Cashback credit cards are all about getting something back when you pay. What options are there – and is it really worth it?
Cashback credit cards promise that their users can save money when shopping. How this works varies from provider to provider. Sometimes you get money back depending on the card turnover, but points, rewards and discounts are also used. And the program is often linked to certain partners of the respective credit institutions. So what do cashback cards really do? Can we actually save money with them, or is it just a sales gimmick by credit card providers to win customers?
Cashback briefly explained
Cashback does not always translate to “money back” when it comes to credit cards. With cashback, a predetermined percentage of the purchase amount is returned to the account. This sometimes actually happens with money, but often in the form of discounts or points, which can then be redeemed for certain products.
With the American Express Gold Card, for example, customers take part in the so-called Membership Rewards program. With every purchase made with the card, points are automatically collected and credited to the account. For every euro spent with the Gold Card, you get one point. New customers are currently even receiving a welcome bonus of 50,000 points when they sign up for the Amex Gold Card until July 15. However, this requires a not insignificant minimum turnover of 4,500 euros in the first six months. The points can be used in a variety of ways:
- Payments when shopping online via SafeKey with participating partners
- Purchases on Amazon
- Subsequent card transactions at selected petrol stations, drugstores, restaurants, supermarkets, travel agencies and airlines
- Payments for flights, hotels or rental cars when booking through American Express Travel
- Points transfer to frequent flyer programs at partner airlines
- Points transfer to Payback
- Vouchers from selected partners
- Donations for good causes
Especially with the welcome bonus, this sounds like a good option to get some of the money you spend back. However, the premium card from American Express also costs 144 euros a year – interested parties should do the math and consider whether they really want to use the cashback options.
Cashback: What you need to know
There are numerous credit cards that advertise cashback. Interested parties should take a close look beforehand, as both the cashback percentages and the annual fees for each card vary. Are there other additional services? All the better! Often, however, the cards with the most benefits are also the most expensive. Especially with the cashback option, it is interesting to know which partners and acceptance points are involved – are these even suitable for your own shopping habits?
Santander Consumer Bank offers a basic credit card that is free and also offers cashback. This is not groundbreaking, but it can still be worthwhile for some people. For example, there is a worldwide fuel discount of one percent on sales up to 200 euros per month. There is also a five percent refund on travel bookings with the partner Urlaubsplus GmbH.
Possible disadvantages of cashback credit cards
- The cashback options and discounts are often tied to specific partners of the credit card company.
- Credit cards with cashback options are often in the premium range and come with a correspondingly high annual fee.
- Cashback can also tempt you to buy unnecessary products.
Can a cashback credit card still be worthwhile?
Whether a cashback credit card is actually worthwhile depends on the extent to which the respective cashback options are actually used and how often the credit card is used to pay. Only with regular transactions with the card will there be enough cashback to compensate for high annual fees, for example. Anyone considering getting a credit card with cashback should therefore take a close look at their individual purchasing and payment behavior and calculate possible fees so that they may even end up with a profit.
One credit card with a cashback option for travel and shopping is the TF Bank Mastercard Gold. The following cashback options are available:
- Four percent cashback at Booking.com
- Five percent cashback on rental cars booked through the TF Bank booking form
- Five percent cashback on travel bookings via the TF Bank travel portal
- Discount codes from selected partners for online shopping
There is no annual fee for the Mastercard Gold.
Who is Cashback recommended for?
For anyone who wants to use cashback to save a little money when shopping, a cashback credit card can be worthwhile. There are cashback credit cards with no annual fee, but the options are sometimes quite limited. Premium credit cards like the Amex Gold usually have a high annual fee, but they also offer a more comprehensive range of discounts and cashback – which, however, must be used extensively in order to offset the costs. Anyone who really uses the wide range of services can both recoup the annual fee and see a positive balance in their account. For anyone who only wants to use cashback every now and then, a fee-free option is probably the better choice.
This article contains so-called affiliate links. More information can be found here.
Source: Stern
