Credit Cards Reward Points

We know banks give reward points on the basis of transactions you make on your credit card. So, how useful are these reward points anyway? Let’s take a simple example. Say over a period of one year, you spend Rs 3,00,000 on your HDFC credit card. The reward points you would earn are:

• 2000 on a silver card
• 4000 on a gold card
• 5200 on a platinum card

Now, what exactly are these points worth?

• If you have a silver card, you could get a Gillette gift pack and a ladies leather wallet.
• For a gold card, if you spend an extra 6,500 rupees, you can redeem your reward points for a steel dinner set.
• For a platinum card, you can get a Cross 18 carat rolled gold ballpen. There are some points that have to be kept in mind when dealing with reward points and their redemption because the individual can get several benefits out of the situation.

There are some points that have to be kept in mind when dealing with reward points and their redemption because the individual can get several benefits out of the situation.

• Choose your card carefully

  Choose your credit card on the basis of where you intend to use it the most. For example, if you are a frequent flier, choose a credit card which gives you extra reward points on purchase of airline tickets. This way you will earn extra reward points for expenses that you anyway incur.

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• Use card instead of cash
  Use your credit card instead of cash as far as possible. The amount you end up paying will be the same but you will benefit in terms of the reward points earned.

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• Compare gifts redeemable
  It is always better to compare the position when the reward points are used as against buying the same from outside. This is especially true when there is a cash amount to be paid along with the redemption of the reward points. This comparison can make the entire situation clear as to whether the person should proceed with the transaction or not. For example, if there is say an iron available for 1000 points plus Rs 500 and while outside the same iron is available for Rs 600. It does not make much sense paying that much extra along with the usage of reward points. One could use the same reward points in an effective manner elsewhere while paying for the iron separately. This can be a good way to ensure that one is getting value for money for the amount being spent.

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• Gift vouchers
  One of the best ways to ensure that you are able to get what you want from the credit card reward points is by selecting a voucher of specific stores. Normally, the items that one can get as redemption against the reward points are dependent upon what the bank offers as choices. There is usually another option whereby a card holder can select gift vouchers of specific stores. These include all the major stores across the country. By choosing these vouchers a person can ensure that they are able to get several additional items that might not be directly present as a redemption choice.

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• Collecting points
  The manner in which the reward points are used is also important. This is because a person can get some additional benefit by smart use of the available reward points. Always check if there are different kinds of reward categories present for the credit card being used. In several cases, if a person manages to accumulate certain amount of points on the credit card then they are shifted to another category where there are additional benefits. These additional benefits are usually in two forms. One enables card holders to access several additional items, which is otherwise not possible. The other calls for spending a lower number of reward points to get the same products or benefits that other card holders can get by using the redemption process.

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• Points expiry
  One has to take extreme care and ensure that none of the reward points on the credit card becomes invalid and unfit for use. This happens if the reward points are not used for a particular period of time, leading to their expiry. The other instance is when the reward points remain if a credit card is not renewed or surrendered. So before renewing or surrendering your credit card it makes sense to use the reward points present on it.