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Cash Back Credit Cards
Get the most from your Cash Back Card
A cash back credit card is a fantastic way earning money as you spend. Cash Back credit cards are considered more rewarding than other incentive based cards as you receive real dirhams back into your pocket, instead of the usual loyalty points or travel benefits.
From the various providers within the UAE there are about 65 different cash back credits cards. These credit cards typically come with higher annual fees by about 27% than your regular credit card. So how does a cash back credit card work, how do you get the most from it and what is the best cash back credit card in the UAE.
How does a cash back credit card work?
A cash back credit card allows you to gain money back from purchases you make each month. You will earn cash back normally around 1% to 2% on everyday spending. Cash back cards can offer up to 2% cash back and certain industries will award more cash back than others this is in addition to bonuses on international spending.
How to use your Cash Back Credit Card
On almost all cash back credit cards there will be a minimum spend. This means that you must spend a certain amount each month to reach your cash back limit.
Many cards will want you to spend at least AED 2,500 to get cash back the way around this is to start purchasing everyday items with your card. It will not take you long to rack up this spend if you buy your food, travel and make retail spends all off the same card.
The thing that you must ensure is that you pay off your credit card bill in full every month to avoid charges. If you do not that the amount you earn in cash back will be lost immediately to the interest charged.
How much Cash Back can I earn each month?
Cash back schemes are usually tiered so that you are limited as to what you can earn as cash back by category and by sector. All cash back credit cards vary in their maximum have a cash back limit. Various cards will reward up to 10% on cash back purchases within the UAE supermarkets. Other cards which require lower minimum salaries limit the cash back available, some stop at AED 2,500 per month and you must be up to date with your payments to receive the cash back.
What you shouldn’t do with your Cash Back Credit Card
You must be aware that you will only be able to accrue cash back with spends at certain merchants. Do not make large purchases on your cash back card if you do not gain rewards for doing so. Within the UAE lots of merchants also offer discounts and you must check that if you use your card to purchase a discounted item cash back will still apply.
Never withdraw cash with you cash back card, the fee you will be charged is generally not worth it. Even if you settle the card balance at before the due date the interest charged to withdraw cash on these cards will still be applied.
Free Cash - What is in it for the banks?
Credit Card companies must get you spending to make money. They encourage spend by offering incentives such as cash back. They want to tempt you into spending on the card and eventually pay them interest. The banks are in profit as the cost of the cash back you can earn is outweighed by the interest costs the bank is likely to receive.
The banks will always make it seem like a cash back credit card is good deal, In most cases used correctly that do provide worthwhile rewards. You just have to remember that banks are running a business and you must cut through all the marketing and hype to understand how does this card impact your pocket. The main thing to consider are will you use the credit card, will you pay it off and does it make sense to pay the higher annual fee. If the answer is yes then check out all the cashback cards available in the UAE and go start earning that cash back.