With the right type of transaction account promotion, you could get free money just for making purchases with your eligible debit card.
Some banks are now tapping into the ‘tap and go’ purchase option by offering customers cash back when you make contactless purchases at checkout. With this type of incentive, it’s as if everything you buy is always on sale.
These are definitely worth looking into if you rely on your debit card to take care of your everyday purchase needs.
How does cash back on purchases work?
Both Visa and Mastercard are now offering cards that do not need to be swiped or signed when you make over the counter purchases of under $100. Typically, they need to have the PayPass or PayWave feature for you to be eligible. All you need to do is find stores and shops who advertise contactless payments at their checkout counters. When the teller reads you your total, you can just wave the card and the money is deducted right from your transaction account.
The conditions to qualify vary slightly from bank to bank, but when you qualify, up to 2% of your purchase value can be deposited right back into your account.
How do I compare transaction accounts that offer cash back promos?
Before signing up for an account that offers cash back, be sure that you fully understand the terms and conditions:
- Limited offer. You may find that these offers are only made for a limited time, rather than being an ongoing feature. Remember to check the end date.
- Maximum amounts that are ‘cashed back’. Look to see if there is a cap on how much cash back you can receive monthly.
- Other requirements. With some banks, there may also be special requirements to qualify for the cash back, such as a minimum monthly deposit.
- Small purchases. Contactless payments are only available when you make purchases under $100.
- Account fees. Look for accounts with the lowest monthly fee requirements.
- Transaction fees. Check for other types of fees, such as overseas purchases and ATM transactions.
- ATM network. When choosing a transaction account you should look at the ATM network of the bank to ensure that you will be able to make cash withdrawals conveniently and without any additional fees.
What are the pros and cons to opting for cash back?
- Ease of use. Contactless terminals provide an easy way to pay for purchases at the checkout.
- Value for money The biggest incentive to use this type of debit card is having money put back into your account for spending.
- Large limits. Although you are limited to $100 on each transaction, you can use the card multiple times in the month.
- Availability. These offers are not always easy to find and are usually only available for a limited time.
- Other requirements. You may find that with some you are obligated to meet other terms such as a minimum balance or deposit requirement.
What are the risks?
Even though you are being given the opportunity to get free money for spending, there are still some things you should avoid:
- Overspending. If your total at checkout is over $100, you will lose the cash back benefit. This type of promotion works best for your small everyday purchases like groceries.
- Terms. Don’t choose an account where you will be unable to meet the other terms required for the promo.