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    How to Use Credit Card Reward Points

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    How to Use Credit Card Reward Points Reviews

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    Overview:

    Many credit cards run Reward schemes on their credit cards. Customers can earn reward points as they shop on their credit cards. Once they have accumulated enough points, they can then redeem it for goodies, vouchers, cash back, miles and more. Banks offer different reward schemes. It’s wise to know how much reward points cost, what’s their worth and how to use them before you lose them. Some people don’t bother about reward points because they feel their value is too low. But a reward is a reward and it’s your money after all. Reward points can greatly benefit you if you use them right.

    How to earn Reward Points?

    Earning points is easy but can take a long time to accumulate enough points to be eligible for redemption. Banks offer different ways to earn points.

    • Welcome points - Some banks load up your rewards collection with a welcome bonus. Banks may offer 1,000 to even 20,000 points. Each bank offers different schemes.

    • Shopping - As you spend on your credit card, you can rack up reward points. Generally, the basic rewards scheme offered is 1 point for every Rs. 100 spent. These are accelerated to double or triple and sometimes even 10 times the reward points for every Rs. 100 spent on certain cards or for special expenses. For example, a golfing card may offer higher reward points for using your credit card at golf courses or at golf stores.

    • Annual Bonus - Certain banks reward you with extra points at the end of the year if you spend a certain amount of money on your credit card. You could earn thousands of points when you spend, say a lakh or more on your credit card.

    What to get with Reward Points?

    Once you have accumulated enough points, you can redeem them from a host of things offered by the banks. Reward redemption depends on your bank. Some banks offer very basic items in their catalogues that include household and other useful items. Some banks may offer a number of ways to redeem your points. Listed below are some of the ways you can redeem your points.

    • Catalogue - Banks make a catalogue available for customers to browse through and choose products that they have listed. You can choose from products that range from eatables, apparel, accessories, footwear, stationery, crockery, travel merchandise, spa treatments, salon treatments and movie tickets and so on.

    • Vouchers - You can redeem your points for a variety of vouchers from the bank’s partner stores. You may be able to use these vouchers online or at the merchant outlet. Vouchers can range from Rs. 100 to a couple of thousands of rupees.

    • Cash - Some banks allow you to convert your points into cash. This cash will be credited to your credit card account. It can be used to pay your bill or a part of your bill if any amount is outstanding. This is a great way to save money because you can pay a part of your bill through your spending.

    • Miles - Banks also partner with airlines to provide you travel rewards. Sometimes you can earn miles directly. In other cases, you can convert your reward points into miles. You can then use these miles to get free flight tickets or discounts on flight tickets. Miles are great for people who travel or love to travel.

    • Donations - Some banks allow you to donate your reward points. You can choose to make a donation to the charity of your choice from the list of charities available. The amount would be converted and donated.

    • Others - Banks carry out different schemes to suit the varied preferences of their customers. Other reward redemption programmes may include redeeming your points for cashback, fuel, classes, training, specialised services, and entertainment. Banks also offer vacation and hotel deals or travel packages that you can use your reward points to enjoy. Banks also partner with various stores that allow you to use your reward points to buy items.

    How to redeem Reward Points?

    Reward Points can be redeemed through the following methods.

    • Online Banking - Log into your online banking portal to redeem the points.

    • Rewards Websites - Some banks have a separate website dedicated to rewards, catalogues and redemption.

    • Phone banking - You can call customer care to assist you with redeeming your points.

    • Merchant Outlets - Some banks partner with retail outlets where you can purchase items against your reward points.

    Tips on how to use your points:

    It can be a bother to calculate how much you spent to collect the points you have accumulated. So sometimes you don’t know if what you’re getting is actually worth the points you collected. Sometimes the product you select might cost much lesser in stores than what you would pay with your points. Since the points seem like they’re freebies, we might not take the trouble to figure it out. Here are some tips on how to use your credit card reward points in a way that will optimize your benefits.

    • Almost all points have an expiry date. Keep a track on the points you’ve earned and redeem your points before they expire.
    • Choose a voucher if you have a use for them, or for gifting purposes. Sometimes vouchers make you spend more than what the voucher is worth just to redeem it. Keep a track on the expiry date of your voucher, too.
    • Choose stuff you want rather than stuff that gives you the most value. The highest value you can get is your satisfaction. So buying something you don’t want and might never use just because it was more valuable isn’t the best option.
    • If you have an outstanding balance, cash is a really good option because you can reduce your bill and the interest you have to pay.
    • Don’t spend to earn points. The value of the points are ridiculously lower than the amount you spent to earn them. Only consider them as a perk of spending on your credit card.
    • Use your credit card wisely by spending only what you can afford and paying your bills in full. This way you will never pay interest charges and the reward points will be completely worth their value.

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