How to Make the Best Use of Your Credit Card Reward Points

You accumulate points on your credit card over a certain number of transactions. You may redeem these points to buy products or vouchers according to your lifestyle. 

The primary objective of credit card points is to encourage you to use your credit cards extensively. Reward points help you save money. Which is why it is important to choose the right credit card—one that will give you the points aligned with your spending patterns.

Common Credit Card Reward Points

The reward points you earn vary between cards. Several types of points are offered. And knowing what they are can help you decide on your next credit card.

• Reward points: These are points you earn after every transaction. The number of points you earn depends on the transaction amount and transaction type.
• Air miles: You accumulate air miles when using certain travel or rewards credit cards. You can redeem these miles to obtain discounted flight tickets.
• Cashback: You receive a certain percentage of your transaction amount of cashback on certain significant expenses. This cashback can be converted to points and redeemed.

How to Earn Reward Points

The rewards depend on the type of card, the transaction value, and where you transact.

• Welcome bonus: These are rewards given to new cardholders. Most credit card lenders issue a few thousand points as a welcome bonus. You also receive points for spending a pre-determined amount in the first 3 months or 90 days of card issuance.
• Reward points: These are standard points added for every purchase with your card. Generally, you receive specific points for every Rs 100 or Rs 150 spent. The reward points could vary from 1 to as much as 40.
• Accelerated points: You receive extra points for transacting at partner establishments or services. These could be for shopping, dining, or travel.
• Premium purchases: Spending on premium or high-value items can earn extra points. Jewellery, travel, or hotel bookings would qualify for these extra points.
• Bonus points: These are awarded when you exceed the spending threshold in a limited period.
• Loyalty points: You receive loyalty points for renewing your credit card. This is usually a significant number of points.

Making the Best Use of Your Credit Card Reward Points

One of the best avenues for redeeming credit card points is online, on the lender’s portal. Here are some ways to optimise the use of your credit card rewards.

Choose a Card That Matches Your Lifestyle

Identify your spending habits and choose cards that work well for you. There are credit cards that give you points for shopping, travel, dining, entertainment, and fuel purchases. Figure out your priorities; your card must compliment them.

Use Your Welcome Bonus

Most cards give you excellent welcome bonuses. You receive many points for spending a pre-defined amount in the first 90 days of issuance. Use this to your advantage and accumulate as many points as you can.

Spend on Special Days

Credit card issuers offer special bonuses and rewards on birthdays and anniversaries. If you own a card that does this, make the best use of this feature. You get extra points for shopping and dining on these days.

Co-branding Benefits

Use the partner outlets and services to earn more credit card points. The rewards earned on these co-branded cards can be used for redeeming credit card points in those outlets for high discounts.

Products from the Lender’s Catalogue

You can use points to purchase products listed in the lender’s catalogue. These include lifestyle products, vouchers, and accessories.

Things to Remember About Credit Card Reward Points

• Reward points have an expiration date. Monitor the ‘rewards’ section on the lender’s platform or app so you do not lose track of your points.
• Some credit cards allow for converting your credit card points to cash. You can use this to pay your credit card bills.
• The vouchers you get from redeeming credit card points can be used as gifts.
• There may be a redemption fee for redeeming your credit card points.

Conclusion

While credit card reward points are lucrative, you must not use your credit card carelessly just to earn points. That being said, it takes a while to accumulate a good number of points, so don’t waste them by not redeeming them.

Always ensure that the rewards match your lifestyle. Also, keep a note of your rewards points’ expiration. Finally, remember to wisely use your credit cards and pay your bills on time. Defaulting on payment might lead to losing all your reward points.