Skip to main content

Card Cash Back offers Vs Card Reward points

Invest In Tax Saving Mutual Funds Online

Call 0 94 8300 8300 (India)

 

"One for everyone. Pick the card that suits you the best! It's good to have a credit card that's like you!" reads a promotional mailer from Standard Chartered Bank. It further reads, " 5 per cent cash back on all fuel spends, all phone bills, all utility bills on Titanium Card." Platinum card offers five times rewards on dining, hotels and fuel and so on. If you see such an offer, will you apply for the cards? Likely; who does not like discounts and freebies? This is why many own multiple credit cards, with multiple benefits. Some go to the extent of saying these benefits help counter the high prices to some extent.

 

If you pay, for instance, an electricity bill of 1,000 using a cash- back card, the card will offer you five per cent of your bill amount, that is 50. You pay only 950 on your card.

 

Reward offers on credit cards work differently. You get cash benefits in the form of coupons or vouchers for a certain number of points collected on purchase through the credit card.

 

For instance, for every purchase through Standard Chartered's Platinum Rewards Card, you collect 3,000 points, which earn you Big Bazaar coupons worth 1,000.

 

Which of these works better for a cardholder?  Collecting and redeeming reward points for lifestyle or other expenses works out better for card holders.

 

Once a customer has collected enough points, s/ he can use those for specified expenses at their will." says a senior official of HDFC Bank. It might not always be different cards that offer cash back and rewards benefits.

Sometimes, the same card offers both these.

 

According to an SBI official, banks discourage customers from cash back cards, as banks as banks have to pay in cash to the customer. With rewards points, banks have nothing to lose. Also, those who really take advantage of such offers are high spenders, making it an expensive proposition for banks.

 

Let's see which option works out better for cardholders. We take the example of Standard Chartered's Super Value Titanium ( cash back card) and Platinum Rewards card. You spend, say, 60,000 a year on fuel for your car. With the cash back card, you will get a five per cent cash back, according to the Standard Chartered banks mailer.

 

However, the actual cash back works out to be 2.5 per cent. Reason: The five per cent cashback offered by Standard Chartered's Super Value Titanium is in fact 2.50 per cent cashback and 2.50 per cent fuel waiver surcharge. This means by spending 60,000, you will get back 1,500 in a year. The fuel surcharge is offered by the rewards card as well.

 

In contrast, the rewards card will give you 3,000 points, which means 1,000 worth of Big Bazaar coupons for spending. This means the cash back card offers a better deal. However, the reward card does not levy any joining or annual charges on the cardholder. However, the cash back card levies an annual fee of 750, which brings down the saving on the card to 750. This makes the total earning on reward cards higher by 250.

 

For small spenders, both these cards offer almost the same deal. However, for big spenders, the cash back card is a better deal between the two. If the annual fuel spend is doubled to 1.20 lakh, then the cash back would be 3,000 and rewards would be worth 2,000. Even if you take into account the annual fee levied by the cash back card, you would get a total cash back of 2,250, higher than the offer on rewards card.

 

Rewards tend to be more when you are opting for lifestyle and related expenses, less when you are looking at regular needs, like Big Bazaar coupons. Also, money is spent first and rewards come later. In the case of cash back cards, you get direct discounts on items you have to buy regularly like fuel or electricity. A 2.50 per cent discount saves on immediate cash outflow. Cash discount frees up cash. Reward points are connected to spending programmes, usually lifestyle- related, which you may not need immediately.

 

A cash back card helps you in two ways. One, it brings home the direct benefit of discounts.

 

Two, it saves you the pain of choosing an item to buy from the reward catalogues, which might not be really worth the price shown. Of course, the benefits of both cash back and rewards are available at select merchant outlets with which the card manufacturer has a tie up.

 

Hence, you might not have too many options to shop. Many times, discounts/ rewards for fuel purchase are available only when you swipe your card on the card issuer's machine.

 

Finally, credit cards should be used judiciously. Keep a record of your estimated monthly expenses that may get cash back.

 

Calculate how much you save if you go with the card. Remember to check on joining if there are any annual fees. Go for it only if you save a decent amount after paying for fees. Do not spend just because there is a cash back offer as you have to pay the outstanding amount lest you'll land in a debt trap.

 

It makes sense to go for a cash back card only if you are a big spender, otherwise the benefits are almost equal

Happy Investing!!

We can help. Call 0 94 8300 8300 (India)

Leave your comment with mail ID and we will answer them

OR

You can write back to us at PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.

Invest Tax Saving Mutual Funds Online

Tax Saving Mutual Funds Online

These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)

Download Tax Saving Mutual Fund Application Forms from all AMCs

Download Tax Saving Mutual Fund Applications

These Application Forms can be used for buying regular mutual funds also

Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )

  1. ICICI Prudential Tax Plan Invest Online
  2. HDFC TaxSaver Invest Online
  3. DSP BlackRock Tax Saver Fund Invest Online
  4. Reliance Tax Saver (ELSS) Fund Invest Online
  5. Birla Sun Life Tax Relief '96 Invest Online
  6. IDFC Tax Advantage (ELSS) Fund Invest Online
  7. SBI Magnum Tax Gain Scheme 1993 Invest Online
  8. Sundaram Tax Saver Invest Online
  9. Edelweiss ELSS Invest Online

------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Birla Sun Life Front Line Equity Fund
    2. Large and Midcap Funds Invest Online
      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
    1. Mid and SmallCap Funds Invest Online
      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
    1. Small and MicroCap Funds Invest Online
      1. DSP BlackRock MicroCap Fund
    1. Sector Funds Invest Online
      1. Reliance Banking Fund
      2. Reliance Banking Fund
    1. Tax Saver MutualFunds Invest Online
      1. ICICI Prudential Tax Plan
      2. HDFC Taxsaver
      3. DSP BlackRock Tax Saver Fund
      4. Reliance Tax Saver (ELSS) Fund
    2. Gold Mutual Funds Invest Online
      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund

Popular posts from this blog

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...

Mutual Fund Review: HDFC Index Sensex Plus

  In terms of size, HDFC Index Sensex Plus may be one of the smallest offerings from the HDFC stable. But that has not dampened its show, which has beaten the Sensex by a mile in overall returns   HDFC Index Sensex Plus is a passively managed diversified equity scheme with Sensex as its benchmark index. The fund also invests a small proportion of its equity portfolio in non-Sensex scrips. The scheme cannot boast of an impressive size and is one of the smallest in the HDFC basket with assets under management (AUM) of less than 60 crore. PERFORMANCE: Being passively managed and portfolio aligned to that of the benchmark, the performance of the index fund is expected to follow that of the benchmark and in this respect, it has not disappointed investors. Since its launch in July 2002, the fund has outperformed Sensex in overall returns by good margins.    While every 1,000 invested in HDFC Index Sensex Plus in July 2002 is worth 6,130 now, a similar amount invested in Sensex then wo...

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now