Cashback Credit Card: All You Need to Know

What is a Cashback credit card?

To put it simply: a cashback credit card is one on which customers can earn back some of the money they spend. It’s like being rewarded for using the credit card. For those of us on a tight budget this can come as a huge relief! So why would someone opt for a cashback credit card instead of a regular bank credit card? Bottom-line: while credit cards can be expensive, with surcharges and hidden fees, a cashback credit card actually helps you save money.

How does cashback credit card work?

Given below is a simple illustration to explain the process according to which a cashback credit card works:

Cashback Technical Terms

While most of us might have some idea about how banking services work, technical terms and jargon are enough to confuse anyone. Here is a list of technical terms related to cashback credit cards:

Cashback Rate

The cashback rate is the money back that the card holder can receive at the end of a cashback cycle. Each credit card has its own cashback rate. For example, UOB One Visa Card’s cashback rate is 5% whereas Maybank Islamic Petronas Ikhwan Gold cashback rate is 8%. As an example, let’s say Azmi uses the UOB One Visa Card and shops for groceries for an entire month. Let’s say he ends up spending RM 400 using the card. As per the cashback rate of 5%, he could receive 5% of RM 400= RM 20 at the end of the month.

Monthly Cap

It is important to understand that while a cashback card might have a certain cashback rate, there is a monthly cap or limit on how much you can receive back. This means if the cashback amount as per the rate is greater than the monthly cap, you will only receive cashback equal to monthly cap. As an example let us see what happens when Azmi uses the same UOB One Visa Card but ends up spending RM 1,000 a month on eligible items. As per cashback rate he should be receiving 5% of RM 2,000= RM 100. However, this is not possible because the monthly cap on this particular card is just RM 20 per month. So despite having spent a lot Azmi can still only receive a cashback of RM 20.

Minimum Spend

We have seen how monthly cap overrides the cashback rate on a card, it is also important to realise that in some cases, the card holder needs to ensure a minimum amount spend every month in order to benefit from the purchases. For example, if Azmi’s card demands that he should spend a minimum of RM 400 on petrol a month, he is entitled to the cash rebate only if he spends equal to or greater than RM 400. If Azmi was holding the UOB YOLO Visa card, he would have to spend money a minimum of 16 times a month to qualify for 8% cashback. Thus for some cards the minimum spend is linked to the frequency of expenditure.

Tiered Cashback

This is another concept related to how much you spend each month using a cashback credit card. Cards which follow a tiered system reward you depending on how much you spend every month within the monthly cap. For example, if Azmi owns a Standard Chartered Just ONE Platinum credit card, his monthly cap is just RM 60, but if spends at least RM 2,500 in a month on eligible goods, it will unlock the 15% cashback on eligible transactions.

Understanding Conditions and Limitations on Cashback

While the idea of a cashback credit card might get you excited, it does come with certain limitations and conditions. Here we discuss some of the common limits associated with cashback credit cards:

Cashback only on certain days of the week

Some cashback credit cards only offer cashback for the shopping you do using the card on specific days of the week. So any purchase you make outside of these days is not eligible for cash back. This also encourages people to limit their expenditure to specific days and thus people try to shop for their weekly groceries or refuel their car for the entire week on a specific day. For example the Maybank Islamic Petronas Ikhwan Gold Card only gives 8% cash back for Petrol on Fridays and Saturdays. Similarly UOB One Visa Card’s 5% cashback on petrol and groceries only covers weekend transactions. If transactions take place on other days most cashback cards give only 0.2 to 1% cashback rate for those transactions.

