The concept of reward points on credit cards has been introduced by banks to encourage more and more customers to make use of their credit cards for purchases. Various credit cards being offered by banks nowadays now come with their own Reward Points Programs which allow customers to earn points on each purchase which they make with their credit card. Once the customer has accumulated a certain number of points, as per their Rewards Program, they can redeem these points for a number of benefits such as vouchers, cash back on future purchases, air miles and lots more. If you too have a credit card which comes with its very own Rewards Program, it might be beneficial for you to be aware about how you can earn and later use these reward points. So read on to find out more.
Reward points are points which a user can collect following each purchase that they make with their credit card. As it usually goes, higher value purchases will earn you more points than smaller value purchases. For example, if you purchase a flight ticket on your credit card, you will earn more reward points, as compared to when you make grocery payments with your credit card. These reward points can later be redeemed or exchanged for a number of things such as vouchers, select product / brand purchases, payment of annual fees, cash back on future purchases, air miles and lots more. Taking the instance of Citibank, credit card holders get to earn 1 reward point for every Rs 100 which is charged to their card.
Once the credit card holder has collected sufficient points, they can redeem those points in exchange for a number of options which are offered by the bank. An increasing number of banks are now offering a bevy of options when it comes to reward points. Considering that not everyone may make high-value purchases often using their credit card, banks also offer cash back against credit card reward points which can come in handy when you have to make smaller value purchases with your card. Certain banks may only offer a very basic catalogue of products which includes items for household and general use. Several credit cards are associated with ticket booking portals or airlines to offer rewards by way of air miles or discounts on travel bookings. Depending on what your bank offers, you may use your reward points in any of the following ways.
Earning reward points on your credit card is an automatic process. The cardholder does not have to do anything extra to earn these points. Each time your card is swiped for a purchase, you get reward points. Usually, for every Rs 100 to Rs 250 that is charged from the credit card, the cardholder earns one point. Also, the higher the value of your purchase, the more points you earn and vice versa. However, the number of points that you collect with every purchase will depend on the type of card you have and the issuing bank. For example, co-branded cards will fetch you more points than a regular card. Like the State Bank of India Gold card will fetch you one point for every Rs 40 spent on the card, whereas the co-branded Tata Card will fetch you 8 points for every Rs 100 charged to the card. The value which each point carried will also vary across banks and credit cards.
The points you earn will depend on the value of your transaction, the type of card you have and the bank which has issued the card and sometimes, also on the place where you have carried out the transaction. However, there are other factors which affect the overall points you earn and their value.
While they are fairly simple to accumulate and are always welcome, there are some things which you must keep in mind about reward points. It can definitely be a little challenging to calculate your spending and the points you have accumulated as a result.
It also may happen that, the cost of the product you select may be lesser in stores and higher if you pay for it with points. Since the points seem like they’re freebies, we might not take the trouble to figure it out. So, if you are looking to get the most from your credit card reward pints, here are a few things to remember.
Get in touch with your credit card provider and educate yourself about the reward program available on your card.
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