You know these cards, debit and credit, that have cashback in bonuses or special offers. Sometimes the cashback percentage is super high. How does that even work? Why would banks hand out money just like that?

I try not to pay too much attention to cashback, because for me it kinda works the opposite way. Instead of saving, I start spending more, thinking I’ll get it all back through cashback.

It’s probably a long and complicated explanation, but in short, the bank doesn’t pay you cashback out of its own pocket. It comes from commissions, interest from people in debt, and so on. At the same time cashback is a huge tool for banks, at least in attracting new clients, which only makes it easier for the bank to pay good cashback. Cashback on my credit card in this bank https://theroarbank.in/en/cashback is actually 20%, and it works for any purchases. There’s a monthly limit, of course, but still 2500 rupees just like that is worth it.