This type of credit card gives you cash rewards for your spending. There are a few different types of cashback offers available on the New Zealand market, with some cards offering introductory cashback promotions and others earning cashback as a percentage of your spending. Some rewards credit cards also let you get cash back in the form of gift cards or account credit. You can 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.
How do cashback cards work?
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 and others providing a one-off cashback reward offer for new customers.
In fact, there are three main ways you can get cash back from your credit card purchases, which we have outlined here:
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 cashback 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 programmes give you the option to redeem your points for cash back on your account.
Is there a catch?
Just like other reward credit cards, you need to meet the spending and eligibility requirements to get cash back from a credit card. For example, you might only get cash back for “eligible purchases”, with common exclusions including cash advances, balance transfers and refunded purchases. Some cashback credit cards may also cap or limit the amount of money you can earn per month or year. Make sure you read individual card’s Product Disclosure Statement for more information.
How do I compare cashback credit cards?
Here are the key details to look at when you are comparing different cashback credit card options:
The cashback amount. Weigh up the value of the cash you will receive based on your spending habits and the overall cost of the card (ie the annual fee and purchase rate). This will help you decide if the rewards are worth it.
Reward caps. Some cashback cards limit the amount of money you can receive. For example, you might be able to get 1% cashback per $1 but have a limit of up to $20 per month.
Introductory offer requirements. If a credit card offers cash back 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.
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.
Rewards value. If you have a card that earns points and want to redeem them for a cashback reward, check to see if there are other rewards (such as flights, travel upgrades or merchandise) that have a retail or regular price value that is higher than the cashback amount. This will help you get the most value out of your rewards.
Other card features. Make sure you also consider the card’s standard variable purchase rate, as well as any additional charges, fees and complimentary extras. Along with the rewards and annual fee, these features will help you decide if the card suits all your needs.
What are the advantages and drawbacks of cashback credit cards?
Weighing up some of the pros and cons may help you determine whether a cashback credit card is right for you.
Money in your pocket. This type of reward offer gives you the chance to get money back for paying with plastic.
Dollar value. Instead of earning points per NZD$1 spent, cashback credit cards offer a straightforward dollar value for the rewards you earn.
Other extra features. Credit cards with cashback promotions may offer other features such as complimentary travel insurances, rewards programmes and concierge services.
High annual fee. Credit cards with cashback rewards charge a higher annual fee than no-frills credit cards. Ideally, the value you get back from the rewards should be higher than the annual fee.
Rates of interest. If the cashback offer is a feature of a more premium product, you may find it comes with a higher interest rate. Make sure you can repay the amount you are charged for the cashback (as well as other purchases) before the end of the statement period.
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 have decided you want a cashback credit card, you can apply online in around 10-15 minutes through a secure web service. 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:
Age. Cardholders must be at least 18 years of age.
Residential status. Most credit cards require cardholders to be permanent New Zealand 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 New Zealand credit card issuers require applicants to have a good credit history.
Documents and details
Proof of identification. You are required to provide a copy of your driver’s licence and/or passport for proof of identification.
Proof of income. You l will be asked to provide your employer’s details, as well as a recent tax return and/or payslips. If you are self-employed, you need to include your accountant’s details.
Financial information. You will need to provide other information about your finances including debt, liabilities and expenses.
Once you have provided this information and hit “submit”, you should receive a response regarding your application within 60 seconds. If you are approved, you will receive your card in the mail within 1to 2 weeks. If the card has a cashback offer, make sure you 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 are 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, 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
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).
Yes, you can generally use cashback rewards to pay your card’s annual fee or the outstanding balance of a credit card.
Yes. The ANZ Visa Business card offers 1% cashback on eligible purchases, in each 12-month period. To qualify you need to spend $5,000+ p.a.
We include the relevant information about cashback and rewards points capping on our review and application pages. If you are interested in a specific cashback credit card or rewards programme, you should also read through the Product Disclosure Statement provided by the credit card issuer. This will outline the full terms and conditions of the offer or rewards programme.
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.
Learn how to reduce your credit card debt. Read our guide to how to approach debt consolidation and help free yourself from financial pressure.
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