Cashback Meaning: Types & Benefits

Let’s talk about cashback - a concept that sounds simple enough but can actually be a powerful tool for saving money and getting more value from your purchases. You might have heard people talking about it, or maybe you've seen offers flashing in your favorite shopping app. But what exactly is cashback, and how can you make the most of it? Let’s break it down.

What is cashback?

Cashback is essentially a reward you get for making a purchase. Think of it like getting a small refund or bonus after you buy something. Companies offer cashback to encourage you to spend more, and it’s a win-win: you get a little extra money back in your pocket, and they earn your business. 

How does cashback work?

The process is straightforward. Here’s how it typically works:

Make a purchase: 

You buy something through a store or online platform that offers a cashback deal. This could be anything from groceries and clothes to electronics and travel bookings.

Receive a percentage back: 

After your purchase is confirmed, you get a certain percentage of the amount back. For example, if you buy something for ₹100 and the cashback offer is 5%, you’ll get ₹5 back.

How you get it: 

The cashback can come to you in various forms. Sometimes it’s credited back to your bank account, sometimes it’s given as a gift card or a discount on future purchases. Some credit card companies apply it as a statement credit, reducing your bill for the next month.

Types of cashback offers:

Credit card cashback: 

Many credit cards offer cashback rewards as a percentage of what you spend. They might have special categories that change quarterly or offer a flat rate for all purchases.

Retailer cashback: 

Online retailers or stores might offer cashback as part of a promotion. You might find this directly on their websites or through cashback apps and websites that partner with these retailers.

App and website offers: 

There are dedicated cashback apps and websites that track your purchases and give you cashback for shopping through their links.

Benefits of cashback:

Savings on purchases: 

The most obvious benefit is saving money. Over time, these small amounts can add up significantly, especially if you’re a savvy shopper who knows how to maximize rewards.

Encourages smart spending: 

Cashback offers can make you more conscious of where and how you spend your money, prompting you to look for deals and compare offers.

Flexibility:

Cashback can be used however you like. You can save it, spend it, or even invest it, depending on how it’s credited to you.

Things to watch out for:

Minimum spend requirements:

Some offers might require you to spend a certain amount to qualify for cashback. Make sure to read the fine print to avoid disappointment.

Expiry dates:

Cashback offers can sometimes have expiry dates, so be sure to use them before they disappear.

Categories and limits:

Keep an eye on which categories earn cashback and if there are any limits on how much you can earn.

How to make the most of cashback:

Choose the right card or platform:

Pick a credit card or cashback app that aligns with your spending habits. If you spend a lot on groceries, for example, find one that offers extra cashback in that category.

Combine offers:

Some platforms allow you to stack offers, meaning you can use a cashback credit card alongside a cashback app to double your rewards.

Stay informed:

Cashback categories and offers can change frequently, so keep up with any updates to ensure you’re getting the most out of your spending.

Be strategic:

Don’t let cashback tempt you into unnecessary purchases. Use it as a tool to save on the things you already plan to buy.