Making the most of plastic
Cashback cards that return significantly high amounts and even allow you to save are growing popular in the UAE
Getting money back on monthly spends gives a great sense of satisfaction. This is what makes cashback cards appealing, especially for those who love to indulge in retail therapy, spend on leisure activities or shop for everyday needs.
There is no shortage of cashback cards offering high headline return rates in the UAE, says Kartik Taneja, Head of Payments, Mashreq Bank. “Some banks may be advertising rates between 5 or 10 per cent. However, these returns are subject to caveats, terms, conditions and caps, among other things.”
Mashreq’s cashback credit card rewards customers with unlimited 5 per cent cashback on dining, 2 per cent cashback on international spends and 1 per cent on all local spends, all with no annual fee.
The card has been launched with shifting consumer habits in mind, says Taneja. “According to our data, millennials constitute 25 per cent of the UAE population and their wallet share on dining spend is 47 per cent higher than previous generations.
“Apart from food and beverages, millennials prefer to use credit cards for travel-related spends. According to a recent Visa Youth Study, 57 per cent of millennials and Gen Z view travelling as one of their top ambitions.”
The concept
A cashback credit card provides users with cash rewards on spending. Deepak Kumar, Co-Founder of Soulwallet, says customers benefit by earning a percentage of spends on the card. “Most banks in the
UAE have an automatic cashback redemption process where rewards get credited as a cashback in the next statement. Some banks may have specific criteria around minimum spend or caps on reward earnings.”
It is also important to note that some banks may have a manual redemption process, where a request needs to be placed either online, mobile app or the call centre. So, it’s best to clarify the terms of redemption in advance, he says. There are also banks that have reward programmes, which allow customers to redeem rewards as vouchers, air tickets along with standard statement credits.
The right card
With hundreds of credit cards on offer in the UAE, choosing the right one can be a chore. Terms and conditions vary from bank to bank, so it is best to do your homework before choosing a cashback credit card.
“Some banks have limits to the cashback they offer, and others may limit the spend categories on which cashback is earned,” says Rengan Seshadri, Head of Credit Cards and Loans Middle East, Citibank.
“Some have minimum spend conditions to earn cashback while others require the customer to complete steps to claim their cashback. These cards also offer different cashback rates on different categories.”
Spending habits
Taking a closer look at your spend habits is a good way to pick the right card. Sethu Ramaswamy, Regional Head, Retail Products and Segments, Standard Chartered Bank, believes the high percentage rate must not be the only factor to consider when looking for a cashback scheme. “Some cards offer features such as lounge access, dining discounts and cinema tickets, which can be just as appealing.” It’s also important to choose a card from a bank that provides excellent service, he says. “For example, you want your card to work when you are at a store. You should also look at the fine print as banks highlight high cashback rates, but may have many conditions.” Several factors must be carefully evaluated when you want to make valuable savings on your card rewards.
Philip King, Global Head of Retail at ADIB, explains cashback payout patterns can be split into three categories.
“Flat rate cashback cards offer simplicity as these cards pay the same rewards rate on all purchases and, generally, have no limit on earnings.
“The tiered cashback cards earn more in specific spending categories, offering higher rewards for spending in certain categories, such as fuel or groceries, and a lower rate or rewards on all other purchases.
“And the bonus category cards offer an even higher cashback rate in specific categories.”
The spending limit is also an essential element to consider when selecting a card.
“It enables spending to be consolidated on one card while maximising the potential rewards available,” says King.