Cashback only to certain outlets

Moreover, not all merchant outlets or stores are eligible for cashback. A specific credit card may provide you with a list of outlets which are eligible for cashback. Only when you shop at these outlets can you benefit from money back offers. Any other purchases carried out at other outlets will not be eligible for the same benefits. For example if Azmi holds a HSBC Amanah MPower Platinum card, it only covers purchases done at TESCO, Mydin, Giant, and AEON Big. So, if Azmi ended up doing bulk of his shopping at a 7/11 Grocery Store, he will unfortunately not receive cashback like he would if he had spent at the eligible outlets. Here it is important to mention that some cards are very flexible regarding spending categories. For example the Leong Wise Gold Card lets you choose which two spending categories you would like cashback on. You can choose the two categories that suits you the most. Similarly the UOB Lady’s Classic Mastercard offers a 10% cashback rate for all weekend fashion purchases, with minimum spending amount of RM 300 and a monthly cap of RM 30.

Choosing the Right Cashback credit card

To make your choice simple it is necessary to keep in mind the minimum spend, categories covered and the eligible outlets. For example let’s say Azmi already has an average monthly expenditure of RM 1200, lives near an AEON store, and ends up dining at a restaurant for lunch twice a week, spends RM 200-250 on telco services and uses public transport. Now, let’s see which of the following cards would best suit him:
Credit Card Cashback Rate Minimum Spend Eligible Outlets
HSBC Amanah Mpower Platinum 8% RM 2,000 TESCO, Mydin, Giant, and AEON Big
Maybank Islamic Petronas Ikhwan Gold Card 8% weekend 1% weekday - PETRONAS
UOB YOLO Visa card 8% Spend at least 5 times a month to benefit from cashback on dining and online purchases -
UOB One Visa Card 5% For petrol, groceries and telecom Minimum RM 200 in each category All Petrol Stations. Tesco, AEON, AEON Big, Village Grocer. Maxis, DiGi, Celcom
Azmi doesn’t need cashback on petrol, so Maybank Islamic Petronas ikhwan Gold Card will not benefit him much. Next, he spends less than RM 2,000 which is below minimum spend required by HSBC Amanah Mpower Platinum. It is good if Azmi goes for UOB YOLO Visa card since he dines outside at least twice a week. The most suitable card for Azmi seems to be the UOB One Visa card because it will allow him to enjoy cashback at AEON and also on telco services You can use the above example to see which card works best for you. Remember, consider spending categories and limitations cashback carefully.

Calculating Cashback Earned on Your Card

There are 3 simple steps to calculate cashback earned in a given month.
  1. Determine the monthly cashback cycle. Let’s your statement begins on 10th June, then the last date to be considered would be 9th July.
  2. Between 10th June and 9th July, calculate total spend on all eligible transactions for cashback. Let’s say this comes to a total of RM 1,000.
  3. Now apply your cashback rate and monthly cap. If your card pays 10% cashback, you are eligible for RM 100. However if the cap is RM 80, you will only get RM 80 cash back.

Top Cashback Cards for Each Category of Goods/ Services

Here is a list of some handpicked cards in each category:

Top cashback credit cards for petrol

Cashback Credit Card Cashback Rate Min Spend Monthly Cap Outlets
Maybank Islamic Petronas Ikhwan Platinum 8% on Weekends RM 625 RM 50 Petronas
Public Bank Petron Card 5% RM 1,000 RM 50 Petron

Top cashback credit cards for groceries

Cashback Credit Card Cashback Rate Min Spend Monthly Cap Outlets
UOB One Visa Platinum 8% on Weekends RM 400 RM 20 Multiple
Maybank Islamic Ikhwan Mastercard 5% Fri and Sat RM 1,000 RM 50 Multiple

Top cashback credit cards for dining

Cashback Credit Card Cashback Rate Min Spend Monthly Cap Outlets
UOB YOLO Visa 5% RM 600, min 5 transactions RM 30 Multiple
CIMB Cash Rebate Platinum Master Card 12% weekends RM 250 RM 30 Multiple

Top cashback credit cards for shopping (online & retail)

Cashback Credit Card Cashback Rate Min Spend Monthly Cap Outlets
UOB YOLO Visa 8% RM 625 RM 25 Dining and Online
AEON Big Visa Gold 5% weekends RM 500 RM 50 AEON Big stores

