How do credit card points work?

REWARD POINTS

REWARD POINTS

BankBazaar

When you swipe your credit card and spend money, you get points as a reward for spending. Every credit card-issuer offers reward points, but the worth of reward point will vary across cards. For instance, some banks offer you one point for every Rs 100 spent and the value of one point could be 20-40 paise, while there are companies that offer two points for every Rs 100. You can ask the bank executive to explain the value of every point that you earn. Credit card companies offer it against transactions such as shopping, buying travel tickets and high-value purchases. There is also a cap on how much you need to have as reward point while you redeem it.

COST AND CONDITIONS

After you have accumulated reward points and go to your card issuing company to redeem the points you will realise that there is a cost attached to it. Banks charge a flat fee of Rs 75 to Rs100 to redeem the reward points.

Also, some banks offer a catalog under which you can redeem your reward points which may not be useful. You may end up buying things which you may not end up using by paying the extra handling charges. Besides the cost and limited options of products, you may also not get reward points on essentials you buy or some bill payment categories. This, in fact, reduces the number of reward points you can accumulate.

HOW YOU CAN USE IT

Firstly, don’t splurge on your credit card to earn reward points so that you can buy some things for free. The reward points are actually not completely free. There is a small cost attached to it. Also, you may not end up getting the things you want to buy. Understand your credit card usage and then consider if you want to switch to another one after comparing the reward points. You should also keep an eye on the expiry date as all reward points have an expiry date. Look for easy options to redeem the reward points. In case a card-issuing company is offering cash for your reward points, you could consider opting for it.