Credit Cards provide different types of benefits ranging from complimentary memberships to exclusive discounts on popular brands, depending on the type of card, But perhaps the most common benefit on almost all credit cards is the potential to earn reward points every time you use your card. Reward points are nothing but returns on the money you spend using your credit card. The more you spend the more reward points you will collect.
One good reason to use your credit card regularly is to reap the rewards. Most of the credit cards have a reward points system while some give value back to the users in the form of air miles or cashback. Cashback is undoubtedly the favorite category among people because you simply get paid a percentage- typically from 1% to 2%, and even up to 5%- of your eligible purchases at the end of your statement period. Air miles, on the other hand, can be used at the time of booking flight tickets or hotels. General reward points are the most versatile when it comes to redemption as they can be redeemed against gift vouchers, merchandise, coupons, air miles or in some cases, even cashback.
So, if you have just started using a credit card, here is all you need to know about the credit card rewards program and you can get the most out of it.
How many Reward Points will you earn?
The value of credit card reward points will vary depending on your card variant and the purchase you make.
For example, HDFC MoneyBack Credit Card offers 2 reward points for every Rs. 150 spend and 4 reward points per Rs. 150 for online spends. So, if you spend Rs. 1,500 offline, you will get 20 HDFC credit card reward points but you will get 40 points for spending the same amount online.
Usually, credit cards that carry a higher annual fee offer higher reward points than basic cards with low or no annual fee. Take HDFC Regalia Credit Card (Annual Fee: Rs. 2,500) for example. It offers 4 points for every Rs. 150 spent which is double the base rate of HDFC Moneyback (Annual Fee: Rs 500).
The table below shows the reward rate on some of the best credit cards in India:
|Credit Card||Annual Fee||Reward Points||Accelerated Rewards|
|HSBC Visa Platinum Credit Card||Nil||2 reward points for every Rs. 150 spent||3X Rewards on Dining, Hotels and Telecom for first year|
|HDFC Regalia Credit Card||Rs. 2,500||4 reward points for every Rs. 150 spent||NA|
|SBI Card PRIME||Rs. 2,999||2 reward points for every Rs. 100 spent||5X reward points on Dining, Groceries, Departmental stores and Movies; 10X points on standing instructions of Utility Bills payment|
|American Express Platinum Reserve Credit Card||Rs. 10,000||1 membership rewards point for every Rs. 50 spent except for expenses made on fuel, insurance, utilities and cash transactions||Up to 20 bonus membership rewards points partner outlets|
|SBI Card ELITE||Rs. 4,999||2 reward points on every Rs. 100 spent||5X reward points on Dining, Groceries, Departmental stores and Movies|
|Standard Chartered Manhattan Platinum Credit Card||Rs. 999||3 reward points for every Rs. 100 spent||NA|
|HDFC MoneyBack Credit Card||Rs. 500||2 reward points for every Rs. 150 spent||2X reward points on online spends|
|Citibank Rewards Credit Card||Rs. 1,000||1 reward point for every Rs.125 spent||10X more reward points at apparel and departmental stores|
|SBI SimplySave Credit Card||Rs. 499||1 reward point per Rs. 100 spent||10X rewards on dining, movies and groceries|
|Standard Chartered Platinum Rewards Credit Card||Rs. 250||1 reward point for every Rs. 150 spent||5 Reward Points for every Rs.150 spent on dining and fuel|
How to Earn Rewards Points on Credit Cards?
The rate of earning credit card rewards points differs from one bank to another and also from one card variant to another. Where a particular purchase on one card may give you 1 reward point, the same might let you earn 5 points from some other credit card. You will also get rewards in several other ways, as shown below:
|Type||Description||How to Earn Points?|
|Welcome Points||Some credit cards offer bonus reward points as a joining benefit||After the card has been issued, sometimes with a spending condition within a few days of activation|
|Regular points||Under your bank’s reward program, you will earn certain points for every purchase you make||After the purchase is made|
|Accelerated Points||You may earn extra points on certain types of expenses such as travel, online shopping etc depending on the card type.||By spending on special categories (differs from card to card)|
|High-value Purchase||Spending on purchases that are of large value such as jewelry, travel bookings etc.||By spending on expensive items or costly travel bookings|
|International Points||Some credit cards earn extra points for spending on the card while you are abroad||By spending on your card overseas|
|Bonus Points||You can earn bonus points when you reach a certain spending limit on your card on your credit card||By spending over and above the required limit|
|Supplementary Cards||Any points earned for spends on add-on credit cards will be credited to the main credit card’s rewards account||By spending on the supplementary card|
|Renewal Points||You may also get bonus points when you pay the renewal fee on your credit card||By renewing your credit card|
Value of Credit Card Reward Points
If your credit card bill shows 2,000 reward points against purchases made in the past 6 months, what is the value of these points in monetary terms?
One reward point does not equal one rupee in the majority of the cases. In fact, it is much less than that (20-30 paise). However, the value differs from issuer to issuer and card to card. It can be as low as 10 paise per point and as high as Re 1 per point. On one side where the value of 1 RBL Credit Card Reward Points is 25 paise, the value of 1 HDFC Credit Card Reward Points is 20 paise for Moneyback and 50 paise for Regalia. SBI Credit Card Reward Points and ICICI Bank Credit Card Reward Points also hold 25 paise value for one point earned for most of their variants.
One way of calculating the value of the reward point is by checking the price of the gift available against redemption. For example, a credit card company is offering a Rs. 1,000 bag against 5,000 reward points. Thus, each reward point is worth 20 paise.
