Cash in on credit card reward points!

Nov 25 2013, 16:01 IST
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SummaryRachita wanted to introduce her father to the marvels of a Smartphone by buying him one.

Rachita wanted to introduce her father to the marvels of a Smartphone by buying him one. The most affordable price she could get one cost Rs. 7,500. She decided to purchase the phone by redeeming the credit card points she had redeemed over the last two years. Rachita was not a compulsive shopper but preferred swiping her card to pay as much as possible.

Credit card companies reward their customers to encourage them to spend more and also to say ‘thank you’. The rewards are extended in the form of discounts, cash backs and reward points that can be redeemed for cash discounts on your next purchase.

How it Works?

Every time you swipe your card to make a purchase, the company automatically awards points in your account. You may earn 1 point for every Rs. 40 to Rs. 100 spent using the credit card. The reward rates vary between different credit card companies. The number of points you earn for the amount spent also depends on co-branding wherein if the credit card company has tied up with a merchant or retailer, you may earn extra points for spending with your credit card in their stores.

How to Earn More Points?

To earn more, you needn’t necessarily spend more, rather spend smartly. Credit card companies provide a list of stores they have tied up with and also send regular offers on shopping with their partners. You can shop from them exclusively to earn more points. Preferably opt for cards that give you the best reward points when shopping for a credit card.

Redeeming reward points for making big purchases is a good way to save while shopping expensive items. For instance, the HDFC Bank Gold Credit card gives cash back and extra reward points if one were to pay their phone and electricity bills with it. Also, ABN AMRO has tied up with and awards 3 extra points for every Rs. 100 spent for booking tickets on the portal.

Keep in Mind...

Different banks have different terms and conditions with respect to the use of points. Previously, credit card companies sent catalogues of items that one could purchase to redeem their points. The products on the catalogue were mostly overpriced and did not offer too much choice, making it quite unpopular among customers.

Now, however, the scene has changed and customers are offered more options and better ways to redeem their points. However,

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