They say the sky is the limit, but that’s not quite the case for credit cards. As exciting as access to heavy cash flow sounds, it comes with great responsibility and restraint. Especially if you’re a shopaholic and always looking out for sales and bargain deals! We don’t blame you since retail therapy can be quite exhilarating. However, it could easily damage your credit score without proper monitoring. In this article we will know main details on CashBack vs. Rewards vs. Shopping Credit Cards and which one should you take.
CashBack vs. Rewards vs. Shopping Credit Cards
While browsing different credit card types, you might have noticed the mind-boggling number of benefits and features they offer. Aside from the numerous advantages, they have certain features that target specific lifestyles. It includes credit cards for frequent flyers, online/offline shoppers, movie enthusiasts and more!
So, which one should you apply for? It’s tempting to go for them all, but that might not work out for the best. Owning too many credit cards is not a crime, but poor personal finance and an over-reliance on credit could tarnish your credit score. That said, there are some cases in which multiple credit cards could come in handy!
Owning Multiple Credit Cards: The Pros and Cons
With so many credit card types around, what if you succumb to the temptation and apply for them all? It’s unlikely that your CIBIL score will be affected by these enquiries. But, that’s not the primary concern here. While weighing the benefits and consequences of over-indulgence in plastic money, consider these pros and cons.
The Pros
- Balance the credit utilisation ratio between multiple credit cards
- Increase CIBIL score with an increased number of timely repayments
- Avail higher cash flow limit provided by multiple cards
- Reap the benefits of all the cashback and rewards these credit cards offer
The Cons
- Too many billing cycles to monitor for timely repayment
- May lead to defaulted bill payments and debt cycles
Those cons put things into perspective, making the reality grimmer, but that doesn’t make it any less valid. Indulging in too many credit cards can go from being a blessing to a curse in a few missed payments. To avoid such situations, stick with a single credit card if it’s enough to meet your requirements.
If you haven’t found a credit card yet, what’s the hold-up? Of course, it’s the tangling decision of choosing between credit cards with features like cashback, rewards and shopping!
Scrutinising the Options: A Comparison
You could spend hours contemplating and soul searching, but sometimes choosing between credit cards can seem like an impossible task. After all, how do you choose between these features? It’s best to take matters into your own hands and draw a comparison between the options before you. Become the judge and jury of your first or next credit card!
- Cashback Credit Cards
These credit cards offer shoppers the benefit of getting back a percentage spent. Though, this feature may be exclusive to certain pricing ranges or categories. It allows users to purchase more items freely without worrying about overspending since they get a certain amount back.
The Pros
- Easy to calculate the cashback earned through transactions
- There is no time limit to use the cashback received
- Certain cards offer instant cashback
The Cons
- There are no extra bonuses or cashback
- Some cards only credit the cashback after 90 days
- There is a maximum limit for cashback
- Reward Credit Card
Unlike the cashback variant, these cards will dispense reward points for transactions made using it. However, certain conditions make a purchase eligible to receive reward points. Such rewards could be earned on all transactions, provided they adhere to the minimum purchase limit.
The Pros
- Higher transactions receive more reward points
- Certain cards offer additional reward points for reaching milestones
- The reward points could multiply depending on the purchase category
The Cons
- These points come with an expiry date, depending on the issuer
- There is a min. transaction amount to avail reward points
- The reward points can’t purchase items aside from those available on the bank’s website
- Shopping Credit Card
A shopping credit card offers a variety of benefits, often clubbing the features that the previous variant provides customers. Some features include discounts, reward points, bonuses and an EMI payment option.
The Pros
- Accelerated shopping benefits and rewards across different categories
- General shopping benefits for additional online savings
- Customers can earn different types of rewards
The Cons
- Co-branded benefits are limited to certain websites or brands
What’s the final verdict, you ask? This entirely depends on your preferences! Cashback credit cards are great if you would like a percentage of money back from purchases to invest in something else. You can amass points based on your credit utilisation with rewards credit cards. And lastly, a shopping credit card offers the best of both worlds and more!
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