How to make intelligent use of your credit card reward points?

Many first-time credit card users don’t know the optimal way to use their credit card points.

The issuance and use of credit cards has accelerated since Covid-19 hit the country in 2020. In fact, almost every aspect of our daily lives has changed due to the pandemic, including consumer spending and spending patterns.

Reports say the festive season helped credit card spending reach a record high of Rs 1.22 lakh crore in September 2022. With the rise in number of credit cards, there has been an increase in lifestyle aspirations, demand for credit, and banks introducing new products and fintech partnerships, giving rise to co-branded cards that now popular.

Apart from access to credit, the main reasons consumers choose credit cards are the rewards, benefits, discounts and other offers that come with it. Depending on the credit card, a person can use their rewards program to earn points for purchases made in categories, including shopping, dining, bill paying, entertainment, and travel. When someone spends, someone earns points that can be exchanged for various prizes.

Today, co-branded cards have emerged as a new payment method as they appeal to consumers across demographics and have an affinity for certain categories.

Many banks, merchants and fintech companies have introduced co-branded cards tailored to the needs of their target segments. This credit card is tailored to individual needs – it’s almost a card for everyone. Along with this customized card comes an attractive reward points program that encourages various segments to take advantage of the benefits, making it a smarter approach to managing payments.

It is very important for credit card users to know the benefits provided by the card. But many first-time credit card users don’t know the optimal way to utilize their credit card rewards points. It is important to note that the value of reward points and point redemption varies significantly from bank to bank depending on the type of card – from initial offer to premium offer. How to get reward points:

Credit card rewards points are earned automatically every time you swipe your card for a purchase. In most cases, cardholders earn one point for every Rs 100 to Rs 250 spent on a credit card. Also, the higher your purchase value, the more points you will earn.

However, the number of points you collect with each purchase will vary depending on the type of card you have and the issuing bank. A co-branded travel credit card, such as the MakeMyTrip ICICI Bank Credit Card, will earn you more points for flight and hotel bookings than a regular credit card. Selecting multiple co-branded cards and using them for the specific categories they are tailored to will help you get the most benefits that are redeemable across the benefits ecosystem.

Here are some tips on how to maximize the benefits of your credit card reward points:

  • If you spend money on your credit card within the first 90 days of issue, some banks offer welcome points. Spending on certain categories, such as shopping at partner stores, dining experiences, and entertainment, earns you accelerated reward points. You can take advantage of these points to make better spending decisions.
  • Stuck for gift ideas this holiday season? You can exchange your points for e-vouchers or gift cards. This way you give the recipient the option to buy what he or she wants. You can also choose to shop through various categories on card issuer rewards portals or save a lot on airfare and hotel accommodations through rewards points and air miles. Some banks even offer the option of making a donation via reward points.
  • Be aware of when your points expire and make sure you redeem them before they do. It is wise to keep a record of credit card reward points before they expire. Most banks provide a special portal to track points and make purchases from the bank’s own official portal or application. Keeping track of these can be very useful when you are shopping, buying plane tickets, etc. To keep things simple, there are several cards on the market that offer additional rewards for reaching spending milestones each year. Therefore, it is wise to concentrate purchases on one or two cards to maximize rewards.

Benefits of Credit Card Reward Points

From hotel bookings to airline tickets to charitable contributions, cardholders are spoiled for choice when it comes to choosing how to redeem their reward points. They can plan their next vacation, revamp their wardrobe, or buy groceries. They can browse the catalog extensively to make a choice and find the best option for their point. Therefore, it is very important to first choose the right credit card by comparing different cards and choose the one that offers the most benefits according to one’s lifestyle and spending patterns.

If someone is a smart credit card user and understands the credit card ecosystem and its benefits, a credit card can be a smart way to manage spending and get the most out of it. It helps users to build a learning curve to handle finances in a more responsible way and have a risk-free expense management experience.

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