How Do Money Back Cards Work And Should You Consider It In 2020?

It was back in the 1960s when a, seemingly random, plastic card started a big revolution in the mode of transactions. Eventually, these cards became the standard method to conduct a monetary transaction, which continues even today. Who knew that the same plastic card, when used, could give you cash back one day?

It was somewhere in the early 1990s, that the cash back cards or the concept of ‘rewards’ was first introduced, and since then they have become ubiquitous. Today, a swipe, an insert or a tap with a cash back credit card helps you earn rewards and numerous benefits.

How does cash back work?

Ever wondered how cash back works? Well, a money back card or cash back card can be defined as the program through which you receive a cash back in the form of incentive or reward for spending the cash using the card in the first place. It is generally a percentage of the total money that you have spent on the purchase of goods or any service availed. Presently, a credit card cash back program is the most popular one out there. It is one of the easiest ways to earn something extra on every eligible purchase as defined by the card issuer.

Different Forms of Cash Back

Cash back works in different ways and comes in different forms. Depending upon the card you own, you can redeem or use these rewards in various ways.

Direct Deposit or Actual Cash – Sometimes it is the actual cash that you receive directly into the account after using a credit card. This is known as direct deposit.

Statement Credit – Another form includes a statement credit wherein a certain amount of money is reduced from your credit card bill. In comparison, it is one of the simplest ways to calculate how much you have earned in cash back. For example, if your credit card bill is of Rs 1000 and you received a cash back of Rs 100 then your final bill amount will be reduced to Rs 900.

Gifts Cards – One of the most popular forms of cash back in India are the gift cards which need to be redeemed at the shopping malls or restaurants within a stipulated time. The stores and restaurants are generally mentioned by the card issuer.

There are flights and travel bookings as well where one can use the cash back. This one certainly appeals to the consumer.

Payback Rate Structures

There are basically three types of payback rate structures that are briefly discussed below:

Flat Rate – As the name indicates, it gives you the same percentage of money back irrespective of the amount of money you have to spend or on what category you have to spend it.

Tiered Or Different Rates – You get different rates for different categories. For example, you would earn X% on refilling the fuel tank while you get Y% on shopping. As a general rule, it usually ranges from 1% – 5%.

Bonus Category – During special occasions and festivals, the cash back earning percentage can greatly vary. This is known as the bonus category where cash back rates are higher and available in certain categories. It is therefore important to read the communication sent by the card issuer or bank.

Benefits of using a cash back card

Apart from the usual payback rates, sometimes, you can avail of the extra rewards and better earning percentage if used at certain stores that are in collaboration with the card issuers.

There are money back credit cards with a nominal amount of annual fees. These cards tend to garner a higher percentage of cash back.

Also, when you sign up for credit cards, the probability of getting a bonus is big, which again includes higher returns.

It is often observed, especially in 2020, that cash backs are much bigger when online modes of payment are done.

It suffices to say that in 2020, considering a cash back card, to enjoy its wide range of benefits is certainly a good idea. However, they must be opted for after understanding your spending habits and the type of rewards offered. With Mswipe’s money back card, you can earn cash back on all e-commerce and POS spends. It is available for both online and offline purchases and the cash back will reach your bank account once a month. For more details on the earning percentages and such, visit

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