How to make the most of your Credit Card Reward Points
1. PICK THE RIGHT CREDIT CARD
The right credit card would be the one that offers rewards on the purchases you make the most. Some cards offer extra rewards on dining and entertainment purchases, for example, while others give you bonus rewards when you purchase airline tickets.
HDFC Regalia Credit Card offers 4 Reward Points every Rs. 150 spent on all retail spends including utility bills, insurance, education, rent, etc. while SBI SimplyCLICK Credit Card offers 5 points per Rs. 100 on all online spends and 10 points per Rs. 100 on making online spends with exclusive partners of SBI Card.
You also have to think about the kinds of rewards you want. If you enjoy taking lots of trips, a card that gives extra rewards on travel makes the most sense. Cashback credit cards are popular because you can turn the rewards into just about anything.
2. TAKE ADVANTAGE OF THE WELCOME BONUS
Many card issuers offer sign-up bonuses to attract new customers into joining. Typically they offer large point or mile bonuses to those who spend over a certain amount within the first three months of card setup. For example, with YES First Exclusive Credit Card, if you make the first transaction within 90 days of card issuance, you will get 50,000 bonus reward points. However, you shouldn’t spend this much just for the sake of earning rewards. Consider your affordability and then proceed.
3. CHECK FOR LIMITED-TIME OFFERS
The majority of credit card issuers often run limited-time offers that can provide accelerated rewards rates. Recently many issuers provided bonus rewards on groceries and food delivery to meet consumers’ increased spending. You may even receive targeted offers that allow you to earn extra rewards for a certain time period.
It’s advisable to keep a track of such offers and take advantage of the benefits since they often run for a short amount of time, but can help you optimize rewards.
4. COMBINE POINTS
If you have multiple credit cards from the same card issuer, there is a good chance of combining rewards. In this way, you can pool points and redeem them for a bigger reward. Typically, you can only transfer or combine rewards with cards from the same issuer and between the same type of cards, such as a reward point card to another rewards point card.
For instance, American Express allows you to transfer rewards between cards that earn Membership Rewards points.
5. USE THE CARD FOR YOUR EVERYDAY PURCHASES
You probably use your credit cards when you shop online for security, but it’s also a good idea to use them for everyday purchases, such as fuel and groceries, even if you have cash in hand. In this way, you can increase your rewards-earning opportunities without having to buy extra things that you don’t need.
6. USE YOUR CREDIT CARD ISSUER’S SPECIFIC SHOPPING PORTAL
The majority of the popular credit card issuers offer online shopping portals to popular retailers. You can earn bonus rewards if you access these retailers’ websites through the card issuer’s portal. In some cases, you can get up to 5% cashback whereas otherwise, you might have only earned 1% on your purchase. The popular online shopping portals are-
- HDFC Bank Credit Card– Smartbuy and MyRewardz
- ICICI Bank Credit Card– Payback Official page
- Axis Bank Credit Card– Edge Rewards Official Page
- SBI Credit Card– Online SBI and Rewardz SBI
- RBL Bank Credit Card– RBL Rewards Official Page
7. CHECK THE EXPIRATION DATES
Some credit card users collect a host of Reward Points and redeem them all at once. This way of redeeming points is typically useful with frequent flier miles, hotel points or to buy a big-ticket item on your premium credit card but it is to be noted that most of the reward points are not for lifetime. They are usually valid for 2-3 years.
You should keep a close watch on your Reward Points validity and try to redeem them before they expire. Your card issuer will also remind you of the same in monthly statements stating the number of reward points that are about to expire.
How to Redeem Credit Card Reward Points?
There are various ways in which you can redeem your accumulated reward points including using your points to shop directly on popular retailers’ websites, statement credits, cashback, or gift cards and more. These different redemption options typically assign different values to your points. Using your points to shop directly on other sites usually means you must spend more points than you would have had to if you’d used your points to buy a gift card to the same store.
It is advised to compare your redemption options to figure out which offers you the best value for your points before you spend them. For example, HDFC Credit Card reward points redemption online using NetBanking is one of the best ways to redeem your accumulated HDFC reward points. The most common ways of reward redemption are listed below-
You can visit the net banking facility of your credit card issuer. Use your User ID and Password to log in. You can find the various options for reward redemption such as vouchers, merchandise or cash credit (if applicable). You can select any one of your choice and place an 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 registered address.
|2. Offline via Post|
You can also visit the nearest bank branch and ask for a reward redemption form. You will be required to fill the same and submit it or post it to the credit card division. It would take 1-15 days for the points redemption. Post that your order will be delivered to your registered address.
|3. 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 email the same. Any handling charges will be charged to your credit card.
|4. 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.
|5. Miles |
Several banks partner with various travel booking portals or airlines to provide users with travel-related rewards. In some cases, the users can earn air miles directly from the purchases made using the card, while in others they can get their reward points converted to air miles. These miles can later be redeemed for payment of flight tickets or for discounts on flight tickets.
Another option when it comes to the redemption of reward points is cashback. Instead of getting points for a purchase, you will receive a certain part of your purchase amount back as cashback.
There are a few other options that banks offer users as a part of their reward redemption program. These include points on fuel purchase, availing specialized services, entertainment-related purchases. Additionally, cardholders can also redeem their reward points in exchange for discounts on vacation packages, hotel bookings, etc. If the bank has partnered with a certain store, then cardholders can use their reward points to make purchases at that particular store.
Reward points can be very valuable if you use them wisely. It is essential to keep an eye out for any information relating to possible spending limitations attached to the rewards program, restrictions placed on redemption, or a possible expiration date linked to the rewards. By following these simple ways, you can surely make the most of your Credit Card Reward Points and get a little extra each time you purchase something on your Credit Card.