Thirty-five year old Shagun Saxena was out shopping at Mumbai's famous shopping arcade, High Street Phoenix.

What prompted her to loosen the purse strings a bit more this Diwali was an HSBC hoarding that Shagun saw on her way to the mall, announcing a 10 per cent cash back offer on all purchases made between 15 September and 15 November 2005 in listed categories, which included apparel, jewellery, electronics, consumer durables, et al.

What Shagun failed to notice was the maximum cash back limit capped at Rs 1,000. So no matter how much purchases she would make, she would earn cash back only for expenditures undertaken up to Rs 10,000 i.e. 10 per cent.

So while Shagun expected a cash back of Rs 4,000 on the Rs 40,000 worth purchases she made, the actual amount that she would get back is only Rs 1,000. So the first lesson before shopping in haste is to understand that the devil is in the details. Blaming the bank is patently unfair.

How can you avoid making such a blunder?

First of all, try and figure out whether the offer that is advertised on every billboard, newspaper and television channel you come across, is available on the card you hold.

Many banks offer this privilege to only selected card-holder categories. Some of them even make it mandatory for card-holders to register themselves via a telephone call for this offer.

The other hitch is the limited offer period. Most of these offers are on hold only during the so-called festive season, i.e. till the end of November -mid-December.

And then there are hidden costs. Others like Citibank ask customers, wanting to avail of the cash back programme, to apply for a separate cash back card. Anupama Hariharan, for example, never thought what would then happen to the cards she already held while applying afresh for the Citibank Cash Back Card?

Even if she stopped spending on them and used only the cash back cards, she had to make annual payments towards maintenance charges on them.

Also the cash back offers sometimes can make you purchase much more than what you had originally intended. So availing the cash back can sometimes mean that you end up paying more.

Pune-based small-time businessman Aiman Khan wanted to buy his daughter a new set of clothes for Eid. He spotted a beautiful salwar-kurta set for Rs 750, but still didn't buy it. Why? because he wanted one that would cost at least Rs 1,000 to be eligible for the cash back offer.

Private sector ICICI Bank [Get Quote] has announced a scheme of 10 per cent cash back for bills paid via the savings bank account between October-December. Seems rewarding at the outset, but a closer look may force you to take a relook.

The maximum amount offered as cash-back here is again capped at Rs 1,000, although the scheme also suggests that the maximum amount of cashback paid will be 10 per cent of the total amount of bills paid during each period.

So even if you pay bills worth Rs 25,000 expecting to get cash back worth Rs 2,500, you would actually receive only Rs 1,000.

In a nutshell, you should check the period of validity on the cash back offer, the minimum and maximum limits and the cards on which the offers are available. So before your banker sends you a new promotional offer, be ready with your questions and queries.

Penny wise

• Check if the card falls under the offer category
• If one needs to register for earning cash back, via a phone call or an online registration form
• Should one apply for a new card meant only for cash back
• Minimum expenditure needed to qualify for the offer
• Maximum amount one can earn by way of cash back; The period during which the offer is valid
• Does the offer apply at outlets having point-of-sale terminals, or should the purchases be made only where the card-issuing bank has installed such terminals?
• The products categories, which are eligible for the offer
• Should cash back be collected at bank branches, redeem them at the POS outlets, or will the amount get credited automatically in the card-holder's savings account.