Credit cards provide many benefits for users when making transactions, ranging from promos, discounts, buy 1 get 1, and cashback programs. Banks benefit from credit cards based on nominal transactions and the frequency of credit card usage. The greater the nominal amount of the transaction and the more frequent swiping of a credit card, the more happy the bank will be. That is the reason why banks continue to encourage their customers to do more and more transactions using credit cards.
Of the many promo strategies, the most frequently used by banks is cashback promos, where credit cardholders will get a refund of a percentage of the nominal transactions made. Cashback promos will not be found in cash payments. The bank offers cashback promos with the aim to encourage credit cardholders to do more transactions using credit cards. So far, cashback promos have succeeded in getting people interested in transacting with credit cards, not infrequently even encouraging people who do not have a credit card to be interested to immediately have it.
How do banks benefit from the cashback program?
Actually, the cashback promo is not because the credit card issuing bank is being kind, but there is an ulterior motive so that the product is used as often as possible by its customers and also becomes a weapon to attract new customers. Because the main source of income for credit card issuing banks lies in the value of the transaction.
The credit card issuing bank actually does not target profits from credit card holders, but at the nominal transaction and credit card frequency swiped. The greater the value of the transaction and the more often the customer uses his credit card, then automatically the greater the benefits of the bank. So, every time a transaction using a credit card, the bank would benefit, it would not hurt to provide cashback.
Credit cards are only a transaction aid, the profit or loss depends on the skill of the customer to use the tool. Before utilizing a credit card cashback program, customers must know more about the types of credit cards. Carefully check the rules for using credit card cashback, whether it applies to all transactions or only for certain transactions. Do not shop using a credit card carelessly, before knowing in detail the provisions for the validity of the cashback program.
Advantages and Disadvantages of the Cash Back Program
Basically, there are several benefits to customers when shopping using a credit card that offers cashback promos. Here are some of the benefits of a credit card cashback program for customers.
- Save on Monthly Shopping
Having a credit card that provides cashback will help customers save spending, especially if the customer uses the credit card to shop monthly and pay monthly bills. It is better to compare the various types of credit cards offered by each issuing bank, then choose a credit card that offers cashback according to your needs and shopping habits.
- Shop for Free
If customers often get credit card cashback, the collected cashback can be used to shop for free from the bank. For example, customers can collect credit card cashback from shopping at Hypermarket for Rp1 million, so customers can use this cashback to buy household appliances such as blenders or ovens according to their needs.
- Free Annual Fee
Credit card cashback collected by customers can be used to pay their credit card annual fees. This is one of the ways cashback helps customers save money not having to pay fees to pay an annual fee.
In addition to the benefits gained by customers, there are also things that are less profitable for customers when shopping using a credit card that offers cashback promos.
Behind the benefits, it turns out the cashback program also has a negative impact on customers. Here are some things that are less profitable from the credit card cashback program for customers.
- Cashback obtained is not balanced with interest rates or even smaller than the interest rates charged by credit card issuers. Credit cards that are too often swiped in the pursuit of cashback are not much, or even smaller than the interest rate, just as the saying goes is greater than the pole peg. Because the benefits obtained are less than the interest rate, the loss will definitely be received by the customer.
- The credit card cashback program only applies to transactions of goods that are not needed or only to buy consumer goods. For example, customers will get cashback when shopping for certain gadgets. So because they want to get a fairly large cashback, then force yourself to buy gadgets that are not really needed.
- There are terms and conditions that apply to get credit card cashback. For example, cashback will only be obtained after the credit card holder to spend with a certain nominal, even the nominal spending may be greater than the customer’s monthly routine expenditure. So that these conditions force credit cardholders to transact with a minimum nominal specified by the bank.
Thus the discussion about the advantages and disadvantages of credit card cashback promos. A customer must be very clever using a credit card. Get to know and understand in detail the types of credit cards you have. You should choose a credit card that offers cashback promos as needed.
For example, customers shop more often online, look for credit cards that offer cash back for online transactions. If you buy fuel more often at gas stations, then look for a credit card that offers cash back every time you buy fuel at a gas station.
Understanding the terms and conditions that apply and being able to react wisely will help customers save money and get the benefits offered. Conversely, if you can not understand the terms and conditions that apply can make customers dizzy due to swollen credit card bills so that it is not the benefits but the losses.