Credit cards have become a way of life for many of the urban consumers, who use credit cards to make purchases both online and at merchant establishments. In today's time of high inflation, credit cards help consumer in more ways than one. Firstly the credit cards can be used to make payments even in scarcity of cash and the settlement can be made later when the liquidity conditions come back to normal.
Another important feature of credit card is that most of the credit cards offer a cash back facility. Cash back feature involves the card company remitting a fixed percentage of the user's spends. For example a card with 5% cash back would mean that out of every Rs. 100 spent, the customer practically pays Rs. 95. But its not necessary that the higher cash back percentage is always good.
The customer should check his/her spending pattern and decide a card which would best suit his/her need. These cards fall primarily under two broad category; one which offers cash back on leisure and lifestyle spends and other which offers cashback on utility bills like fuel. Depending on one's monthly expenses, one should chose the card. For example if someone drives a lot, he/she should select a petro-credit card with cash back facility on fuel purchases, whereas a movie enthusiast should buy a credit card which offers discounts/cash backs on movie tickets.
Another feature to keep in mind is that card companies limit the cash backs, for example most banks limit the fuel surcharge waiver limit. A thorough questioning from the bank about the exclusions cash back is necessary before zeroing in on your card.
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