How to Redeem Credit Card Reward Points ?

Credit Card Reward points are types of incentives that customers receive when they use a credit card to make purchases. Credit cards typically have a fixed reward point earning ratio that varies depending on the type of credit card and the issuing bank. For example, a certain credit card company may have a reward policy of granting 1 point for an expense of every Rs.100. 

There are accelerated reward points when you shop at partner merchants. Some banks differentiate reward points for specific categories based on the customer’s card type. For example, a credit card company may have a policy that allows you to earn 2x reward points if you use their card with a certain merchant.

In this blog, we have decoded all the questions and doubts about credit card reward points. Read on!

How Do Credit Card Reward Points Work?

Each rewards programme operates differently, and the value of your rewards varies by programme.   

1. Cashback

 They are the simplest to use because you receive a percentage of your spending back if you spend a certain amount. The percentage of cashback earned varies depending on the bank. You can compare the best credit card for cashback offers and choose the one best suited for you.  

2. Miles

If you enjoy traveling, this is an excellent option. When you use the card to make purchases, you earn air miles that can be used to book flights. You can use these air miles to buy plane tickets or get discounts on plane tickets. Banks and credit card issuers collaborate with travel booking portals or airlines to provide travel-related benefits to cardholders.  

3. Credit Card Reward Points

The point system appears to be the same across all credit card issuers. However, the allocation and value may differ depending on the card issued and the bank’s rules. 

Reward points cannot be redeemed all at once. To redeem, you must first accumulate a certain number of reward points. The accumulated reward points must be redeemed within a certain period. Most banks permit redemption within 2 to 3 years. 

Types of Credit Card Rewards

1. Cashback

One of the most fundamental rewards is the credit card company’s cashback to a customer. This is a type of discount that is credited into the card holder’s account after they have made the purchase. Compare different credit cards for cashback offers and rewards to select one that meets your needs.   

2. Credit Card Reward Points

Each transaction earns you a set number of reward points, which can later be redeemed for goods or services. Bonus rewards may be given to specific merchant categories or merchants to increase online or contactless spending at merchant outlets.  

3. Credit Card Miles

Miles-based reward programmes are associated with airline co-brands and were targeted at affluent consumer segments who traveled frequently. Non-travel transactions would usually earn fewer miles.   

How to Earn Credit Card Reward Points?

There are many ways to earn reward points on your credit card. Different banks offer different ways to earn reward points; below are some of the most common ways that banks offer reward points:  

1. Welcome Rewards

Some banks offer welcome points to new credit cardholders.  

2. High-value Purchases

Spending on high-value purchases such as jewelry, travel bookings, and vacations can fetch you higher reward points.  

3. International Rewards

Some credit cards offer bonus points for using the card while traveling abroad.  

4. Bonus Points

When you spend a certain amount on your credit card, you can earn bonus points.  

5. Regular Rewards

 You will receive a set number of reward points for every buck spent on your credit card.  

6. Accelerated Rewards

There is a scope to earn extra points when you spend money on specific categories like shopping at partner merchants, dining at partner eateries, apart from other dining expenses, entertainment, etc.   

7. Loyalty Points

Credit card companies also provide rewards for renewing your credit card. You can earn a substantial number of points for your credit card loyalty. 

How to Redeem Credit Card Reward Points?

If you want to redeem your credit card reward points earned, here are a few ways to redeem your points:

1. Online Mode

2. Calling the Customer Care

You can contact your bank’s customer care number and the representative will help you with the redemption process. You can choose your desired product and place the order.

3. In-Store Shopping

Few banks partner with offlines stores too. You can walk-in to these stores and redeem your points. 

How to Maximize the Reward Points on your Credit Card?

1. Do not Spend Solely to Earn Rewards

While rewards are a nice perk, you should not overspend on your card just to rack up more reward points. Overspending may make it difficult to make full payment, resulting in late or missed payments and high finance charges.

2. Use the Correct Card for the Appropriate Purchase.

Not all credit cards reward you equally; each one focuses on different types of spending. This is why it is critical to understand your rewards programme, identify the areas with the greatest benefits, and use the card appropriately.

3. Redeem for Maximum Benefit

The redemption rates are different for each card, just like the reward earning potential. This is why it is critical to first understand the conversion/redemption rate offered before making a decision.

4. Keep Track of the Expiration of Reward Points

Having a large reward balance will undoubtedly help you get a better deal when it comes time to redeem. However, keep in mind that credit card reward points typically have an expiration date of two years from the date of earning, so you must plan your redemption so that no points are lapsed. Furthermore, some credit cards offer reward points that never expire.

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What to Get From Credit Card Reward Points?

Credit Card holders can avail whatever reward they want given the points they have earned:

1. Gift Vouchers

Reward points can be redeemed for e-vouchers from well-known brands, merchants, and restaurants.

2. Cashback

Instead of points, most cashback credit cards offer direct statement credit. Some cards, however, allow you to convert your reward points into cash credit. The funds can be used to pay off any outstanding credit card balances.

3. Merchandise

Each bank will have a catalogue containing a specific list of products as well as the number of reward points required for each product. Clothes, accessories, books, stationery, travel merchandise, electronic gadgets, beauty products, and other items can be found in the catalogue.

4. Donations 

Reward points can be used to make a donation to one of the charities listed with banks. You can choose the charities to which you want to donate, and your reward points will be converted into cash.

5. Air Miles 

Some credit cards allow you to earn air miles rather than reward points. Some credit cards, on the other hand, allow you to convert your accumulated points to air miles. These miles could be redeemed for air tickets or a concession on air tickets.

Credit Card Reward Points vs Cash Back

It is critical that you understand how cashback and reward points in credit cards differ from each other.   

1. Transactions

The main difference between cashback and reward points is that cashback offers are only available at partner outlets, whereas reward points are available on all transactions.  

2. Validity

The other difference is the validity of cashback and reward points earned. Cashback has no expiration date because once credited to your account; you can use it whenever you want. Reward Points have a validity period of two to three years, depending on the bank, after which they expire.   

3. Maximum Limit

Reward points have no maximum amount of reward points you can earn because the more transactions you make, the more reward points you will earn. At the same time, there is a maximum limit for earning cashback on specific offers and brands.

Final Word

A credit card holder can easily manage significant expenses and daily expenditures with credit card reward points. Furthermore, the reward points can be redeemed for various attractive gifts from partnered stores. Credit card rewards programmes have developed significantly, with a wide range of appealing offers. Consumers are advised to assess their spending patterns and choose a rewards programme best suited to their preferences to extract the most value.

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