Updated November 2019
Earn up to 8% cash rebates with a cashback credit card. Compare and find the best American Express cashback credit card to earn the highest rebates based on your spending habits.
Cashback credit cards fall under the broader category of rewards credit cards, where consumers accumulate points for every dollar charged to the card. These points can then be redeemed for “rewards” such as gift vouchers, appliances, etc.
A cashback credit card, however, rewards you with a cash rebate instead. This amount varies quite a lot among credit cards but typically falls between 1% and 5%, though some credit cards have attractive bonus cash rebates to reward certain types of spending.
New to the world of cashback credit cards? Here are the key features you need to know before you sign up.
Also known as “base rate”, this is the standard cash rebate you can expect to receive on your purchases, regardless or when, where, how or with whom it’s made. Typically this falls around 0.25% and up.
Many credit cards offer tie-ups with brands and retailers ranging from Uber to Sheng Siong, offering higher cashback rates (as high as 8%). Some also offer higher rates for specific types of spending, e.g. online purchases, telco bills. Note the fine print on these and be sure they are a good fit for your actual spending habits.
Some cards offer introductory cashback promotions such as a higher rate for the first few months or a $100 bonus with your first purchase. Be aware of the limited nature of these promotions and of any terms & conditions.
Certain attractive cashback rates only apply for hefty minimum spends, say of $2,000 and up. If your planned expenditure is nowhere near that minimum, it makes little sense to apply for the card.
Credit card issuers often have a cap on how much cash rebate you can earn per quarter. You may be surprised to find that your 20% cashback only has a $10 cap.
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Cashback credit cards are good entry-level cards for everyday use. They typically come with low income requirements (usually around $30,000 annually) which most young working adults can hit fairly easily, and in most cases annual fees are waived. They are also set up such that you can enjoy some form of cash rebate even if you don’t spend a huge amount of money, so you can still enjoy their benefits even if you live quite a frugal lifestyle.
You can get the most out of your cashback credit card if you pick one that is perfectly aligned to your actual spending habits. For example, if you spend a lot on clubbing or online shopping, look for a card that offers hefty bonus cashback rates (these can be as high as 8%) on these categories or merchants. If you are not a particularly big spender in any one category, pick the card with the highest base rate, provided you can meet the minimum spend requirements.
While we would dearly love to receive a cheque or a nice wad of cash every month, this isn’t usually how credit card cash rebates are paid out these days. Instead, the cashback amount is credited to your account, effectively giving you a discount off your next credit card bill.