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Best ways to finance your big Indian family holiday

December 19, 2022 / 12:55 PM IST
On average, credit cards have a rewards rate of about 3-4 percent, though this can go up to 10 percent or more in certain categories, or during promotions and sales. (Photo: Rupixen via Unsplash)

On average, credit cards have a rewards rate of about 3-4 percent, though this can go up to 10 percent or more in certain categories, or during promotions and sales. (Photo: Rupixen via Unsplash)

In 2019, the year before Covid-19 hit the world, I travelled by air more than your average flier. Internationally, I went to New York once to visit my sister, to Dubai twice to visit friends, and I also did short vacation runs to Sri Lanka and Thailand. Within India, I did 23 trips to Bengaluru, four trips to Chennai, and one to Guwahati. In all, my tickets cost nearly Rs 5 lakh, but here’s the kicker - I didn’t spend a single rupee on them, thanks to a judicious use of the reward points on my credit cards. How did I achieve this? Allow me to let you in on a not-so-secret trick.

While most people are aware of the negative aspects of credit card spending, many people do not pay as close attention to the potential benefits that credit cards provide. Credit card companies usually incentivise you to spend money, by offering various benefits. These can be broadly divided into two categories - cashbacks and reward points or miles.

We will be talking about rewards cards today - these cards give you rewards in the form of points or miles, which function like a currency and can be redeemed for various goods and services. In addition, a rewards card usually gives you a welcome bonus as well as a renewal bonus every year.

On average, credit cards have a rewards rate of about 3-4 percent, though this can go up to 10 percent or more in certain categories, or during promotions and sales. Thus, a spend of Rs 1 lakh will give you a minimum return of Rs 3,000 (going up to Rs 10,000 or more in the case of promotions) points. It is important to note here that the value of each point is not fixed and can vary depending on the type of card and the type of redemption you are making.