Pleased as Punch that the credit card you're considering gives you one reward point for every Rs 50 you spend on it? You may want to look at what you will get from redeeming those reward points first.

Encouraging spending

The reward points system works thus - one point is awarded for every multiple of a fixed amount spent on the card. For example, for Axis Silver Credit Card, every Rs 100 you spend will deliver one reward point. These points are totalled at the end of every billing cycle. So if you had spent say, Rs 13,250 in a month, the number of points is 132.

Once you reach a threshold, these points can be converted into various gifts. Each gift is worth a certain number of points.

The more advanced the card type, such as a platinum or signature against a gold, the fewer are the points needed to convert into a gift. For instance, gifts such as a donation to CRY worth Rs 500 will require 800 points for an Axis Platinum Credit Card. The same Rs 500 calls for 3,900 points on the Silver card.

To look at what benefit your card will deliver, check the amount of spending needed to amass points. A lot also depends on the type of gift being offered.

To illustrate, consider HDFC Bank's Gold card. Requiring 820 points, a gift voucher from Costa Coffee for Rs 100 is the cheapest item in terms of points. This card gives out 1 point for every spending of Rs 150.

This means you will have to spend as much as Rs 1,23,000 to avail of a voucher worth just Rs 100. The picture is a little better with the Signature card, where the amount to be spent for the same voucher comes to Rs 30,750.

The rewards system varies with banks. Some offer better deals than others. For instance, Citibank's Gold card needs spending of Rs 20,000 to avail of the cheapest 200 points-items such as a Cookie man gift voucher worth Rs 100.

Other rewards

Some credit cards promote certain themes such as travel, fuel and so on. In such cases, benefits may be a bit better than a simple rewards program. In Axis Bank's Titanium Smart Traveller card, for example, spending on air, train and bus bookings, or hotels and travel packages delivers points at twice the regular rate. Similarly, fuel cards offer refunds of fuel surcharge, or then points can be used to buy fuel instead.

In some cards, points can be used to get air miles.

The math involved is how many points you need to collect to make a trip. Other benefits to look for, which are more useful than simple rewards, are cash backs on spending in grocery and department stores. Cards offer up to 5 per cent refund of spending you do in grocery and department stores.

But even in these cases, take the rewards programme with a pinch of salt. In air miles, for instance, look at the participating airlines. Standard Chartered, for instance, has only Kingfisher Airlines and Jet Airways. Fuel surcharge refunds are subject to ceilings. Cash backs can be availed at participating outlets only.

The bottom-line is, take a closer look at the rewards programmes. Most banks put up the details on their Web sites. Also, there are other factors, such as interest rate, payment period, credit limits, fees, and so on that take precedence.