Credit card reward points explained: How to actually benefit from them

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Credit cards are everywhere, and most of us love swiping them for convenience. But when the monthly bill comes, the one thing that makes it feel a little lighter is those reward points you’ve been racking up. The trouble is, a lot of people don’t really know how to make the most of them. Here’s a simple guide to actually benefit from the points you earn.

How reward points work

Think of reward points as cashback in disguise. Every time you swipe your card, the bank gives you a certain number of points based on your spend. The rate differs—groceries might give you one point per Rs 100 spent, while dining or fuel could give you two or three. Premium cards may even give bonus points for categories like travel or shopping.

Redeeming without wasting

Here’s where most cardholders go wrong. They let points expire or redeem them for items in the bank’s catalogue that aren’t worth much. Always check the conversion value—redeeming for gift vouchers or statement credit usually gives you more bang for your buck than picking a toaster from the catalogue. Some cards even let you convert points into air miles, which can be a sweet deal if you travel often.

The fine print you should know

Banks aren’t giving these points for free. Annual fees, interest charges, and restrictions on redemption can eat into your benefits. Some points expire in 2-3 years, while others stay for a lifetime—so read the terms. Also, avoid overspending just to “earn” points. Paying 40 percent interest on a revolving balance wipes out any benefit you’d get from rewards.

When points really add up

Reward points work best if you’re disciplined—pay your bill in full every month and use your card for categories where you earn the highest bonus. For example, if your card gives 5X points on dining, make it the one you swipe at restaurants. Over time, this can translate into free flight tickets, hotel stays, or serious savings on shopping.

The bottom line

Reward points are like sprinkles on a cake—they’re not the main reason to use a credit card, but they definitely make it sweeter if used wisely. Treat them as a bonus for spending you were going to do anyway, not an excuse to splurge. If you stay disciplined, those little points can actually take you places—literally.