All you Need to Know about Credit Card Rewards



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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