Credit card providers are coming up with new ways to attract consumers. Many credit cards specialize in rewarding a particular spending habit. Credit cards reward the customers in the form of Points, Cashback or Airmiles. Choosing a particular rewards credit card is important as it allows you to maximize your returns on transactions. This article will help you decide what sort of rewards credit card you should opt after you have identified your spending habits.
Why should a Rewards Program be a factor in deciding the Credit Card?
One of the selling points for credit cards is the rewards that they offer on your transactions. There are hundreds of credit cards currently being offered in India. They vary on the interest charged, annual fees, suited for a particular spending motif or Rewards Program associated with it.
Credit card selection should be dealt with as much seriousness as given to any major loan decision. Hence, credit card applicants must consider the reward program as an important factor and match it to their spending habits. The point is best illustrated through an example; suppose you frequently make retail or online purchases and rarely travel. If, in this scenario, you take an air miles credit card that gives minimal miles on retail purchases and bonus points on flight bookings, then your purchases are not efficiently rewarded. Also your air miles won’t accumulate enough to make the infrequent airline ticket free, as your points start to expire after 2 years. This way you can never truly maximize your spends or have the credit card work for you.
Air Miles Credit Cards
Many credit card providers offer air miles as an incentive to use their cards. The cards may be independent or co-branded with an airline partner. The air mile rewards credit cards directly reward your eligible transactions with air miles which can be redeemed on airfare. Co-branded credit cards come in association with certain airlines and reward you with frequent flyer miles directly. Independent credit cards offer the user to redeem points on any of the partner airlines associated with the provider. Both options offer huge savings as the generic credit cards charge a fee when converting points to air miles. These credit cards also offer discounts and additional benefits when used for booking flight tickets. The benefits can range from extra baggage weight allowance to Priority Pass lounge access. Certain air miles reward credit cards also give away annual complimentary flight tickets.
Suggested Credit Card: Citi Premier Miles Credit Card
The Citi Premier Miles credit card is specifically designed for the frequent traveller looking to earn air miles. The many features and benefits of this credit card are:
- The credit card offers 10 PremierMiles for every ₹ 100 spent at airline transactions and 4 PremierMiles on every other spend.
- The card offers 10,000 PremierMiles on first transaction of at least ₹ 1,000 made within first 60 days.
- The annual fee charged is ₹ 3,000 for which the user gets 3,000 PremierMiles.
- The miles can be redeemed at any of the fourteen airline partners which include Air India, Jet Airways, British Airways, and Qatar Airways.
- The miles can be converted to Taj Inner Circle Points and used in any Taj hotel.
The many different airline partners along with the hotel partner makes this credit card stand out making it a great choice for the frequent traveler.
Reward Credit Cards
Most of the credit cards reward the user in points. What sets these cards apart are the flexibility they offer to the users. The points can be redeemed on a wide range of selection offered through their rewards catalogue. The Rewards Catalogue offer a host of selection ranging from apparels, electronic items, travel vouchers, luxury and lifestyle items, and much more. The reward credit cards are a great choice for those who are new to credit cards or those who love shopping. Some of the reward credit cards also offer a chance to convert the points to air miles for a nominal fee. This allows the casual traveller to upgrade their class of ticket or book one using their accumulated points.
Suggested Credit Card: The Everyday Spend American Express® Gold Credit Card
American Express, a brand known for premium credit or charge cards, has entered the basic credit card sector as well. The card comes packed with features that make it great for everyday use. Some of its features are:
- Convert big purchases to EMIs and pay interest rate as low as 12% per annum.
- Earn 1 Membership Reward Point for every ₹ 50 spent across all categories except fuel, insurance, utilities and cash transactions.
- Earn 10X Membership Reward Points when you use the card for making purchases at Flipkart or Ola.
- Get 5-times more reward points when you shop at Big Bazaar, Amazon, BookMyShow, UBER and many more.
- Users will get ₹ 500 cash back as welcome gift on spending ₹ 10,000 in first 90 days of card membership
- Users also get a chance to waive the annual fee, ₹ 495 + taxes, if they spend ₹ 39,999 on eligible categories annually.
