When it comes to credit cards there are two schools of thought. One firmly believes that credit cards are the root of all evil and the reason behind many people spiraling into debt. Then there is the other school which believes that credit cards, when used wisely, are extremely beneficial in terms of Credit Card Rewards.
Way to Earn More Credit Card Rewards
When it comes to settling this argument, let’s just say that the latter school of thought is on the right track. Of all the benefits that come with using a credit card, probably the biggest is that credit card rewards your spending.
If you are unable to believe this, just take a look at your credit card’s terms and conditions. You will see that depending on the type of card you have, you will be rewarded with points each time you spend Rs.150 or Rs.200 as the case may be. For example, if you have the HDFC Freedom Credit Card, you get 5x reward points per Rs.150 spent on movies, dining, railways, and groceries. Additionally, you earn 25x reward points when you make transactions during your birthday month.
Of course, you earn points only if you make your payments in full and on time. So, what does one do with these points? How do you ensure that you maximize the benefits that come with using your credit card well?
In case you were wondering how to make the most of your credit card reward points, here’s a handy list to help you out.
1. Use the Right Card for the Right Transaction
What does choosing the right card mean? Well, let’s say that you have two credit cards – one that rewards grocery spends and the other one is the best credit card for online shopping. The smart thing to do is to use the one that rewards your grocery spending when you buy groceries and the other one when you make online transactions.
Sounds pretty simple, right?
It is quite simple. The truth, however, is that most people either don’t know the credit card rewards that come with their card or they think it is too complicated to keep track of.
Well, there are solutions to both of these problems. The first is to read the terms and conditions of your card and see for which spends do you earn the highest credit card rewards. So, if you earn 5 points per Rs.150 spent on groceries with a particular card and only 1 point on online transactions, make sure you use it to buy groceries and consider a different card for online shopping.
The solution to your second problem is also simple. Thanks to technology you can download a mobile application to help you keep track of your points. But more about this later.
2. Understand the Points Cap on Your Card
Not many of us know that most credit card issuers tend to place caps on the points you earn. So, while you may be using the right card and maximizing the number of points you earn, you should know the cap on points.
Let’s look at the HDFC Freedom Credit Card again to understand this point. You get 5x points when you spend on movies, dining, railways, and groceries. What you probably don’t know is that these points are capped at 1,500 reward points per statement cycle. So, the minute you reach this cap, you will not earn these points. Instead, you will earn the base rate of 1 point per Rs.150 spent.
How does this make a difference?
Well, let’s say that in a month, you spend Rs.50,000 on the categories mentioned above. Since you get 5x credit card rewards point per Rs.150, you should ideally earn around 1,666 points. But when you get your statement you see only 1,533 points. This is not a mistake. You see, your points are capped at 1,500 points per statement cycle. This amount to Rs.45,000. Any spending beyond this amount means that you will be rewarded the base earn rate (1 point per Rs.150).
To make sure that you don’t lose out on earning points, ensure that you keep track of your spending and switch cards when you have reached the credit card rewards point cap on one.
3. Know When Your Credit Card Rewards Expire
There is really no point in earning and accumulating points if you just let them expire. In most cases, people don’t know the validity of the points they earn. Do yourself a favour and read the terms and conditions of your card. Knowing when they expire will help you redeem the points in time.
To keep track of all of this, you can download mobile applications like Key Ring or Credit Card Reward Summit. These apps help you track your spending, your points, their caps, and their validity. All in one place, so you don’t have to worry about forgetting the validity of the points on your card or the cap on points.
4. Redeem Your Points on the Rewards Portal
There really is no point in earning all of these points if you just let them stay in your account. Go ahead and redeem them. All banks have their own credit card rewards platform that you can log into and redeem your points for travel, entertainment, retail, and lifestyle vouchers. Additionally, you can redeem your points for products. This is a great way to get a gadget you have always wanted without actually having to spend any money to buy it.
5. Transfer Your Points to a Hotel Loyalty Programme or Airline Frequent Flyer Programme
If you don’t want vouchers or products, you get the best value out of your points if you transfer them to a hotel loyalty program or a participating airline’s frequent flyer program.
If you transfer your points to a hotel loyalty program, you can use the points to pay for your stay or get a room upgrade. With airline frequent flyer programs, once you collect enough miles you can redeem the miles for an air ticket and travel to the destination of your choice.
Now, that you know just how credit card rewards can be, go ahead and find out best credit card uses and get the maximum reward points. But make sure you keep these points in mind so that you can make the most of your hard-earned rewards.