More and more banks issue plastic cards with cashback. How to make the right choice?
In the wake of the consumer boom, banks are increasingly offering customers plastic cards with a cashback function, which provides for a return of 0.5–3% of the amount of purchases paid by the card. Such credit cards appeared in the United States in the 1980s, but reached Russia only in 2007. Now, cards with cashback are issued by two dozen banks, including regional ones, and the maximum percentage of return can be obtained not only with premium cards. Two-thirds of credit cards are credit, the rest are debit or settlement cards with interest on the balance. Forbes figured out whether it is profitable for customers to get such a bank card.
The generosity of banks has limits, since the cashback card holder receives a reward from the commission that the issuing bank receives from the acquiring bank serving the merchant. The size of the commission depends on the profile of the outlet and averages 1.5%. Banks can offer higher remuneration – up to 10% of purchases, but only in certain shopping categories – “restaurants”, “travels”, “gas stations”, etc.
As a rule, banks are ready to offer the best conditions to the most affluent customers. Indeed, the stimulation of retail card transactions gives the best results among those customers who already regularly use a payment card for goods, works and services. For them, not only the added value in the form of cashback is important, but also the status of the plastic, says Alexander Borodkin, head of the VTB24 plastic card department. This bank returns 0.5% of the purchase amount to plastic holders with Standard status, customers with a Gold card receive 1%. At the same time, every tenth customer selects a card with the cashback option.
Banks specializing in consumer lending, highly profitable for banks, are willing to pay higher interest on purchases. For example, HCF Bank returns 2-3% on Standard and Gold cards (every third client chooses a card with the cashback option).
What should I pay attention to when choosing a card with cashback? The first is annual maintenance fees. As a rule, this commission is higher than that of ordinary bank cards with the same status. True, in some cases this defect is correctable. For example, from the second year of service, Russian Standard Bank may not pay a fee if the turnover on the Bank in your Gold / Platinum card exceeds 300,000/600,000 rubles. After the first purchase, Citibank will transfer a welcome bonus of 300 rubles to the card (before deducting personal income tax), which compensates the client for the difference in commissions. At HCF Bank, service fees are charged on a monthly basis, and if there were no transactions, then you do not need to pay. TCS Bank does not require this fee from those who open a deposit of at least 30,000 rubles.
Another trick is the 13 percent cashback payout tax. Previously, all banks as tax agents paid remuneration to the card minus tax, guided by a letter from the Ministry of Finance dated March 28, 2008. In April 2012, the Ministry of Finance issued a new letter of clarification in which it equated bonuses and cash rewards on the card to a discount and exempted from tax. Now, some banks do not levy a tax, for example, Avangard and VTB24. And many banks are reinsured and still automatically deduct the tax, citing the need for additional clarifications from the Ministry of Finance.
Another circumstance that may deprive the consumer of the expected benefits is a change in conditions. Often, banks unilaterally change the amount of interest and often reduce it. Some banks even pay cash temporarily, as part of the action. It may happen that because of this, the consumer does not even pay back the annual service fee. The behavior of banks is understandable: loyalty programs with accrual of points and bonuses are more beneficial for them, since not all customers use them, and the use of such a reward is delayed.
Banks do not charge cashback on all transactions. The fee is not paid when withdrawing cash from an ATM, replenishing electronic wallets, payments in favor of financial institutions, or purchasing lottery tickets. In addition, not all banks return money from purchases made on the Internet. If you have overdue credit card payments, you will also have to forget about the fee. At the same time, the bank does not need any reasons at all to refuse the client to accrue cashback, as a rule, such a condition is provided for in the contract.
Compared to some co-branded cards, a cashback bonus may not be that attractive. Take for example the Visa Gold Aeroflot-Bonus card of Sberbank. To accumulate 50,000 miles on a business class ticket from Moscow to Paris and back, you will need to spend 1 million rubles (fare 1.5 miles for 30 rubles). If you pay in cash, the same flight of the airline will cost more than 40,000 rubles per ticket, that is, when you return to the card 3%, you will have to spend 2.667 million rubles.