Credit cards are not just about making big purchases and paying them off in EMIs. Rewards and cashbacks are also important parts of credit cards but most of us find them too complicated to understand, let alone take benefit from them. Lately, credit card reward programmes have become more popular than ever. Have you ever seen a credit card advertisement trying to sell a low interest rate or easy EMI feature? Probably not, because all credit card providers are focusing on their reward programmes and brand loyalty benefits by painting a dreamy vacation picture or a 5-star dine out.
As a customer, what you need to understand is that banks are no generous donors which is the reason why these reward programmes come with a whole set of terms and conditions. So, being a smart user, you must know how to strategize the use of your credit cards in order to make the most of these reward programmes.
But let us first understand how rewards work.
Most of the banks assign a certain number of reward points for every Rs 100 spent on your credit card which can be redeemed for merchandise or gift cards. Some credit cards offer extra rewards on specific use such as dining, travel, online shopping, etc. The trick here is that rewards are characteristically complex since they are not calculated in terms of cash. Unless a good deal of points is accumulated, they won’t be of much use. On the other hand, some banks also offer cashback credit cards which either provides direct cashback into your statement or the reward points collected can be converted into statement credit.
It is easy to collect reward points but it is even easier to lose them. You will not be able to make the most of these benefits if-
- The reward points have expired
- You have not spent the minimum amount for that reward to be valid
- The store you have visited is not in the list of your credit card benefit providers
- The terms and conditions with respect to reward points have been changed by the bank
If you have read so far, we bet that you are quite puzzled about reward points. So now we will talk about a few strategies that can help you maximize the reward point benefits on your credit card-
1- Don’t Spend Money just for the Sake of Earning Rewards
Trust us! This is what the banks want. The whole idea behind reward points is to encourage people to make more use of their credit cards. Don’t go busting your budget just for earning the reward points. Turn off those emails they keep sending you. Don’t get influenced, just use your credit card wisely.
2- Pick a Credit Card that Offers Rewards Matching your Lifestyle
You should always get a credit card that matches your personality. A card that offers extra reward points on travel will be of no use if the last trip you made was three years ago. So this is something you need to decide at the time of getting a credit card. You will be able to make the most of your rewards and cashback benefits only when it is aligned with your lifestyle choices.
3- Read the Fine Print
Pay attention to your credit card reward programmes as they are subject to change. Your credit card provider can change the terms of rewards and cashbacks as and when they like. So it is in your interest to stay updated with the latest rules by visiting their website from time to time. You should also know about reward categories and the stores where the rewards can be redeemed.
4- Research about the Offers and Schemes
Do not just go with the promotional mail in your inbox. It is possible that the same benefit is available in the market to other users also. Research and then take the step. If you have several credit cards, you should know how to utilize the rewards of each card. Banks also put up sales for their credit card users, especially during festive seasons. Although these are also targeted at enticing you to spend, they can be beneficial for your festive shopping.
5- Know your Limits
Some credit cards offer tremendous rewards but with the condition that you have to reach a certain spending limit. In case you have such a credit card and you wish to enjoy the benefits, keep track of how much you have spent and how much more you need to be eligible for the rewards and discounts.
6- Be Regular with your EMI Payments
Reward points would not make any sense if you miss out on credit card bill payments and have to pay interest plus penalty for delay. The benefits you get from reward points are not enough to make up for the penalties you pay. Also, some credit card providers cancel the rewards if you make late payments. Hence, be regular and enjoy all benefits.
What you need to understand here is that credit card rewards are beneficial for the credit card company. For you to derive benefits from them, strategic spending is required. Roughly you need to know a few things. Credit card rewards are beneficial only when they are accumulated in bulk. It is important to know the benefits aligned with your credit card and use it accordingly. Keep up with the changes in terms and conditions of your rewards programme. If you follow these rules, it will truly be a rewarding bunch for you.