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Making Right Choice in Credit Cards: Cash Back or Reward Points?

Pakistan Tribune: It is quite tough to overlook the handiness of credit cards these days. From skimpy beginnings in the 1920s, the credit card market has grown substantially over the years. This unbelievable financial instrument has transfigured spending behaviors of the customers and has changed the face of business. In contemporary economies, credit cards have become an important part of family, business and global activity.

Credit Cards not only offer safer mode of transaction when compared with cash, but also brings in added benefits in the form or reward points or cash-back options.

Providers offer variety of incentives to lure customers, it is prudent for customers to know the payback options, mark-up rates, billing cycles and other necessary details to fully explore that hidden benefits and drawbacks of the Card being offered.

Credit Card companies usually entice customers with cash back, reward points and discount deal offers. Below we will compare cash back and reward point offers to help customers make informed decisions.

Cash back Credit Cards

Cash back Credit cards pays back a certain percentage of the amount spent on the card. The amount varies across banks, card issuers and across markets. For example, Silkbank in Pakistan offers 3% cash back on international transactions while 1% on all local transactions.

Some banks also set a minimum transaction value on their cards to qualify for the benefits and have a cap on the cash back they return to the customer. The process of claiming the cash reward also varies from institution to institution.

Some of the banks adjust the cashback reward against dues for the next month, while for some others may require subscribers to call the customer care number to claim your cash reward. Some cash-back offers carry certain expiry date.

“Cash-back cards come with conditions. For instance, if you fail to pay your dues on time, the cash back you accumulate will not be credited to you,” a credit cards analyst said.

Therefore, like any other financial product, it is better to go through the fine print and know all the benefits of the card before you pick one

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