Festival time— a time when people go on shopping sprees for gifts, clothes, jewellery, home appliances, etc. It is also a time when stores offer huge discounts. Credit card companies too have jumped on the discounts’ bandwagon, offering cashback offers that range from 2% to an incredible 100% to tempt shoppers to use their cards more often.

If you have a credit card, it’s time to cash in. But remember to do it with your eyes wide open. Do not purchase something with a credit card just because it has a cashback offer. No cashback offer can justify an inessential purchase. Also, do not forget to read the fine print before you go on a swiping spree and read the “conditions apply” part well. Here is what you should know to get the full advantage of cashback offers.

There’s a minimum requirement  You might have to spend a minimum amount per charge as well as a minimum charge per month, to avail of the cashback offer. Normally the minimum amount per charge could be as high as Rs 2,000 plus and the minimum charge per month could be as high as Rs 10,000 plus. The danger here is that you may end up buying stuff you don’t need, just to make it to that ‘minimum’ amount. In certain cases, you may also need to make a minimum number of transactions with the card before you can avail of the offer.

Drop in the ocean

Though the cashback percentage may be high (say 10%), the maximum amount you may get as cashback may be a mere drop in the ocean when compared to the bill amount. For example, in one specific offer last year the maximum cashback was Rs 500 per month even though the cashback percentage was 10%. Thus, if you ended up purchasing for about Rs 50,000 driven by the 10% cashback, your cashback would be restricted to Rs 500 only (making the effective cash back at 1% instead of the advertised 10%).

Cashback may depend on what you buy. The cashback offer may be valid only for certain kind of purchases. For instance, one specific credit offered a cashback only on apparel, consumer durables, jewellery, watches, electronic goods and leather items, and purchases made at department stores. So before you plan to pay for that expensive dinner with your card, find out whether or not it is eligible for a cashback offer!

Is the vendor using the right machine?

The cashback offer may be applicable only if the card is swiped on the machine owned by the card issuing bank. Swipe it on a different machine and you won’t get cash back. So make sure the vendor swipes it on the right one.
Getting the code right

In some cases, the amount of cashback you’ll be eligible for, may depend on the six-digit authorisation approval code (AAC) number on your payment slip. For example, in the case of an ICICI Bank credit card, the sum of these digits can range from 1 (when the AAC is 000001) to a maximum of 54 (when the AAC is 999999). If the AAC number ranges between 0 and 5, the amount repaid by the bank will be 75%; if the AAC number is 51 and above, the cashback would be 100% of the value of the purchases. Obviously the odds of the AAC falling within the range that offers high cashbacks are not high.

Lastly, the bank reserves the right to deny the cash back if you are in default on the credit card account. So remember to pay your bills on time.

Cashback programmes do offer a lot of advantages. All you have to do is examine the terms and conditions well and buy stuff that you actually need. So go and swipe that card, happy shopping!

The author is CEO of apnaloan.com and can be contacted at ceo@apnaloan.com
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