Five credit cards that offer the best cashback programs if you spend ₹1 lakh

• Cashback is when consumers get a percentage of the transaction amount credited back to their account.
• Depending on the provider, many credit cards give a certain percentage cashback on each purchase.
• Choosing a credit card that aligns with your spending habits and preferences helps maximise benefits.

Credit cards come with several features to make them attractive. One of them is cashback on expenses. The concept of cashback became mainstream in 1986 when Discover Financial Services, a division of Morgan Stanley, launched a credit card which had a cashback bonus on certain purchases.

“Cashback is when consumers make purchases using their credit cards, and a percentage of the transaction amount is credited to their account. It's a transparent way for consumers to enjoy real benefits based on their spending. Depending on the provider, every card gives a certain percentage cashback on each purchase,” says Gaurav Chopra, founder and CEO of IndiaLends.

In most cases the cashback is credited to your credit card account and is then adjusted with the next bill.

Here are five credit cards that are offering healthy cashbacks, keeping in mind that one is approximately going to spend a lakh.

Cashback SBI Credit Card

This card offers 5% cashback on online spends and 1% cashback on offline spends. If you spend ₹20,000 online and the rest offline, the annual cashback received is ₹21,600.

HDFC Millenia Credit Card

This card offers a 5% cashback on Amazon, BookMyShow, Cult.fit, Flipkart, Myntra, Sony LIV, Swiggy, Tata CLiQ, Uber and Zomato and a 1% cashback on other spends. Assuming a breakup of ₹20,000 and ₹80,000 every month, the annual cashback comes to ₹21,600.

Axis Bank Ace Credit Card

It offers 5% cashback on bill payments, 4% cashback on Swiggy , Zomato and Ola and 2% cashback on all other spends.

Let us assume a spend of ₹10,000 on bill payments and categories with 4% cashback and , and ₹90,000 on other spends every month, cashback during the year comes to ₹20,400.

ICICI Amazon Pay Credit Card

For prime members this card offers 5% cashback on spends on Amazon India, 2% cashback on Amazon Pay payments, 1% cashback on other expenses.

Assuming you spend ₹10,000 on Amazon India, and ₹20,000 and ₹70,000 through the other means, it results in a cashback of ₹19,200 annually.

Standard Chartered Smart Credit Card

The card offers 2% cashback on online spends and 1% on all other spends. Assuming you spend ₹50,000 online and ₹50,000 otherwise every month, the cashback for the entire year is ₹18,000.

Make the right choice

Many credit cards in India offer enhanced rewards or cashback for specific categories such as dining, groceries, fuel, or online shopping.

“Tailor your spending to maximise rewards in these categories. Choose a credit card that aligns with your spending habits and preferences to maximise the benefits,” says Adhil Shetty, CEO, BankBazaar, a financial marketplace.

For example, if your card provides higher cashback on fuel, use it for fuel purchases. If it offers extra rewards on online shopping, make your online purchases using that card. For example, you can order your groceries online instead of buying them from a store.

However, to truly benefit from cashback and rewards, it's essential to pay your credit card bill in full and on time. Late payments can result in hefty interest charges that may outweigh the value of any rewards earned.