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ArticlesCashback is a card reward that returns part of eligible spending to the cardholder, usually as a statement credit, reward balance or other issuer-defined benefit. The headline cashback percentage is only one part of the offer: category rules, monthly or annual caps, minimum spend and excluded transactions can materially change the actual value.
How cashback works
A cashback card applies the issuer’s stated reward rules to eligible transactions. Some cards use one flat rate across most retail spend; others pay different rates for categories such as groceries, fuel, dining, utilities or online purchases. Cashback may be credited automatically or may need to be redeemed through the bank’s app or rewards portal.
Flat-rate vs category cashback
| Structure | How it works | What to watch |
|---|---|---|
| Flat rate | One percentage across eligible spend | Exclusions and total cap |
| Category rate | Higher rate in selected categories | Merchant coding, category caps and minimum spend |
| Tiered | Rate changes after thresholds or by spend band | Complexity and marginal value |
| Promotional | Temporary boosted rate | Expiry date and post-promotion rate |
What counts as eligible spend?
Eligibility is defined by the issuer. Retail purchases commonly qualify, while cash advances, fees, finance charges, balance transfers, wallet loads, government payments or other transaction types may be excluded depending on the card. Category rewards can also depend on the merchant category code assigned to the transaction rather than the merchant’s marketing description.
Example: headline rate vs actual cashback
Illustration only: suppose a card advertises 5% cashback on groceries up to AED 100 per month. Spending AED 1,000 on qualifying groceries would generate AED 50. Spending AED 3,000 would mathematically equal AED 150, but the monthly category cap would limit the cashback to AED 100. If some transactions are coded outside the eligible grocery category, the amount could be lower.
What is a cashback cap?
A cap is the maximum cashback that can be earned during a specified period or category. A card can advertise a high percentage while still producing modest value if the cap is low. Compare the maximum realistic cashback with the annual fee and your normal spending pattern rather than comparing percentages alone.
Minimum spend and qualifying spend
Some cashback cards require a minimum monthly spend before a rate applies or before cashback can be redeemed. “Qualifying spend” can exclude certain transaction types. Read the product terms so that you understand both the threshold and the transactions that count toward it.
How to compare cashback cards
- Use your real spending categories rather than the card’s headline category mix.
- Check monthly and annual cashback caps.
- Check any minimum-spend requirement.
- Review excluded transaction types.
- Compare the annual fee and waiver rules.
- Check whether cashback expires or has redemption conditions.
- Look at non-cashback costs such as foreign transaction fees if relevant to you.
Frequently asked questions
Is cashback free money?
It is a card reward tied to eligible spending and the issuer’s terms. Fees, finance charges or unnecessary spending can easily outweigh the reward.
Why did I receive less cashback than expected?
Common reasons include caps, excluded transactions, merchant-category coding, minimum-spend conditions or transactions posting in a different reward period.
Does every purchase earn cashback?
No. Eligible transaction types are defined by the card issuer.
Is 5% cashback always better than 1%?
Not necessarily. A higher percentage may have a low category cap or strict conditions, while a lower flat rate may apply more broadly.
Can cashback expire?
It can, depending on the rewards programme. Check the issuer’s current terms and redemption rules.