Credit cards are often seen as a means to make purchases but they hold untapped potential as a powerful financial tool. When used responsibly, credit cards can significantly enhance your purchasing experience, providing not just convenience in spending but also a range of exciting rewards and benefits. By understanding how to avail of these credit card benefits, you can unlock the full potential of your card, converting your everyday purchases into valuable rewards.
How to earn rewards with a credit card
The rewards you earn largely depend on the type of credit card you select. Credit card rewards may differ based on the value of your transactions, where you spend your money, and how often you use your credit card.
To maximise your credit card reward points, it’s essential to choose the right card. You can do this by comparing different options and selecting the one that offers the maximum benefits according to your spending habits.
Moneycontrol displays credit card offers from top partner banks, to eligible users based on their credit profile. Users can view these offers directly on their credit score dashboard, enabling them to choose the best rewards tailored to their needs.
Types of credit card rewards
Here are some common types of credit card rewards you may come across:
Cashback
With cashback credit cards, you earn a percentage of what you spend, usually ranging from 1% to 5% or even more in some cases. The cashback percentage varies depending on the card and the spending category. E.g.some cards offer cashback on specific spending categories such as groceries, dining, online shopping, etc.
Advantages:
- Easy to use the rewards earned.
- You can reduce your expenses as cashback can be directly used for paying off your credit card bill or spending on other needs.
Most rewards programmes offer a pre-fixed number or percentage of credit card reward points every time you spend using your credit card. These points can be redeemed for various purchases, including merchandise, gift cards, travel and more. While some banks offer a range of credit cards that provide 1-2.5 reward points for every ₹100-₹150 spent, some cards increase the reward points for spends made on special occasions or during promotional times.
Advantages:
- You can redeem credit card reward points for a wide range of products and services.
- You can earn bonus points for spending in certain categories or during specific times.
Travel Miles
Certain credit cards allow you to earn higher rewards or travel miles for your travel related transactions. These can be redeemed for purchasing flight tickets, hotel stays and other travel-related expenses such as car rentals or even shopping. Cards that focus on travel often come with additional perks, like travel insurance, discount vouchers and lounge access.
Advantages
- You can get access to exclusive travel benefits and privileges.
- Travel miles can be redeemed for airfare and other travel-related expenses, providing you with significant savings and reducing the overall cost of your tickets.
Some credit cards offer special rewards or discounts when you buy from partner brands.
Advantages
- These credit cards offer customised rewards that align with your spending preferences.
- You can get access to unique deals and discounts in specific categories.
Several credit cards come with the milestone benefits. The card issuers provide bonus reward points, or offers, on reaching certain spending milestones. These milestones are based on spending limits in a certain period or in a financial year. For example, if you spend Rs 5 lakh in a year, you may get a bonus reward of 5,000 points over and above the regular reward points on purchases. The card issuers take into account all the payments or spendings in a predefined period to decide the milestone benefits.
ALSO READ: Credit Card: Key factors to consider to choose the best credit card
Which credit card rewards best suit your needs?
Choosing the best credit card rewards depends on various factors. Here are some considerations to help you decide:
- Analyse your spending: Review your monthly expenses to identify where you spend the most. This will help you determine which type of rewards card offers the best benefits based on your spending habits. For instance, if you frequently dine out, a card offering restaurant-related rewards would be advantageous.
- Consider your reward preferences: Do you prefer straightforward cash rewards or do you enjoy the flexibility of redeeming points for travel or products? Do you travel frequently and have access to miles and other travel benefits? Select a credit card that fits your spending habits and way of life.
- Evaluate the card’s terms: Look at the credit card’s annual fee and other charges compared to the benefits or rewards. Some cards provide better rewards for specific categories, which can be beneficial if your spending aligns well. For example, if you find yourself frequently booking flights, a card with travel miles might provide the best value for you. At the same time, many cards offer lucrative rewards for premium categories but it may come with higher fees.
- Evaluate user experience: When choosing a credit card for rewards, it’s important to evaluate the overall user experience it offers. A well-designed and smooth mobile app can significantly enhance your experience by providing easy access to your rewards balance, transaction history and promotional offers. Look for cards that simplify the redemption process, allowing you to easily exchange points for travel, cashback or gift cards without hidden fees or complicated steps. Additionally, a strong customer service is essential — ensure the card issuer offers responsive support via multiple channels, including phone, chat and email, to address any queries or issues that may arise.
To conclude, credit card rewards can significantly improve the value of your spending, providing benefits that go beyond mere convenience. Whether you prefer cashback, travel miles, or specialised points, understanding the different types of rewards can help you choose the right card for your needs.
Moneycontrol allows users to compare the best credit card offers from various banks to find the best options. By taking the time to analyse your spending habits and preferences, you can maximise your credit card benefits and enjoy the rewards that come with responsible card usage.
Disclaimer
This piece/article was written by an external partner and does not reflect the work of Moneycontrol's editorial team. It may include references to products and services offered by Moneycontrol.Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
