Cashback Credit Cards

2 July 2009

Cashback credit cards are one of the most popular forms of credit cards worldwide with their initial launch in Australia only matched in success as the frequent flyer credit cards. Cashback credit cards are similar to a rewards program allows credit cards users to earn points as they spend and redeem cash. Often in Australia, cashback credit cards will employ a ratio of 200:1 of points: dollars, meaning that a cardholder can earn 10,000 points for every $50 spent using a cashback credit card.

Of course, it is never as simple as this with many various factors that differ between the numerous cashback credit cards available on the Australian market.

However, the most importance aspect to understand before undertaking a cashback credit card is the difference in Rebate Rate between different credit cards. A Rebate Rate refers to the actual rate at which the cardholder gets their money back after making a set amount of purchases through their cashback credit card.

In today's market there is now a maximum limit to the cashback that a person can receive in one year which in most cases is $500, meaning that any purchases made over the $50,000 mark will not earn cashback points and rewards. This was put in place in recent years after massive payouts were accumulating when no limit was set. The previous method was of a simple percentage formula that saw customer's receiving 1% cashback from whatever they had spent during the year. For example, if a cashback credit card customer spent $10,000, they would receive $100.

There have been new additions to the Rebate Rate formula in the form of Graduated Rebate where payments are stagnated across different levels of spending. The graduated rebate formula assigns a particular percentage amount to a range of spending and has proven to be of best benefit for credit cards companies themselves. The graduated rebate formula is typically as follows:

$0 - $10,000: 0.25%
$10,000 - $25,000: 0.5%
$25,000 - $50,000: 0.75%
$50,000+: 1%

Due to this format of cashback that can be used on some cashback credit cards, it is recommended that people do their research and find out which style of rebate suits their spending habits best.

Within the cashback credit cards varieties, the Commonwealth Bank Awards Card is generally viewed as one of the better alternatives due to its introductory offer. While keeping with the typical formula of a cashback return rate of 200 points to $1, the Commonwealth Bank Awards Card offers new customers double reward points for the first 2 months. This offers significant potential for major rewards if the customer works the rewards program to their own advantage.

Compare the top ten credit cards on the Australian market and see what they can offer you

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