by Venus Zoleta, on category "Credit Card"
November 14, 2018
Get paid each time you spend with your credit card—isn’t it enticing enough to get a cash back credit card?
But there’s more to cash back credit cards than just swiping and then earning rebates. Understanding how they work allows you to find the best cash back card that suits your spending habits and maximize your earnings.
Cash back credit cards are a type of rewards cards that earn you cash rebates for every purchase. These cards make your life simpler because unlike other rewards credit cards like air miles cards, you know exactly how much you’ll be paid back without dealing with complicated points systems.
Apart from being quite easy to use and understand, these credit cards can help you save money, cover some of your expenses, and even build a good credit history.
Cash back credit cards in the Philippines vary not only in their rebate rates but also the ways to earn and redeem cash back.
When you shop using a cash back credit card, the issuing bank pays back a percentage—anywhere from 0.20% to 6%—of your monthly purchases into your credit card account.
For instance, if a cash back card has a 1% rebate, you’ll get a peso for every PHP 100 qualified purchase.
Cash rebates don’t entitle you to instant discounts on purchases with your cash back credit card. Neither are they considered a payment to your credit card account—you can’t use them to lower your minimum amount due.
Cash back cards in the Philippines come in two types with different rebate structures: variable and fixed rates.
These cash back credit cards offer tiered rewards, with different rates for different spending categories. There’s a higher rebate rate for certain categories. So it makes sense to choose a cash back card with the highest rebate for the category you spend most often.
For example, the cash back credit card from Citibank pays back 6% on grocery purchases, 2% on Meralco bill payments, and 0.20% on all other purchases. This makes the Citi Cash Back the best card to use for grocery shopping and paying for electricity bills.
Meanwhile, the HSBC Gold Visa Cash Back pays back a 5% rebate on dining transactions and 0.50% on all other purchases.
For those who use their card to gas up, the Security Bank Complete Cashback Mastercard offers the highest cash back rate of 4% for fuel purchases, as well as 5% on groceries, 3% on utilities, 2% on dining, and 1% on shopping and medicines.
Cash back cards with a flat rate are simpler to use than those with variable rates. You earn a fixed rebate percentage on all purchases with your cash back credit card. No need to remember confusing spending categories and double-check them with the issuing bank.
Two of the cash back credit cards that allow cardholders to earn a flat rebate rate are PNB Platinum Mastercard (PHP 1 cash credit per PHP 200 purchase) and UnionBank Platinum Mastercard (1.5% cash rebate on all purchases).
Read more: 7 Great Cash Back Credit Cards in the Philippines
Cash back credit cards aren’t exactly cheap to own. Their annual fees range from PHP 2,500 to PHP 3,500. Most of them charge a 3.50% interest rate, which is on the highest end of credit card interest rates in the Philippines.
So when choosing a cash back credit card, make sure that the savings you’ll get from the rebates offset the high annual fee and interest rate. Consider also the other credit card fees that might cancel out your rewards.
Typically, cash credits earned from spending with cash back cards are credited to the cardholder’s account every month.
The credit card provider may or may not require redemption of cash rebates. For example, Security Bank and EastWest Bank automatically post cash credits to a credit card account, so cardholders don’t need to redeem. On the other hand, Citibank requires redeeming rebates online or via SMS.
It’s important to be aware of the little things that make a big difference in the way you earn rebates from a cash back credit card. Here are some of them:
Most cash back credit cards in the Philippines put a limit on the amount you can earn every month. The maximum rebate is typically around PHP 1,000. Once you exceed that, you can start earning cash rebates again at the start of the next cycle.
Only the BDO American Express Cashback and UnionBank Platinum Mastercard have no rebate limit.
Certain types of transactions may not be eligible to earn rebates. Check the fine print for the exemptions to earning rebates from a cash back card.
For example, the HSBC Cash Back card doesn’t earn you rebates for cash advance and online bills payment transactions. The Security Bank Cash Back card doesn’t have rebates on international and online transactions. However, Security Bank has a separate cash back card for online transactions, the Click Mastercard.
To qualify for a certain cash back rate, you have to meet the bank’s minimum spend requirement. This is the case with Citibank and EastWest Bank.
For example, to earn a 6% rebate on groceries with the Citi Cash Back, at least PHP 10,000 should be spent per month on purchases other than groceries and Meralco payments.
Meanwhile, the EastWest Bank EveryDay Titanium Mastercard pays back a 5% rebate on groceries, fuel, and medicines if you spend at least PHP 10,000 on all other kinds of purchases in a given month.
Cash back rates for most rebate cards in the Philippines can be earned any time of the year. But cash back cards like that of HSBC offer seasonal rebates for specific spending categories. For example, you can get a 1% cash back on school supplies and uniforms only from May to August every year. There’s also a 1% rebate on overseas transactions only in January, April, May, and December.
Using a cash back credit card can be a rewarding experience, only if you find the right card for you and get the most out of it. Compare different cash back credit cards in the Philippines to know which one suits you best.
(Photos from Freepik.com)