Some Common FAQs on Cashback Credit Cards

  1. Is supplementary cardholder eligible to earn cashback? -Yes, both principal and supplementary cards are eligible. In fact the more supplementary cardholders you have the faster you earn cashback.
  2. What is merchant category code (MCC)? -It is a code used by banks to determine spending category for any transaction. It helps determine which transactions are eligible for cashback.
  3. What is Islamic MCC? -Islamic credit cards are Shariah compliant and so some transactions are not eligible for cash back as they are considered prohibited. For example MCC 5813 stands for Bars, Lounges and Discos, whereas 7995 stands for Gambling and 5921 stands for Liquor. Any transaction with this code appearing on the statement for an Islamic Credit Card will not be eligible for cash back.
  4. What is Eligible spend? -Refers to the retail purchase that qualifies for cashback. Some credit card transactions that are NOT considered as Eligible Spend include:
    • Government-related transactions
    • Charity or social services
    • Balance transfer or cash advance
    • Payments of fees and taxes
  5. What is transaction date and posted date? -The transaction date is a date where you make a credit card transaction. The posted date is when the transaction reflects in your statement. This is important because cashback takes into consideration the posted date of transactions.
  6. When will cashback be received? -The last date for cashback calculation is one day before the statement date and the total cashback is posted in the next month's statement date. So any eligible transactions posted after the statement date will be credited into the next cycle.
Depending on your credit score, you may be able to hold multiple credit cards. However, the number of credit cards you have and your repayment behaviour will affect your credit score. In 2011, Bank Negara Malaysia introduced a guideline stating that anyone with an annual income of RM36,000 or less can hold credit cards from a maximum of two issuers. Focus on choosing one or two credit cards which suit you and your requirements best. Eventually, if you prove your good repayment behaviour, you will be offered a higher credit limit.
As long as you pay your credit card in full and on the date in your credit card statement, you do not have to pay interest on your credit card.
In order to be eligible for a credit card in Malaysia, you need to be at least 21 years old and financially stable. Each credit card issuer has its own minimum annual income requirement. In most cases, a minimum annual income of RM24,000 is required, but this could vary from bank to bank. You don't need to have an existing account with a bank to apply for a credit card from them. Remember to always research the best credit cards before applying!
If you're earning an annual income of RM36,000 or less, the maximum limit extended to you will not exceed twice your monthly income for every credit card issuer. This guideline does not apply if you are earning more than RM36,000 per annum, so you should consult your credit card issuer in Malaysia to find out how much your credit limit will be. Your credit limit can also be raised if you show good repayment behaviour. You can talk to your credit card issuer about raising your credit limit.
You can call the bank to ask for a review in your application. However, approval for an increase in credit limit is usually determined on your credit score. By being prompt in paying your monthly bills, the bank might increase your credit limit.
Choose a credit card that complements your lifestyle. Cashback cards help you save on groceries, petrol, and dining. Air miles cards let you earn miles for every RM1 you spend, which you can redeem for free tickets. Rewards cards let you earn points for every RM1 you spend, which you can redeem for vouchers. By using our comparison tools, you can quickly see which credit card has benefits that are most useful to you. Make sure to compare annual fees and effective interest rates so you know what extra charges apply.
Credit card issuers provide various methods of payment, from online banking, paying through telephone or mail, or visiting a branch of the bank to settle the balance. The most convenient method is to create a bank account and have credit card balances deducted automatically every month.
The processing time varies depending on the card issuer, but as soon as your application has been approved, it normally takes 7 to 10 working days until you receive your card. Make sure that you submit all the relevant documents so that your application can be processed as quickly as possible.
If you suspect an unauthorised transaction has been made on your account, check if you made any other purchases on the same day before contacting your bank. The item could have been mistakenly billed under a different name. Also, ask anyone who uses the card with your permission (such as your partner) if they made the purchase. Once you have confirmed that the transaction was unauthorised, contact your credit card issuer immediately. Credit card issuers provide 24/7 customer service to address these matters, so do not hesitate to take immediate action. Failure to do so could make you liable for the unauthorised transactions charged to your credit card.