One of the most attractive benefits of credit cards is their reward points. Every time you use your credit card, a few reward points are accumulated in your account. Once you have reached a certain reward point threshold, say 2,000 points, you can redeem the same against gift vouchers, merchandise or cash credit. Some banks also give you the option of converting your reward points into airline or hotel loyalty points. Credit card reward points are being increasingly used by banks to encourage cardholders to spend more. At the same time, they benefit the users by offering attractive redemption options.
How to Earn Reward Points on Credit Cards
The rate of earning credit card reward points differs from one bank to another and also on the basis of cards. The same expenses may give you 1 reward point on one card while they might earn you 5 points on a different card. Here are the different ways how you can earn reward points on your credit card:
Regular Rewards- Under your bank’s reward program, you will earn certain points for every purchase. The rate will be specified in your credit card document.
Accelerated Rewards- You may earn extra points on certain types of expenses say travel, online or grocery spends. For example, if your regular reward rate is 1 point per ₹ 100 then you may get 3x points on grocery spends. These are known as accelerated rewards. With smart use of your credit cards, you can maximize your reward earnings.
Sign-up Bonus- Some credit cards offer bonus reward points as joining benefit. You may have to reach a spending threshold within a specified period of time to earn these extra rewards. On some cards, paying the joining fee would give you the sign-up rewards of a few thousand points.
Milestone Benefit- Extra rewards may be offered to the users on reaching a certain spending threshold within a predefined period. For example, you may receive 10,000 bonus points on spending ₹ 1 Lakh in an anniversary year.
Renewal Points- You may get bonus points when you pay the renewal fee on your credit card.
Add-on Cards- When you get supplementary credit cards, the rewards earned on them are also routed towards the primary card.
Reward Points on Top Credit Cards
|Credit Card||Reward Points at Basic Rate||Accelerated Rewards|
|2 Reward points for every ₹ 150 spent||3X Rewards on Dining, Hotels and Telecom for first year|
|4 Reward Points for every ₹ 150 spent||N/A|
American Express Everyday Spend Gold Credit Card
|1 Membership Rewards Point for every ₹ 50 spent||10X and 5X Membership Rewards Points at select merchants|
|2 Reward Points on every ₹ 100 spent||5X Reward Points on Dining, Groceries, Departmental stores and Movies; 10X points on standing instructions of Utility Bills payments|
|ICICI Bank Platinum Chip Credit Card||2 PAYBACK Points on every ₹ 100 spent for all retail purchases except fuel||N/A|
|American Express Platinum Reserve Credit Card||1 Membership Rewards Point for every ₹ 50 spent except for expenses made on fuel, insurance, utilities and cash transactions||Get up to 20 Bonus Membership Rewards Points partner outlets.|
|4 Reward Points for every ₹ 150 spent||N/A|
|SBI Card Elite||2 Reward Points on every ₹ 100 spent||5X Reward Points on Dining, Groceries, Departmental stores and Movies|
|4 Miles for every ₹ 100 spent||10 Miles per ₹ 100 spent on all airline transactions|
|Standard Chartered Manhattan Platinum Credit Card||3 Reward Points for every ₹ 100 spent||N/A|
How to Redeem Reward Points
There are various ways in which you can redeem your accumulated reward points. The most common ways of reward redemption are listed below:
Online – You can visit the net banking facility of your credit card issuer. Here you can find the option of reward redemption. Here you can find the various options for reward redemption such as vouchers, merchandise or cash credit (if applicable). You can select the one of your choice and place order. If you have chosen a voucher, the code will be sent to your registered mobile number and email ID. In case of merchandise, the item will be delivered to your address. If you wish to change the delivery address, you would have to call the customer care of your bank.
Offline (By Post) – You can also walk into the nearest branch and ask for a reward redemption form. You are required to fill the same and submit it at the same branch or post it to the credit card division. It would take 1-15 days for the rewards to get redeemed and the item being sent to your address.
Customer Care- Another option of reward redemption is to call the customer care department of your bank. The executive will tell you the options against which you can redeem the points and will guide you through the whole process. You may be required to download the form and post the same. The charges for reward redemption will be charged to your credit card.
Co-branded Stores- This is usually helpful when you have a co-branded card. Some banks allow their cardholders to purchase items at partner stores and pay for the same using their accumulated reward points.
What benefits can you get against your reward points
Various types of rewards are offered while customers redeem their points. Not every card company offers all of these and the offer is guided by each company’s protocol. Some of the widely popular rewards are:
Vouchers – Reward points can be redeemed to get vouchers of different retails and businesses with whom the card company is associated with. Sometimes vouchers can be utilized for online purchase as well.
Cash – Some banks give the option to convert the reward points into cash which is credited to the card account. This could be used to pay out any outstanding balance and also saves money for card holders.
Merchandise from Rewards Catalogue – Each bank will have catalogue with specific list of products and services with the mention of reward points to be redeemed for each of those. Some of the catalogue items are: clothes, accessories, foot wares, crockeries, books, stationaries, travel merchandise, electronic gadgets, beauty products and services like salon and spa, movie tickets and so on.
Flyer Miles – Customers can directly earn air miles while making purchase or they can convert the reward points into flyer miles. These mile points could be redeemed for air ticket purchase or to get discount on air tickets.
Donations – Reward points could be redeemed as donation to the charities listed with banks. Customers can select the charities they want to donate and reward points will be converted and equivalent cash will be given to the charity.
Miscellaneous Redemption – Customers can redeem their reward points for buying fuels, enrolling in some courses, hotel bookings and buying travel packages. Reward points could be redeemed to certain shops directly while purchasing in case the business is partnered with issuing bank.
How to Make the Most of Credit Card Reward Points
Reward points are most useful when you use them wisely. So, here are a few ways how you can make the most of your credit card rewards program:
Cash is the King – It is best if the card offers reward redemption in terms of cash or cash back to the card balance or towards purchase. This is the most popular and useful utilization of reward points.
Align the rewards with your interest – Be it air mile, fuel, service or merchandise, redeem your reward points for the things that fulfill your interest and requirement.
Choose the cards that offer best rewards – Before opting for a credit card, consider the reward points that the card offers and compare several of such cards. A moderate annual fee for card is good enough to offset the rewards earned.
Focus on a single card – Try to use one card for all purchases to maximize the reward point’s benefits and avail it more often. Cards which are less rewarding could be stopped using after careful consideration.
Reward Points come with Expiry Date – Make sure to check the expiry date so that points could be redeemed in a timely way. If a single card is used then more reward points get accumulated often and those could be redeemed more effectively within the expiry date.
In addition to these, you should periodically check the terms and conditions of the reward points since banks modify those sometimes. Make sure to pay credit card dues in time so that penalties and late fees are not imposed on the card. This will maximize the benefits of reward points.