In this article, we are going to see some of the hidden facts about Credit Card Rewards, some pointers to look for before buying a credit card and how to make the most out of it.
Reward points are one of the key reasons why people want to spend money through credit cards. We have listed down some of the key points you should look for while buying a credit card,
1. Actual value of reward points:
In most cases, 1 Reward Point is NOT EQUAL TO 1 Rupee. Let us say, you get Rs 2000 worth Amazon gift card for 10000 reward points, then your reward point is worth only Rs. 0.2 (2000/10000).
2. Reward Points to Cash Conversion:
Some people prefer to convert their reward points into cash. So check if your credit card offers such features. I prefer this, rather than redeeming the offer in other merchant outlets such as Pizza hut, Tata Chroma etc. By redeeming the offer at other merchant outlets we may end up buying things which are not essential.
3. Free Movie Tickets:
Some cards provide you movie tickets or dining coupons for free, if you spend a certain amount in the month. You need to check if there are any conditional clauses that says offer is applicable only if you spend certain amount in a single transaction. Let us say, your monthly spend is 20 k and if the offer is valid only if you make a single transaction of 15 k, it is not going to help you anyway.
4. Sales Tactics:
Sales executive can convince you to opt for a credit card with annual fee based on your credit history. During the conversation, he usually closes the sales by saying you will get X amount of reward points as a welcome kit. Let us say, you are being convinced to get a credit card with an annual fee of Rs 10000 and the sales executive might say you get 10000 reward points as welcome offer. Don’t get fooled with this statement and calculate the actual value of reward points which we discussed earlier.
5. 5X Reward Points on dining:
In this COVID situation, think how often you want to dine at a restaurant and what benefit you can get out of it. This again depends on personal choice and your needs.
6. 3X Reward Points on utility payments:
Some of the utility providers such as electricity department charge a transaction fee, if paid through a credit card. In such cases, you may not make use of this benefit.
7. Rewards Portal:
Take a look at the rewards portal of the bank and look for a wide range of consumer products for redeeming your points. In some cases, options may be limited and you may end up redeeming your points through hotel bookings or flight bookings and the prices are usually high in such cases. I usually prefer to redeem the points for amazon or flipkart gift vouchers. This way we can wait for good deals in amazon and flipkart and make the most out of our reward points.
8. Fuel Surcharge Waiver:
Most credit cards offer fuel surcharge waiver, however one should closely watch if there are any specific conditions mentioned. For example, a condition like “The transaction should be a minimum of Rs. 400 to Rs. 4000” may not help people who own only two wheeler.
9. Airport Lounges:
Usually cards that gives you access to both domestic as well as international airport lounges are pretty expensive. Make sure you understand what you sign up for. There will be limits on how many times you can visit. Also remember, the access is only for the primary card holder. If you are travelling with family you may still end up paying for them.
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