These features make The Everyday Spend American Express® Gold Credit an excellent choice for individuals who want a credit card that rewards their everyday spends including the commuting service that they use.
Cashback Credit Cards
Some credit card providers offer cash back as an incentive to entice the user. Here the credit card providers pay back a small percentage of the amount spent by the consumer. This card is for the users who value their money and want to be free from the restrictions offered on other reward programs such as expiration date or redemption fee. The savings are done in the currency alone and the accumulated money can be used by the user whenever they want. The beauty of the cash back credit cards is that the savings never expire unlike the points or air miles.
Suggested Credit Card: Citi® Cash Back Credit Card
Citi Cash Back credit card is a great option for users that want to earn cash back on all their transactions. The many features and benefits of this credit card are:
- The card gets the user 5% cash back on movie ticket purchases.
- Card holders also get 5% cash back on telephone and utility bill payments. The maximum cash back in this category is capped at ₹ 100. To avail the incentive user must pay through ‘Citibank Online Bill Pay’ method.
- 5% Cash back is earned on all other spends.
- The card charges only ₹ 500 in annual fees.
- Users can avail up to 15% off on select dining restaurants.
Best of the Three Worlds
If you find that you don’t have a particular spending habit and make mixed purchases mostly. Then you should go for the credit card that offers you a bit of everything. These credit cards reward you with points that can be converted to cash or miles. The cash, most of the times, can only be used to pay the outstanding amount. These credit cards do not usually charge a conversion fee as well. These credit cards will not be as efficient at maximizing your returns as a cashback, airmiles or rewards credit card. This however is a small price to pay for the versatility offered.
Suggested Credit Card: IndusInd Bank Platinum Select Credit Card
IndusInd Bank Platinum Select credit card provides the best-in-class privileges in travel and living, dining, and lifestyle for those with refined taste. The features and benefits that come standard with this credit card are:
- Card holders earn 1 Reward Point on every ₹ 150 spent.
- Users can convert reward points to cash and pay their outstanding. The conversion rate is 1 Reward Point = ₹ 0.75 of cash value.
- Customers can also convert their reward points to Jet Privilege air miles. The conversion rate is 100 Reward Points = 100 Jet Privilege Miles. The reward points will be redeemed in multiples of 100 only and the user must accumulate a minimum of 500 reward points.
- Users can book favorite restaurants by a single tap using EazyDiner.
- Customers also get ‘buy one get one ticket’ offer on book my show when using this credit card.
- Card holders also get Priority Pass membership.
- Card holders also get access to concierge services available 24*7. The concierge service can help the user make hotel reservation, flight bookings, and much more.
This a great all round credit card for users that want to be able to redeem points, earn miles or cash back. If you are looking for a credit card that covers the entire three domains then go for this credit card.
Tips to Maximize Your Credit Card Rewards
The reward programs might make it seem like that the bank is giving away money to the user. This however is not true the credit card business is highly competitive and the reward programs are there to entice the customer mostly. The rewards and benefits work in the customers favor as long as the customer acts smartly. The following points will help make you a smarter credit card user:
- Use credit cards for your usual purchases. Using credit cards for normal purchases makes sure you earn the rewards that would otherwise have been looked over. Do not over spend on things you don’t need just to earn rewards.
- Read the fine print. Read the Most Important Terms and Conditions (MITC) of the cards that you want to apply for. Many a times the benefits and privileges offered on the site blind us to the downsides of a particular credit card. This could be in the form of high interest rates, or a steep reward point conversion fee.
- Know the important limits and milestone markers of the credit card. Many credit cards offer annual fee waiver on meeting a certain annual expenditure. Still others offer Bonus Reward points on passing an expenditure milestone. Knowing the limits and milestones associated with your credit card helps you maximize the returns.
Suggested Read: Follow These 7 Strategies to Optimize Your Credit Card Rewards
It is up to you the customer to meditate on what sort of reward program you want to enroll in. For this you must have an idea about your spending habits and which reward program will prove to be the most beneficial to you. There are many options in the market one of which will certainly be best aligned with your needs. Take your time and research thoroughly.