:
| Cashback Category | Monthly Spend Amount | Cashback Rate | Monthly Cap |
|---|---|---|---|
| Petrol & Groceries^ | Below RM2,000 | 2% | RM50 |
| Petrol & Groceries^ | Above RM2,000 | 8% | RM50 |
| All Other Spend | No minimum spend | 0.2% | Unlimited |
^At selected participating merchants
Additionally, credit card cashback varies according to the partners involved. Some provide higher rates for grocery shopping, others for petrol, while others still offer cashback on ride-sharing. Being aware of your credit card’s cashback policy is the key for getting the most out of it.
Know your limits
No, not your spending limit. The amount of cashback rewards you receive are often capped at a level lower than what you would receive if you maxed out your credit limit. Essentially reducing your incentive to charge as much as you can to your cards. In the end, there must be balance in all things.
For instance, the example of the HSBC Amanah MPower Platinum Credit Card-i we’ve been using thus far still applies. It limits customers to a maximum of RM50 cashback for petrol and groceries. Regardless of how much was actually spent during the month. This limit doesn’t apply to other purchases, but they receive smaller cashback value (0.2%).
Of course, most credit card companies also include calculators for people for convenience. Making it easier to find the sweet spot for those rewards.
Layer the rewards
Relying solely on cashback rewards is not always the best way to go about things. Not when there are more promotions at work. Like a good lasagna, the best solution is to create multiple layers.
Credit cards are not the only source of cashback. This is especially true of e-commerce and online shopping. Something that is important to note if you want to make the most of your experience.
Sites like Shopback offer additional discount codes and cashback promotions. Allowing you to double dip on the rewards.. For instance, HSBC has several online partners that offer additional cashback if you shop using a HSBC credit card. This ranges from 30% cashback from Fave to a RM20 discount from Sephora; this is on top of the additional chance of getting another 20% cashback when you check out with the HSBC credit card including HSBC Amanah MPower Platinum Credit Card-i.
Sure, it’s not really much for each purchase, but that amount adds up over time. Plus, you really wanted that discount anyway.
The only thing to keep in mind is that discounts actually reduce your cashback returns. Which then becomes an exercise in balancing the two.
Cashback is a fantastic way to get the most out of your monthly expenditure. But it comes with many caveats, and maximising it takes effort. Which is why you always need to be aware of your cashback thresholds on credit cards. Having the feature and using it badly is just not being financially responsible.
