Personal Finance

Spend Smart: Get rewarded for shopping

Maulik Madhu | Updated on January 19, 2018

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Reward points come with strings attached. Know how you can use and redeem them

Many of us love to use our credit cards for making as many payments as possible, simply because they help us pile up reward points. The points can be exchanged for shopping vouchers, buying electronic gadgets or for bagging free appliances, if they are listed in the rewards catalogue.

Some banks also sweeten the deal with redemption options, such as exchanging the points for cash or using them to buy fuel.

But, not all credit cards reward with you the same number of points. The spends on which points can be earned also vary across cards. The redemption options too are not the same for all banks.

What you earn

Obviously, the more you spend on your card, the more reward points you earn. But, what also matters is the rate at which you earn such points. This varies across banks and different cards of a particular bank. Apart from that, in case of some cards, the rate at which you accumulate points also depends on the type of spend.

Take, for instance, Standard Chartered Bank’s Platinum Rewards Credit Card. For every ₹150 that you spend on fine dining, fuel and hotels using this card, you get five points.

All other spends get you two points. The bank’s Bajaj Finserv Platinum Credit Card has a faster spend-to-points conversion, though it applies for a different category of spends.

You get five points for every ₹100 spent at supermarkets, department stores, grocery shops and retail apparel outlets. Other spends entitle you to two points. Similarly, if you have Axis Bank’s Platinum Credit Card, you can earn 6 (12) points for every ₹200 of domestic (international) credit card spend.

But, with the bank’s Signature Credit Card, you can collect 10 (20) points for every ₹200 of domestic (international) spend.

No free lunches

But, before you consider switching to a card that generates faster reward points, take note that such cards could also cost you more.

So, unless you spend large amounts and do so often enough, it may not be worth going for some of the costlier premium credit cards simply with the idea of accumulating more points.

Take, for example, Bank of Baroda’s BOBCARD Signature Visa Card. While it can earn you reward points at a faster rate than that on BOBCARD Titanium Master, its ₹1,000 annual fee is also twice as higher.

Reward points, of course, are not the only differentiator between the two cards. The more expensive BOBCARD Signature Visa Card also comes packed with a higher cash withdrawal limit and much higher accidental death coverage compared to the other card.

Likewise, the annual fee of ₹ 3,000 on Axis Bank’s Signature Credit Card is several times more than that of the bank’s Platinum Credit Card. But the Signature Card also offers a list of other benefits that the Platinum Card does not.

Redeeming your rewards

Once you have accumulated the points, comes redemption. Here, check out what the points can be redeemed against and at what rate; the minimum number of points that you must collect before you begin redeeming them, and when they will expire.

Reward points collected on the Standard Chartered Bank’s Platinum Rewards Credit Card, and Bajaj Finserv Platinum Credit Card can be redeemed against products and vouchers from the rewards catalogue and for airline miles with select airlines.

For instance, to pick a Marks & Spencer Gift voucher worth ₹500 from the catalogue, you will require 1,800 points, that would accumulate on a spending of ₹36,000.

But, do note you must have a minimum of 500 points before you can start redeeming them.

If you have an Axis Bank card, you can use these for purchases from the rewards catalogue, making payments at certain branded stores and booking flight and hotel tickets. But, you must have collected at least 300 points before you begin using them.

You must also ensure that you redeem every point within three years of having earned it, after which it will expire. Keep in mind the fact that most banks charge a handling fee for redemption of reward points against products from their respective catalogues and a processing fee for transferring reward points to a partner airline.

Published on January 31, 2016

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