Ketul H Shah is a Chartered Accountant and an MBA. He has specialised in Banking, Finance and Insurance. Ketul is passionate about consumer rights and is actively offering professional advice to consumer-related matters. His mantra: "To help customers find a solution to their problems."
REMEMBER that sinking feeling when you walk out of a mall only to realise that you have blown up a bomb? Blame it on the marketing guys! They make it all sound so enticing.These guys spend hours holed up in their cubicles thinking of new and innovative ways to make you part with your moolah. But we believe that forewarned is forearmed. Watch out for these 'schemes'!Dangerous liaisonsThe bank offers cash-back on the purchase or usage of credit cards at some specific companies/retail outlets with which they have a tie-up. Your monthly statement will reflect the cash-back on the amount you have spent. You can benefit if you use the correct card and buy specified goods or services in line with terms and conditions. The discount is actually borne by the tie up partner and the bank as per an agreement.Minimum is maximumThis offer is available on any goods purchased i.e. there is no tie-up with any retail outlet. The customers will benefit if they fulfill certain specified conditions such as the minimum amount you that should spend to qualify for a cash back.
Point scamSome banks offer reward points on usage of their credit card. The reward points or cash (depending on what you choose) can be redeemed against various credit card charges. This is an indirect way of extending the cash-back offer to the customer.Remember one thing, no matter how its presented, cash-backs will always be subject to certain terms and conditions.
For eg:1. Minimum purchase of Rs 2,000 per card swipe: Banks earn a commission between 0.5 and 2.5 per cent, per swipe from merchants for every swipe you make.
2. Purchase through particular card swipe machines: The banks ensure that the credit card gets swiped on their machine. The cost saved is shared as cash-back reward with the customers.
3. Exclusion of particular items: For example, items with a very low margin are not considered valid for cash-back.
4. Variable cash-back based on lucky number: If the last four digits of your credit card is 1234 then the bank would offer, say, 50% cash-back on your purchase. This has an element of luck and people love to give it a try.
5. No exchange: Cannot be used in conjunction with any ongoing offer at a retail outlet.
6. For a limited period, only: Banks believe that if a customer is given more time, he can plan his shopping to a overspending.A shopping thumb rule: be wary of any offer that makes you spend more!
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