One of the main advantages of holding a credit card is associated with a rewards program. However, you must make the most prudent choice from a wide range of options that are present in the market. Distinct credit cards come with distinct perks. Rewards are provided under 3 categories – miles, points, and cashback. Thus, before availing a reward or shopping credit card, it is crucial to analyse the types of benefits that align well with your spending and lifestyle pattern. In the case you channelise your expenditures well, you can get the most out of the benefits and rewards provided on your card. Mentioned here are some crucial questions you must ensure to ask before availing a reward card to enhance your savings –
Will the reward points differ depending on where you transact?
If you are one of those who frequently travel or shop, you must ensure to be aware of a few credit cards provide higher benefits at specific merchants or brands. So, while selecting a reward card, you must ensure to analyse your requirements and check whether the credit card provides decent rewards throughout distinct transactions according to your lifestyle. It is crucial to assess where you can earn higher rewards and channelise your buys accordingly.
Also, in the case, you are an individual loyal to a particular brand, then holding a co-branded card makes sense instead of opting for a credit card that provides similar benefits throughout multiple brands. Issuers of credit cards often introduce co-branded credit cards in association with top-class airlines, fashion brands, or others.
Such credit cards provide exclusive benefits and discounts on transactions with partnered brands. For instance, if you are one of those who frequently shop on the online platform from Amazon and Flipkart, then you must ensure to opt for an Amazon Pay ICICI card, and Flipkart Axis bank credit card, respectively. Doing so would assist you to maximise your benefits as well as permit you to save a higher amount on your transactions with Amazon and Flipkart.
What are the options available for reward point redemption?
Issuers of credit cards permit you to liquidate the earned rewards against multiple options depending on your needs. You can liquidate the rewards against multiple categories such as cash credit, air miles, gift vouchers, hotel, and flight bookings, etc. based on the credit card issuer. So, before applying for the card of your preference you must ensure to be aware of the options linked with redemption. For example, with the HDFC Intermiles Signature card, you may earn intermiles, which can just be liquidated against your booking via intermiles. In contrast, HDFC Regalia card allows you to liquidate your rewards against air miles, products and vouchers and flight and hotel bookings via its reward portals or against the cashback according to your preference.
In the case you are the one who constantly travels, then you can opt for a credit card like HDFC Intermiles Signature, otherwise, there’s zero point in opting for a reward card that permits you to liquidate your rewards just against the air miles. In contrast, if you consider availing cashback in place or air miles, you can apply for an HDFC Regalia card. Thus, it is crucial to analyse the redemption facilities and options to understand if it properly aligns with your constant transactions and lifestyle. You must always select a credit card that comes with various redemption options in case you are not loyal to any brand.
What’s the value of the reward points earned?
There’s little doubt that most credit card issuers permit you to liquidate reward points against various options. However, you must note that 1 reward does not equal Re 1 or 1 mile in every transaction. For example, in the case of HDFC Regalia, 1 reward point may equal Re 0.50 or 0.20 mile. So, you should check if the value offered at the redemption time will assist you enhance your benefits.
Also, not every credit card issuer provides the same redemption value. Using an HDFC Regalia card, you are allowed to redeem 1 RP at the value of Re 0.50, while the SBI credit card permits you to liquidate 1 RP at Re 0.25. Apart from this, a few premium cards provide a value of 1 RP equal to Re 1. You should, thus, analyse the overall redemption cost of reward points according to your needs. Try opting for the credit card that provides 1:1 redemption value but in case this is not possible, opt for the credit card offering a prudent redemption value as per your needs.
Will your rewards expire if you fail to redeem them?
The entire point to make buys using credit cards is to basically capitalise on the rewards they provide. However, most reward points tend to come with validity. In the case you fail to use the reward points that you have accumulated within a stipulated time frame, then you may lose out on the earned rewards. After a specific time period, the reward points earned tend to become null and void and you would not be able to liquidate them. But a few premium cards provide rewards that do not come with any expiry.
So, when selecting a credit card, you must opt for a card where your reward points do not expire. However, in the case you already have a card that provides rewards with a validity time frame, then you must ensure to keep a constant tab on the reward points so that they can be liquidated before they reach their expiry date. You can sign into your credit card issuer’s net banking account to review the expiry of your reward and ensure that your points do not get wasted.
Additional tip – Factor in the charges linked with your reward card
Apart from selecting the correct credit card for yourself, it is crucial for you to review whether the benefits offered on the credit card justify your annual charge. Most reward cards have an annual charge attached, and a few credit cards even levy a fee when you liquidate your rewards. You must read all terms well while placing an application for a credit card to know whether associated charges are well-suited for you.
