What is a cashback credit card? What you should know

With a cashback credit card, you get money back on purchases and are rewarded for your spending. However, you should be aware of the costs and terms and conditions of the card.

The basics of a cashback credit card

Cashback credit cards are a special type of credit card that allow you to get back some of what you spend in the form of rebates, known as cashback.

• At its core, this means that when you pay with your credit card, you will be credited with a small percentage of the amount spent. This advantage makes cashback credit cards particularly attractive for people who regularly pay with their credit card.
• The percentage of cashback varies by provider and credit card model. It is usually between 0.5% and 2%. Some providers also offer increased cashback for specific categories such as grocery shopping, refueling or online shopping.
• The cashback is usually credited monthly or at the end of the billing period. There are models in which the collected cashback amounts are offset directly against the credit card bill, or you receive the credit as a transfer to your bank account.
• In addition to the cashback advantage, many of these credit cards also offer additional services such as travel insurance, bonus programs or purchase protection insurance. However, not every card is the same, and it is worth comparing the terms and conditions in detail to find the optimal credit card for your needs.

What to look out for in a cashback credit card

Despite the advantages that cashback credit cards offer, there are also some important aspects that you should consider before using one.

• Annual fee: Many cashback credit cards come with an annual fee. This fee can reduce or even eliminate the cashback benefit if you don’t spend enough to offset the cost. However, there are also fee-free models on the market.
• Interest rates for installment payments: If you are unable to pay your credit card bill in full, you may incur high interest rates for installment payments. These interest rates usually exceed the amount of cash back you receive.
• Acceptance: Not all credit cards are accepted everywhere. Find out whether the card of your choice can be used in the stores and online shops where you prefer to shop.
• Cashback conditions: Some providers set conditions such as minimum sales or a limit on the maximum possible cashback. Therefore, read the conditions carefully to avoid unpleasant surprises.
• Exchange rates and foreign transaction fees: If you travel abroad a lot, you should check whether the card is suitable for foreign use and whether additional fees apply.