A cashback credit card gives you cash rewards for your spending. Some cashback offers available in New Zealand offer cards with introductory cashback promotions, while others earn cash back as a percentage of your spending. Use this guide to compare cashback credit card options, learn how they work and discover how you can get the most value out of this type of credit card.
A cashback credit card gives you rewards in the form of dollars or credit on your account. These offers vary between cards, with some earning cashback as part of an ongoing rewards programme, while others may provide a one-off cashback reward for new customers.
We’ve outlined the three main ways you can get cashback below:
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 gives you $20 back.
Promotional offers on sign up. Some cards have cashback promotions 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 programme. Some credit card programmes reward you with cashback on your account. For example, with the BNZ Advantage Visa Platinum credit card, you earn a $1 Cash Reward for every $90 spent.
The pros and cons
If you’re thinking about getting a cashback credit card, weighing up the following pros and cons can help you decide if it’s worth it for you:
Simplicity. Unlike rewards credit cards, where figuring out the value of rewards can be complicated, cashback rewards are straightforward.
Usefulness. There’s no denying that cash or statement credits are the most versatile reward you can get.
High annual fees. These cards usually charge higher annual fees than other basic rewards or no-frills credit cards available on the market.
High-interest rates. If you often carry a balance, the cost of interest could outweigh any cashback rewards that you earn from the card.
How can I compare cashback credit cards?
Here are the key details to look at when comparing your options:
The cashback amount. Weigh up the value of the cash you receive based on your spending habits and the card’s overall cost (i.e. the annual fee and purchase rate). If the cashback’s value isn’t worth it, you might find a$0 annual feeor0% purchase rate cardmore suitable.
Introductory offer requirements. If a credit card has an introductory cashback offer, make sure you understand the spend criteria before applying. If the criteria say: “Get $150 back on your card when you spend $3,000 within the first 3 months of card approval”, that tells you how much you need to spend and the timeframe for spending it to receive the cashback.
Ineligible transactions. While most everyday purchases are eligible to earn cashback rewards, transactions such as cash advances, bill payments, gambling transactions and credit card fees are usually ineligible. Check these details before you get a card to decide if it suits your spending habits.
Other card features. Make sure you also consider the card’s standard variable purchase rate, plus any additional charges, fees and complimentary extras. Along with the rewards and annual fee, these features help you decide if the card suits all your needs.
How to decide if a cashback card is worth it
The potential value of a cashback rewards card depends on the amount of cashback offered, the card’s cost, and how often you use it. To put this in perspective, let’s say you get a credit card that offers 1% cashback on everyday purchases and has a $150 annual fee.
If you spent $3,000 per month on this card: You would earn $30 cashback per month or $360 per year. If you take out the annual fee cost, you get a $210 value from cashback rewards over a 12-month period.
However, if you only spent $1,000 per month on this card: You earn $120 cashback in a year. That is $30 less than the $150 annual fee in this scenario, so you spend more for the card than you earn from cashback rewards. This doesn’t necessarily mean that the card isn’t valuable, but you have to make sure you get at least $30 worth of value from the other features.
Bear in mind that this example does not consider the cost of any interest that might be charged if you carry a balance from your purchases. The bottom line? There is no one “best” cashback card for everyone because the value you get from a cashback offer depends on your personal spending habits and card preferences.
How to apply for a cashback credit card
Anyone who meets the eligibility requirements for a cashback credit card can apply. These requirements vary between cards, but you can usually expect the following:
Age. Cardholders must be at least 18 years of age.
Residential status. Most credit cards require cardholders to be permanent New Zealand citizens or residents, though some offer products tospecific visa holders.
Minimum income. Some cards list a minimum income amount that you need to earn before applying; others require you to earn a regular income. Some cards don’t list an income requirement – but even then, you need to include details about your money when you apply.
Proof of identification. A copy of your driver’s licence, passport or Kiwi Access Card for proof of identification.
Proof of income. Your employer’s details and a recent tax return and/or payslips. If you are self-employed, you need to include your accountant’s details.
Financial information. Other information about your finances, including debts, liabilities and expenses.
Once you have completed and submitted your application, you usually receive a credit card provider’s response within 60 seconds. If you’re approved, you’ll receive your card in the mail within 1-2 weeks.
If you’re looking for a new credit card, one that offers cashback can give you extra value for your spending. However, even though cashback offers can be rewarding, they also come with terms and conditions. Make sure you understand what these are and compare your options before you apply for a card.
Frequently asked questions
A cashback credit card is a type of rewards card that lets you earn money back in the form of credit for your spending. Standard rewards cards offer points for eligible spending, which you can redeem for merchandise, vouchers, cashback and more.
While the cashback rate varies from card to card, most cashback returns are between 1-2% of the transaction’s total value. This figure can jump when you look at some bonus cashback rewards schemes or when a fixed cashback rate is offered (such as $20 or $50 when you first use the card).
Yes. The ANZ Visa Business card offers 1% cashback on eligible purchases in each 12-month period. To qualify, you have to spend $5,000+ p.a.
Yes, you can typically use cashback rewards to pay your card’s annual fee or the outstanding balance of a credit card. If you plan to use the cashback to help pay off your balance, be aware that you usually still need to make a minimum payment on your account by the statement due date.
Alison is an associate editor for Finder. As an editor and proofreader, Alison has found an outlet for her love of the written word. As well as constantly reading, Alison can be found caring for her menagerie of animals in her spare time.
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