If you have lived long enough in the UAE, you would have heard the word Cashback, be it on the radio, billboards, and leaflets at your doorstep or through our banking relationship.
What does it really mean? Basically, the bank gives you money back on your spending and it can vary anywhere from 0.5% to 50% – Now that sounds like a winning strategy to save money. However, as you embark on your savings spree, here are 5 ways to make the most of the Cashback programs.
- Many of the cards will do as they say but there is usually a cap on the maximum amount of cash back you are able to get back in a month. Let’s be fair, it would be a losing game for the banks if they keep giving away cash on all your spend.
- Some Cashback programs are tiered and is generally advertised as “Get up to 5% cash back on all your spends”. Check the tiers applicable as the 5% is only applicable when you spend above AED10,000 in a given month; otherwise, you will get 1%, 2% or 3% cash back dependant on the amount you spend
- Cashback programs are generally for specific categories such as spending at the supermarket, entertainment, dining, air tickets and many more. Below are just a few examples of the programs but you can find out the Cashback program your credit card offers through Souqalmal.com
- If you are a traveler, it makes sense to have a card that gives Cashback specifically on air tickets e.g the SAMBA Platinum card gives 2%-5% Cashback on airline spend depending on the amount.
- If on the other hand you enjoy dining out, Barclays Edge card gives 10% Cashback on restaurants up to AED 300 a month.
- For your monthly utility bills, Dubai First Titanium Life gives 2% Cashback on the monthly spend
- If you do not have any specific lifestyle preference, there is the option of getting Cashback on everything you spend. Union National Bank’s credit card offers you 1.5% but you require AED 1,000 minimum spend to enjoy the reward.
- Cashback programs on your credit card will vary according to season. Before making any purchases in holiday seasons, Ramadan, Eid or even back to school, check out your program details to see if there are any temporary offers on Cashback percentages you can enjoy.
- To maximize the gains on Cashback, try and avoid paying interest on the purchases and pay off your balance at the end of each month. The real gain on the Cashback otherwise would be much less after taking into the account the interest payment if balance is not paid in full
- Are you a weekend spender? The weekend Cashback programs could be of interest. These cards give you money back only on weekend spend e.g Dubai First Titanium Life gives away 2% on all your weekend spend
- Very often the Cashback cards have an annual fee associated with it. If you are thinking of taking a new card just for the program, it may be a good idea to estimate your annual spend on the card and the amount of money you will get back vs the annual fee you will be paying. You may find that the annual fee offsets the Cashback in certain cases.
- Cashback is only one type of rewards program. It is always a good idea to do a quick calculation of returns of the different rewards program. E.g. If you are a traveler, airmiles would be a better option if the Cashback on your total spend will not cover the cost of a ticket and the airmiles will.
- It is important to understand that you only earn Cashback when you spend on your card. Balance transfers or cash withdrawals are not entitled to give Cashback. It is not because you have added balance on your card that you will be earning money back, so watch out.
Cashback cards can be a fantastic way to save money and can be very helpful during this summer holidays. Just keep an eye on the fine prints.