A credit card process is a cycle of money transactions where the merchant is provided with cash from his bank, which he lends to the customer and when the customer repays that cash, the merchant returns an amount of it as commission to his bank. Banks then use this commission money to add tempting bonuses on their credit card schemes, so that more customers can be attracted towards their services. Banks very successful catch customer’s attention by offering various deals and services on use of their cashback credit cards.
Credit card commission can be shared in the form of points like purchase discounts, package deals, gas filling etc, AirMiles, or a monetary amount. The money however that is given out has a special name, cashback credit cards. Banks then use from 0.5% to 2% of this money as service offers on cashback credit cards. This rebate is not done weekly or monthly, but annually to make sure that the customer doesn’t take and use the credit card for a full year service. Reimbursements given out by the banks to customers is either in the form of credit or individual checks. Extended warranty, purchase theft insurance, baggage delay insurance, car rental insurance etc. are all other offers made by credit cards cashbacks in Canada.
The advantages of cashback credit cards include the usage of free money where buying things is necessity, want, and even fun for some elite groups, hence they benefit most from their refund on luxury items. Now it depends on you if you want to search for cash back rewards on your own, or get it from your bank, that is ever ready to grab you up as their potential new customer.Some banks are so desirable for customers that they even give out 5% cashback services. Customers who pay their credit bills regularly, with no bad record are selected for bonus points. A particular mastercard in Canada offers ‘price protection’ by making you a refund of equal to 0 on price difference if you get a reduce price inside 60 days of your purchase.
There are some disadvantages of cashback credit cards also. Firstly, the lure of rewards encourages customers to make unnecessary purchases making it difficult to settle the balance. Secondly, some banks charge a high rate of APR that just adds to the customer debt. Therefore, it is always recommended that customers should read every line of the contract and terms and conditions before getting a credit card deal final. One thing to be aware of is that the rates that banks charge initially, is just for 6 months, with a gradual drop to 1% when customers go for purchases.
Whenever you have any dealing with financial matters, it is necessary that customers have a good understanding of the credit card world, before they jump on it, and there are Canadian financial institutions that help general consumers with this knowledge.