Free money! Now that we’ve got your attention, discover how you can be rewarded with a cash back credit card.
Cash back credit card offers are an enticing proposition for rewards seekers and there are a few different types of cash back offers available on the Australian market. These generally include receiving a percentage of your total spend as cash back at the end of the month, a one-off cash back payment as part of a special promotion or the option to convert your rewards to cash back on your account. You can use this guide to compare cash back credit card options, learn how they work and discover how you can get the most value out of this type of credit card.
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Compare credit cards that allow you to redeem rewards points for cashback
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Guide to cashback credit cards and offers
What are cashback credit cards?
A cashback credit card rewards cardholders with money in their account when they spend on the credit card. Depending on the offer, the cash back you'll receive may be a specific dollar amount or a percentage of each transaction. For example, some issuers will include a cash back offer when you first sign up and spend a certain amount within a set period of time. Others may run cashback promotions for existing customers, such as $20 back on their account when they spend with a partnered retailer.
How do cashback cards work?
There are three ways you can earn cashback on your credit card purchases:
- Instant cashback when you make an eligible credit card purchase. For example, if you make a credit card purchase of $1,000 and there is a 2% cashback promotion, the credit card provider will give you $20 back.
- Cashback promotional offers on sign up. Some cards have a cash back promotion for new customers. These offers usually require you to apply before a set date and spend a specific amount within the first few months you have the card.
- Cashback via a credit card rewards program. As well as using points for flights or merchandise, some credit card rewards programs give you the option to redeem your points for cash back on your account.
While there are many cashback offers on the market, it's important to note that the terms and conditions will vary from card to card. Make sure you read the card's Product Disclosure Statement for more information. Generally, transactions like cash advances, balance transfers, and refunded purchases are ineligible for cashback rewards.
How can I compare cashback credit cards?
As there are many different cashback credit cards on the market, it's important to compare your options before making a decision:
- The cashback amount. Obviously, the amount you'll actually be rewarded with should be considered. If you have to make a purchase to receive the cash back offer, make sure that it fits in with your spending plans and isn't just for the sake of the cashback offer.
- Paying off your balance. As you'll often have to spend a specific amount to redeem the cash back offer, make sure you can afford to pay this off before the statement period ends. The cashback offer won't hold much value if you're unable to pay back what you spent and it starts collecting interest.
- Ineligible transactions. As mentioned, the cashback offer won't apply to all transactions. Cash advances (such as ATM withdrawals), some bill payments, gambling transactions and credit card fees are usually considered ineligible transactions. Don't waste your money using a credit card for these types of transactions if you're trying to get a cashback offer through your account spending.
- Rewards value. Before you use your points for a cashback reward, do your calculations and make sure that there aren't any other rewards (such as flights, travel upgrades or merchandise) that might have a retail or regular price value that outweighs the cash back amount.
- Offer terms and conditions. As cashback rewards are usually offered as a special promotion, make sure you understand the terms and conditions before signing up. Depending on the offer, you may want to look for the date the offer expires, spending requirements or participating retailers to take advantage of the cashback reward.
What are the advantages and drawbacks of cashback credit cards?
Weighing up some of the pros and cons could help you determine whether a cashback credit card is right for you.
- Money in your pocket. Every time you spend, you have the potential to get some money back through this type of offer. If you already had to make purchases, any return in value is a bonus, no matter how small.
- Other extra features. Credit cards with cashback promotions may offer other features such as complimentary travel insurances, rewards programs and concierge services. These can help increase the value of your card if you're opting for a premium product.
- High annual fees. Credit cards with cashback rewards generally charge a higher annual fee than low rate credit cards. Make sure your annual spend is high enough so the value you get back from the rewards is higher than the annual fee.
- Rates of interest. If the cashback offer is a feature of a more premium product, you may find that it comes with higher interest rates. Make sure you can repay the amount you've charged for the cash back (as well as other purchases) before the end of the statement period, otherwise the interest you'll accrue might outweigh the value you're receiving from the cashback offer.
- Limited rewards. Some cashback credit cards may have a cap on the number of times you can redeem a cashback offer. For example, some many only allow you to receive the cashback once, while others may allow you to take advantage of it up to a capped amount of times in a set period.
How to apply for a cashback credit card
If you've decided you want a cashback credit card, you can apply online in around 10-15 minutes via a secure web service. But before you apply, make sure you meet the eligibility requirements and have the necessary documents needed to complete your application. These will vary from card to card, but you can usually expect the following eligibility:
- Age. Cardholders must be at least 18 years of age.
- Residential status. Most credit cards require cardholders to be permanent Australian residents, though some do offer products to specific visa holders.
- Minimum income. The minimum income requirement will vary between cards, but they usually start at $15,000 p.a. for low income cards and between $60,000 and $100,000 for higher-tier products.
- Credit history. All Australian credit card issuers require applicants to have a good credit history.
Necessary documents and information
- Proof of identification. You'll be required to provide a copy of your driver's licence, Medicare card and/or passport for proof of identification.
- Proof of income. You'll be asked to provide your employer's details, as well as a recent tax return and/or payslips. If you're self-employed, you'll need to include your accountant's details.
- Financial information. You will need to provide other information about your finances including debts, liabilities and expenses.
Once you've provided all of this information and hit "submit", you should receive a response regarding your application within 60 seconds. If you're approved, you'll receive your card in the mail within 1-2 weeks. If the card has a cashback offer, you should read the Product Disclosure Statement to confirm the terms and conditions and when you can expect to receive the cashback credit in your account.
If you're looking for a new credit card, a product with a cashback offer could provide you extra incentive to pay on plastic. While cashback offers can be rewarded, they always come with terms and conditions, so make sure you understand what these are and compare your options before you apply for the card.
Popular questions about using cashback credit cards
How much cash can I expect to get back when I spend?
While the cashback rate varies from product to product, most cashback returns are somewhere between 1-2% of the total value of the transaction. This figure can jump when you look at merchant and retailer bonus cashback rewards schemes, or when a fixed rate of cashback is offered (ie. $20 or $50 when you first use the card).
Can I use cashback to pay the annual fee or my credit card debt?
Yes, you can generally use cashback rewards to pay your card's annual fee or the outstanding balance of a credit card.
Where can I find out more about cashback and rewards points capping?
We include all relevant information about cashback and rewards points capping on our cashback credit card review and application pages. If you're interested in a specific cashback credit card or rewards program, you may also want to read through the Product Disclosure Statement provided by the credit card issuer. This will outline the full terms and conditions of the cashback offer or rewards program.