With 2022 in its last few weeks, many of us would look to indulge in online shopping to end the year on a high. With credit cards these days offering great deals, discounts, cashbacks and reward points on online spends, customers are spoilt for choice. However, choosing the best credit card for online shopping is based on personal priorities, given the different features and costs involved. We reviewed different credit cards from the biggest issuers such as HDFC Bank, SBI Card, ICICI Bank and Axis Bank. Here is a guide to getting the best credit card for online shopping.
On target with reward points
Reward Points (RP) are points or credits accumulated in your name for a specific frequency or volume of transactions done via the credit card. Regular online shoppers can build lots of RPs. Once you win RP, it is important to redeem them or they might expire within one-two years.
The RP system is mentioned in card features. For instance, HDFC Bank Moneyback credit card gives two RP for every ₹150 spent and 2x RP for shopping online. In this case, RP are redeemed as cashback against credit card dues, exclusive gifts, or air miles. Do note, RP redeemed against statement balance happens at a certain ratio; for instance 1 RP = ₹0.20/0.30/0.5/1.
For SimplyCLICK SBI Card, one can earn 10X rewards on online spends with exclusive partners and 5X rewards on all other online spends (excluding utility bill payments). But there can be a cap on RPs per month. For instance, a cap of 10,000 RPs per calendar month on 10X RPs accrual is applicable on Amazon, post which every ₹100 spent there will accrue 1 RP. There are limits for 5X RPs for online spends made other than on exclusive partner brands. Do note, special RPs are often not applicable when there is a site-wide joint offer programme.
If you are going for a credit card because it gives good RPs, bear in mind the following. One, redemption against travel benefits such as flight and hotel bookings via RP is allowed in some cards but you can redeem up to a maximum of 50 per cent of booking value through RPs. Two, if you choose to redeem points at card issuer’s rewards portal, the value of 1 RP can be higher, but reward redemption fee is applicable. Rewards redemption fee thankfully isn’t charged on redemption of RP towards cashback. Three, in some cards, no reward points are earned for gold and EMI purchases. This is a setback for many.
Upfront on cashbacks
Cashback credit cards offer you the chance to earn from the money you spend. This is done by paying you back a percentage of what you spend. EMI transactions don’t give cashbacks. Depending on card, cashbacks get activated only above a certain transaction limit.
Typically, co-branded cards, where an e-commerce platform partners with a card company, offer attractive features For instance, Amazon Pay ICICI Bank credit card allows you to earn 5 per cent cashback on your Amazon India spends (3 per cent if you are a non-Prime member). Also, using the card on Amazon Pay will get you 2 per cent cashback on payments to partner merchants. Earn 1 per cent cashback on other expenses such as shopping, dining, insurance payments, travel costs etc. Note there is automatic conversion of earnings to Amazon Pay balance on completion of every billing cycle.
In comparison, Flipkart Axis Bank credit card offers 5 per cent cashback on Flipkart and Myntra, 4 per cent cashback on preferred merchants and 1.5 per cent on all other categories. Gift card purchases won’t land you any cashback, neither will wallet loading transactions. The good thing is there is no limit on earnings of cashback on the credit card
Cashbacks are often rounded down for each individual transaction. For example, if for a transaction of ₹1,100, the customer is eligible for a cashback of 1.5% — ₹16.5 — only ₹16 will be credited.
Some cards seemingly offer good cashbacks, but have monthly caps. For instance, HDFC Bank Millenia credit card provides 5 per cent cashBack on 10 online merchants viz. Amazon, BookMyShow, Cult.fit, Flipkart, Myntra, Sony LIV, Swiggy, Tata CLiQ, Uber & Zomato. However, maximum cashback per cycle is ₹1,000. Interestingly, this card allows you to redeem cashBack against outstanding. Do check if the card of your choice allows this flexibility.
Welcome bonus, card fees
Many cards marketed as best for online shopping sweeten the deal for customers with the lure of welcome/renewal benefit. You must understand how ‘benefit’ works. For instance the Flipkart Axis Bank card promises ₹1,100 welcome benefit broken into ₹500 worth Flipkart vouchers (for first transaction with card), 15 per cent cashback up to ₹500 (on first transaction) on Myntra using card and 50 per cent instant discount up to ₹100 on 1st Swiggy order by using a code. Some cards such as HDFC Bank Millennia give welcome benefit of 1,000 cashpoints if the joining membership fee is paid. Note there will be no cashpoints for renewal membership fee payment.
Card costs matter if you are sensitive about membership/renewal fees. Annual fees for HDFC Millennia and HDFC Bank Moneyback annual fees are ₹1,000 and ₹500 respectively. There are conditions for waiver of annual charges for 1st year or next year, which either have targets for yearly/quarterly/monthly spending. There is no joining fee and no annual fee on Amazon Pay ICICI Bank credit card. The Flipkart Axis Bank card has a joining fee of ₹500 and annual fee (2nd year onwards) of ₹500 but annual fee is waived on yearly spends greater than ₹2 lakh. In case of SimplyCLICK SBI card, if you spend ₹1 lakh then you get annual fee of ₹499 reversed in the subsequent year.
Given the propensity of online shopping at Amazon, Amazon Pay ICICI Bank credit card packs the maximum punch and value. For those who swear by Flipkart, the Axis Bank card is a good one. SimplyCLICK SBI Card is a solid alternative for those who want the choice of online shopping at more than one platform. Do not get enthralled by features such as free lounge access at airports if your main goal is online shopping.