It has been visibly evident recently that a number of banks in the U.S.A. are offering cash back rewards on credit cards to entice prospective customers and provide more value to the existing customer base.
These credit card cash back offers are derived from diverse patterns based on criteria such as spending limit, type of purchases, sponsors, partners, demography and so on. For example, a new credit card launched by a leading bank in U.S.A. offers cash back from 1 – 3 percent on spending on items such as grocery, fuel and so on. Another bank offered with cash back rewards up to 5 percent on spending up to $1500 on pre-defined categories. For customers spending $500 in the first quarter of their credit card, one bank introduced a cash back offer that provides one-time reward of $100.
This trend in cash back rewards display cutthroat competition for customers with high credit better credit history, and due to the new regulations this is also considered as an effort by banks to lure customers from debit cards to credit cards. There has been increase in marketing of credit cards using these cash back rewards.
Many banks are also seen restricting the maximum amount and set an upper limit for such offers. For example, a bank which offers 15% cash back, but may restrict the maximum sum at $200. So, even if you spend $3000 on all your purchases, based on the 15% upper limit, you will only be entitled for $200 and not $450.
There is also a small catch; you cannot use your credit card at just any outlet and qualify for cash back rewards. The cash back rewards are offered on pre-defined companies, brands or websites. An exhaustive list of all partner offers for cash back rewards is provided to the customer by the bank. Another drawback is that few banks will only sanction the cash back reward if the credit card is swiped on its own point of sale terminal.
Although there are a few shortcomings when it comes to cash back rewards due to the varied terms and conditions mentioned above, it is widely accepted by the general audience as it provides a scope for customers to earn few rewards who use the credit card regularly. It is also proven to be a great marketing approach and help banks to rope in new customers with attractive offers on the card.