Here are a few tips to avoid falling into trap of Cash-Back Offers:
Ms Anitha was looking to buy a laptop on a popular online shopping site. She found an irresistible 25% cash back offer on a laptop which cost Rs.60, 000. She assumed that she would get a credit of Rs.15,000 into her bank account on the purchase of it.
After the purchase had been done, she did not understand why no details of her bank account were asked. She called up the customer care, only to be told that the cash back offer was not exactly a refund of money, but only “virtual cash” added to her account on the shopping portal, which could be redeemed on purchasing any other product on the same portal.
Mr Rajesh wanted to try out a new online food delivery service through their app. Once he registered, he was offered a 50% cash back, as a first-time user. Hoping to make the best of the offer, he ordered food worth Rs.800 and received cash back points worth Rs.400. When he tried to redeem it after a fortnight, he realised that it could be utilised only on orders above Rs.2000 and only on their “Premium” dishes which were obviously expensive!
Ms Aruna received a coupon to avail 10% cash-back offer from a big grocery delivery start-up. On applying the coupon for a grocery purchase of Rs.4000, she realised the cash back; she would get only Rs.100 as that was the maximum limit set by the company. Also, availing this offer would nullify any other discounts applicable on the selected products. The company also charged Rs.30 as delivery charges.
Welcome to the reality of Cashback Offers! Both the online marketing space and direct-selling stores lure us with cash back offers these days. Come festive season, the e-commerce portals, the payment gateways, the credit card companies flood our browsers and e-mail inboxes with cash-back offer and discounts.
But do we actually get our “Cash” back”?
Cash-back offers are just another tactic used to lure customers into making unnecessary purchases, most of the times. These offers come with many terms and conditions, from earning the cash back points as well as redeeming the same. Many times, you might make an impulsive purchase to avail such offers without realising the hidden costs.
Let us understand more about Cash-back offers:
Cashback Offers from online shopping portals/payment gateways/Apps
Cashback offers from these are given as “Virtual Cash”, on the purchase of specific products, or a specific amount, and can be utilised only for purchases on their websites/apps.
To earn cash, the usual terms will be:
– Purchase a particular product, which is usually in the higher price range.
– Make a single transaction up to a specified amount.
– Stock Clearance
To redeem cash, the usual conditions will be:
– Can be used only on the certain range of products on their website/app.
– Can be used only once for purchases above a certain amount on their website/app.
– Cannot redeem it along with any other offers or discounts.
– Cannot redeem cash earned from different transactions, in a single transaction.
– The expiry date is specified to redeem the cash on the portal/app.
The companies doling out these offers may apply all or only a few of the conditions prescribed above.
Also read: Bhim app a better alternative to e-wallets
Cash Back Offers from Credit/Debit Cards and Internet Banking transactions
Cash Back Offers from these, do credit the cash into your bank account, but there are plenty of rules applicable, for receiving it in your bank account.
– Only a few privileged bank accounts and credit/debit cards will be eligible for Cashback offers. The credit cards which are eligible for such offers, come with joining fees and high annual fees.
– The card issuing companies limit the amount of cashback that can be earned in a particular period, per cardholder.
– The card-issuing companies may provide cash back, only for transactions above a specified limit.
– Cash back may apply only for transactions with a particular chain of stores or a particular range of products or services.
– Cash back offers are sometimes earned, only if you swipe your card at the POS machine of a specified bank at a specified outlet/chain of stores.
Though you might get money credited to your account, there are several applicable rules, which limit your eligibility for cashback or make the actual money returned, very minuscule. Also, if you are paying interest on your credit card, it makes no sense to shop just for the sake of earning cash, as it would negate the money received.
How to avoid falling into the trap of Cashback Offers?
1. Set a budget
If you are planning to purchase any product, set a budget for it and stick to it. Never stretch your budget hoping to get part of your money back.
2. Opt for Discounts
Opt for instant discounts rather than getting cash back later.
3. Choosing Cashback Offers
If you do come across a cashback offer for a product of your choice, check the redemption options in case of online shopping sites/apps, etc. If the cash is easily redeemable, go for the offer.
4. Shop for a trusted brand
Let not the lure of cash-back, force you to buy any brands on offer. Always buy a reliable brand.
5. Expiry of Cashback
Cash-back given on shopping portals/apps come with an expiry date. Check if you have genuine purchases to make on it, within the specified expiry date.
6. Interest on Credit Card
If you are already paying interest on your credit card, it makes no sense to shop just to utilise the cash back offers.
7. Charges on Debit/Credit Cards
If you are opting for a credit/debit card with cash-back offers, check the joining and annual fees. Evaluate your usage of the card and how much cashback you could earn on it. If the cash back earned is lesser than or equal to the fees you pay for it, you are sure to fall into the cash back trap.
8. Ask for Store Credits
If you have earned cash back from online shopping portal/app, ask them if they can convert it to “store credits” in case they have an offline store. The store credit coupons have a longer validity period and can also be utilised by any of your friends or family members.
Cash back offers might work well, under a few of the terms and conditions. If you wish to shop for something you need, and you also get a good cash back offer, Go for it! Never make any purchases for the sake of such offers as it won’t fetch you a good deal.