Reward Points

Reward Points (RP) are given by banks when you use their credit card or debit card for certain purchases. These reward points come with some validity and some banks offer them for a lifetime. So as a consumer, we need to keep track of these reward points and their validity as they hold some value in terms of money.

These reward points can extract different values depending on what redemption option you pick. Mainly what I have observed is reward points give maximum value when they are redeemed for travel and hotel stays. But your credit card bank needs to support this, if your bank is not offering this redemption option then taking a Gift voucher or cashback should be your plan because shopping on their redemption portal is paying more reward points for some selective set of options is a bad choice.

I always encourage people to fulfil their needs or requirements with the collected reward points instead of trying to extract more value from their reward points.

Types of reward points

1. Fuel Reward points: Mostly these rewards are collected when you spend through your Fuel credit card on fuel or other shopping. These rewards should be redeemed for fuel vouchers or directly at the petrol pump as they give the maximum value for fuel. Cards like the Axis Indian oil card, SBI BPCL and SBI octane card are best in this category.

2. Gift Vouchers (GV) : Some reward program are good when we redeem them for GVs instead of cashback or catalog program option . Standard Chartered Ultimate , IDFC bank credit cards etc .

3. Loyalty Rewards points : Some credit card gives rewards in form of loyalty program rewards which need to be used for that business to get the best value of rewards . ICICI Amazon pay , SBI/Axis Vistara and IndusInd EazyDiner credit card.

4. Reward Program supporting Airline & Hotel Transfer : Some premium credit card only support transferring their reward points to different transfer partners which will help to book some reward seats in Airline or book hotel stays. HDFC Infinia , Axis Atlas , Axis Magnus and HDFC DCB etc .

Things to remember

1. Reward points given to customer for their spends are paid by banks. This is one of the expense bank need to manage and try to reduce so that they are always on the profit side .

2. Banks which gives reward points with no exipry are always in some plan to reduce the value of the rewards . So my suggestion will be if you have some good amount of rewards then try to redeem them for some useful thing or some holiday plan where you may need to pay some amount from pocket as well .

3. If you thing i will try to redeem all the reward for one stay and get the best price value for reward point then you never know when bank may reduce the value of rewards.

4. If you have some holiday plan and don't have enough points on one reward program then see if you can use some loyalty program to transfer reward points from different credit card and plan your travel . This is the bueaty of loyalty programs which help to accumulate rewards at one place and use them .

5. Sometime Rewards points + some cash can be a good redeemtion option instead of waiting for collecting enough reward points.

6. Almost every bank is taking processing charge for redeemtion , so make sure you do your math before going for redeemtion.

Conclusion : Always keep track of your reward points and try to redeem then whenever possible .