Credit card companies
often encourage the use of their credit cards by offering rewards such as
cashback, reward points, or miles. You may receive your cashback as an
increased credit limit to your credit account, or as a cheque, or as money
deposited directly in to your account.
Another possibility is
that you can redeem your cash reward as a gift card with the credit card
company’s partner stores. For example, with the Bajaj Finserv RBL Bank SuperCard
you can get exciting EMI options and discounts on clothes, accessories,
groceries, etc., at Bajaj Finserv partner stores. Reward points, meanwhile, are
awarded based on the money you spend. For every milestone you reach, you are
given a certain number of reward points.
Miles are given mostly
on travel reward cards and you can redeem them to get lower airfare prices. The
number of miles you earn varies from one credit card to another, and may also
vary based on your frequent flier program.
How
do you accumulate and redeem points?
You accumulate reward
points by using your credit card.
Every time you spend a certain amount of money, you get a certain number of
points, as specified by your credit card company. As a generally followed
practice, higher value purchases earn more reward points than smaller value
purchases.
Once you have
sufficient points, you can redeem them against apparel, gadgets, jewellery,
luggage items, gift vouchers, discounts on movie tickets and more. Moreover,
certain creditors have tie-ups with stores where you can redeem points easily.
How
are reward points funded?
It is the fees that
merchants pay to accept credit cards that fund the reward point system. These
fees are called interchange fees, and they usually amount to about 1-2% of
every credit card transaction. There is a limit to the amount credit card
issuers can charge as interchange fees though, and the amount varies in
different countries.
Factors
affecting reward points
There are many factors
that affect the number of reward points you get. These include:
1. Card variant
The type of credit card
you hold plays a major role in the kind of rewards you receive. Depending on
whether you have a travel credit card, hotel rewards card, or airline miles
card, you will get additional points for travel-related purchases, hotel bookings,
or airline tickets, respectively. Moreover, if you have a premium or super
premium variety (as opposed to a basic card) you may get more points for your
purchases. However, such cards also have higher annual and joining fees.
2. Co-branded cards
Credit card companies
and banks often partner major stores, brands, hotel chains, airlines, etc., to
create co-branded cards. These offer a chance to fetch 5 to 10 times more
reward points than other cards, especially when used at the sponsoring
merchants.
3. Where you spend
Depending on where you
use your credit card, you get more (or less) reward points because certain
merchants pay the credit card company a higher interchange fee. For example,
swiping your card at a branded retail store might earn you more points than if
you were to use it to pay your electricity bill.
4. Special occasion spending
Swiping
your card during the festive season almost always gives you bonus points. You
may even get bonus points on joining. For example, the Bajaj Finserv RBL Bank
SuperCard gives you reward points on joining.
What’s more, it is now
a lot easier to apply for
these credit cards with pre-approved offers. Simply share a few
details and get your pre-approved offer today.
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