How credit card reward points function Indian credit card issuers offer reward points as incentives for every purchase made. The points are accumulated over time and are redeemable in different forms depending on the issuing bank. However, the redeem value of a point varies from bank to bank and is not equally rewarding with all options of redemption. Learning how to do this is what makes you get the most out of your spending.
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Cashback redemption of reward points One of the simplest ways of redeeming points is to cashback points. All banks allow you to offset the value of points directly against your credit card bills. For example, 4 reward points may be worth ₹1, depending on the bank's policy. The cashback scheme is most suitable for those who wish to offset outstanding dues and not convert into merchandise.
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Redeeming points for shopping and vouchers All credit card issuers have an association with online and offline merchants so that customers can use points for shopping. Merchandise, gift vouchers, or e-vouchers for retailers like Amazon, Flipkart, or lifestyle retailers can be bought. The conversion rate may vary, and during festivals, banks also have promotional offers with a higher value, so the option will be lucrative to consumers.
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Using points for booking travel Travel cards typically allow you to redeem reward points for flight, hotel, or holiday package reservations. Some even allow you to transfer points to airline loyalty programs such as Air India's Flying Returns or Singapore Airlines' KrisFlyer. This can be extremely useful if you travel a lot, as you receive significant discounts on ticket fares or upgrades.
Billing utility bills and EMIs with points A few banks in India even provide redemption of points towards paying utility bills, recharges, or even converting purchases into EMIs. While the conversion value is normally lower than cashback or travel, it is helpful if you have to pay small, recurring outflows.
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Things to watch out for Reward points usually come with two- to three-year validity periods. If not claimed in time, they lapse. Banks also charge a redemption fee ranging from ₹50 to ₹100 per request. Reward points may also not be awarded on every transaction—fuel, wallet recharges, and cash withdrawals are usual exclusions. It pays to read your card's reward policy to ensure you don't lose out on rewards.
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Maximizing your reward points For Indian consumers, the smartest strategy is to use points for cashback or travel redemptions, which are likely to yield higher value than products. Keeping track of expiry dates and redeeming during festive offers will give the maximum returns. Lastly, reward points should be used to augment wise usage of credit cards rather than encouraging excessive consumption.
