29 JUNE, 2022

Credit cards, when used wisely, are a terrific way to maximise the value of daily purchases.

Further, when you use your rewards credit card to make purchases, you can earn points, cashback, or miles, which can mount up over time if you use it frequently.

Rewards and cashback are essential parts of credit cards in India.

Rewards programs are designed to keep you returning and spending more money at each visit.

You can use rewards to book travel, hotel stays, or other items.

Some cards offer a wide range of rewards you can build your points into, while others offer a more limited selection.

To get the most out of these rewards programs, keep track of your spending habits and choose a card with a high rewards rate.

This blog will show you how to maximize credit card rewards.

 

How do rewards work?

Rewards are usually tied to a specific purchase or category.

Every time you use your card to make a purchase, the merchant will reward you with a particular number of points based on the amount spent.

Several credit cards in India provide additional benefits for specific activities, such as travel, dining, and online shopping.

The more purchases you make with your card each month, the more opportunities there are for earning those points.

Rewards collected by the cardholder can be redeemed in the future for things like travel or gift cards.

The challenge is that these rewards are not measured in cash, and unless you have acquired many points, there is no use in redeeming them.

Moreover, a few banks also offer cashback credit cards that provide either direct cashback or the ability to convert reward points into statement credit.

 

What kinds of credit card rewards are there?

There are mainly three types of credit card rewards:

 

1. Travel Rewards Credit Cards

Travel rewards credit cards are usually offered by banks and other financial institutions that offer travel rewards to their customers.

You can earn points or miles on each purchase of travel with your card.

These points can be used to book hotel rooms or flights with any major airline or hotel worldwide.

 

2. Cashback Rewards Credit Cards

Cashback credit cards also reward you with cashback on certain purchases.

Still, instead of earning rewards that can be redeemed against future travel purchases, they give you cashback directly in your bank account on all purchases.

 

3. Points Rewards Cards

These cards offer you specific points for every rupee spent on purchases made with your card.

The points can be used to redeem gift cards or airline tickets at any time within a given year after they have been earned.

 

How can you maximise your credit card rewards?

Below are seven tips for maximising your credit card rewards points:

 

1. Use the right credit card

The first and most essential step is to choose a card that best suits your spending habits, needs, and preferences.

This will determine how much you can earn in rewards and what kind of rewards you get.

For instance, if a cardholder travels more, they can select the travel reward card, which will benefit them more.

 

2. Do not spend money only to get a reward

The most important thing about rewards is that they need to be used wisely and not just make up for bad spending decisions or overspending.

Holders must always be on the lookout for ways to save money and choose the best rewards credit card India.

In addition, keep track of how much money you are spending overall across various categories like groceries, utility bills, travels, shopping, etc.

So, you know where your money is going and what areas could be improved next time.

 

3. Explore schemes and offers

The other essential thing is to research offers and schemes, and do not just go for the first scheme you get.

If you have numerous credit cards, you must understand how to maximise the benefits of each one.

Banks also provide discounts to credit card holders, particularly around festivals, so you can look for that.

 

4. Know your limits

Before cardholders can benefit from credit card rewards, they need to know their credit limit and whether it is enough to trigger bonus points or cashback.

This is because some cards allow them to earn rewards for spending above the threshold.

If they want to take advantage of the perks, they can track how much they have spent and how much more they need to spend to qualify for the rewards.

 

5. Pay EMIs regularly

If cardholders want to maximise rewards on their credit card, paying EMIs regularly is essential.

It helps ensure that their account is not left overdrawn and thus, unable to access any reward offers.

Paying off the full balance each month is essential so that interest does not build up over time and the total costs outweigh the rewards. 

Start by checking how much interest charges will be added to the monthly bill if payment is not made.

 

6. Check for flexible reward programs

Credit cards often have flexible reward programs that will match one’s spending at certain shops and restaurants with specific offers and discounts when making purchases using their cards instead of cash.

Some will even give double points for every rupee spent on travel or gift cards and other benefits like free flights booked through their website, etc.

 

7. Pay attention to the fine print

Another essential piece of advice for cardholders is to keep an eye on their credit card incentive programs because they can alter at any time.

The credit card company has complete control over the terms and conditions of points and cashback.

As a result, it is in their best interest to visit their website regularly to stay updated on the latest guidelines.

 

Conclusion

Understanding the rules of the rewards, establishing a plan, and sticking through will help you maximize your credit benefits and improve your credit score.

Though opening numerous credit cards may be a terrific method to earn rewards, one must figure out what works best for them.

With many credit cards, tracking your expenses and managing the rewards might be challenging. 

Evaluating the spending habits will assist in getting the most of the rewards.

Moreover, ensure to read the terms and conditions of the rewards and offers of credit cards to know exactly what to expect.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.

Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.