Will you accept festival offer on credit cards?

It’s festival season again. It’s time to go shopping for gifts, clothes, jewellery, home appliances… the works, if only because every store worth its façade is offering attractive discounts and freebies.

Lately, even credit card companies have started offering sizeable festival discounts and cash-backs ranging from 2% to an incredible 100%, to get shoppers to use their cards more often. That’s more reason to go shopping, if you have a credit card.

However, never forget the sage advice: shop with your eyes wide open and do not purchase something with a credit card just because of the cash-back offer. Also, do not forget to read the fine print before you swipe that card - read the “conditions apply” part as well.

Here’s what you should know to be able to take full advantage of cash-back offers.

There’s a minimum requirement
You might have to spend a minimum amount per charge as well as a minimum charge per month to avail of the cash-back offer. Normally, the minimum amount per charge could be as high as Rs 2,000 plus and the minimum charge per month could be as high as Rs 10,000-plus. The danger here <http://www.apnaloan.com/articles/credit-card-india/Creditcard_article_tackling_stress.html> is that you may end up buying stuff you don’t need just to make it to that ‘minimum’ amount.

In certain cases, you may also need to make a minimum number of transactions with the card before you can avail of the offer. …and a maximum, too

Though the cash-back percentage may be high (say 10%) the maximum amount you may get as cash back may be a mere drop in the ocean when compared to the bill amount.

For example, in one specific offer last year, the maximum cash back was Rs 500 per month even though the cash-back percentage was 10%. Thus, if you ended up purchasing for about Rs 50,000 driven by the 10% cash-back offer, your cash back would be restricted to Rs 500 only (making the effective cash back 1% instead of the advertised 10%).

What you buy matters
The cash-back offer may be valid only for certain kind of purchases. For instance, one specific credit offered cash back only on apparel, consumer durables, jewellery, watches, electronic goods and leather items, and purchases made at department stores.

So, before you plan to pay for that expensive dinner with your card, find out whether or not it is eligible for a cash-back offer.

Is the vendor using the right machine?
The cash-back offer may be applicable only if the card is swiped on the machine owned by the card issuing bank. Swipe it on a different machine and you won’t get cash back. So, make sure the vendor swipes it on the right machine.

Getting the code right
In some cases, the amount of cash back you’ll be eligible for may depend on the six-digit authorisation approval code (AAC) on your payment slip. For example, in the case of an ICICI Bank credit card, the sum of these digits can range from 1 (when the AAC is 000001) to a maximum of 54 (when the AAC is 999999).

If the AAC number ranges between 0 and 5, the amount repaid by the bank will be 75%; if the AAC number is 51 and above, the cash back would be 100% of the value of the purchases. Obviously, the chances of the AAC falling within the range that offers high cash backs are not high.

Lastly, the bank reserves the right to deny the cash back if you are in default on the credit card account. So, remember to pay your bills on time.

Without doubt, the cash-back programmes offer a lot of benefits, but only if you know how. Now, go swipe that card.

The author is the CEO of Apnaloan.com and can be reached at ceo@apnaloan.com