Credit card rewards are arguably the most important reason why individuals prefer to get a credit card for themselves. The rewards that a card offers, however, tend to vary depending on the type of credit card that you opt for.
Wondering what are credit card rewards? In this article, we’re going to explore this concept and how it can help you save while you spend.
To put it simply, credit card rewards are an incentive that’s offered by card issuers for using their card to make purchases. There are three primary types of rewards that a credit card may offer - cashback rewards, reward points and travel rewards. Let’s take a look at each one of them in detail.
Some credit cards offer cashbacks as a reward for using the card to make payments. Such types of cards typically refund a percentage of the transaction value back to your credit card account. The percentage of cashback that you’re eligible for may vary depending on the kind of transaction that you make. With cashback rewards, you can effectively reduce your overall credit card liability.
This is one of the most common types of credit card rewards that you would get to see. Instead of cashbacks, some credit cards offer reward points when you use your card to pay for products or services. Depending on the card that you opt for and the transaction that you make, the amount of reward points may vary.
Once you’ve accumulated a certain amount of reward points, you can choose to redeem them for cash, discount vouchers, or gift vouchers. You even get to choose the category of rewards that you need as well. That said, keep in mind that many card issuers tend to levy a small fee for reward point redemption. Also, reward points have a limited life span and can expire if left unclaimed for a long period of time.
Travel rewards are very similar to reward points. However, in exchange for points, you earn air miles when you use your card to make payments. These air miles that you accumulate can be redeemed at a later point in time for free flight tickets. Alternatively, you can also redeem your accumulated air miles to book hotels as well. Such kinds of credit card rewards are often offered by travel credit cards and are designed for frequent fliers since you get to save a lot through free flight tickets.
Now that you’ve seen what credit card rewards are, let’s take a look at its significance and uses.
Rewards play an important part in the credit card ownership experience. They can enhance your entire credit card experience and make it a lot more gratifying. Also, thanks to credit card rewards, you’re far more likely to use your card to pay for products and services. This is precisely why card issuers often offer exciting rewards as an incentive.
With credit card rewards, you get plenty of opportunities to save money through cashbacks, discount vouchers and free tickets. The higher the value of transactions, the higher the rewards you’re likely to get. In some cases, you even get accelerated cashbacks or rewards on certain specific transactions as well.
Since the rewards that you get to enjoy depend on the kind of card that you choose, it is important to ensure that you pick the right credit card. This way, you can maximise the benefits that you get from the card. You can also compare the credit card rewards of multiple cards with one another to make sure that you choose the one that fits your requirements.
Also, remember to keep an eye out for the date of expiry of your reward points. It is advisable to redeem reward points much before its actual expiry date. Holding onto your reward points for longer in the hopes of accumulating more can lead to you missing out on its benefits.
In the case of cashback rewards, the card issuer will automatically credit the cashback to your account. In the case of reward points and travel rewards, you will have to visit a dedicated reward point redemption website. Once you’re on the website, you can choose the reward that you wish to redeem your accumulated points for. You will then receive the reward on your email and your registered mobile number.
Some of the best rewards credit cards that you can currently get in the year 2022 include the SBI Card Elite and the HDFC Regalia credit card. Alternatively, the Citi PremierMiles credit card and the HDFC Bank Diners Club Privilege credit card are a couple of other good options that you can consider.
You can use some of the following factors mentioned below to compare credit cards with one another.
Annual Fees
Different credit cards charge different annual fees. The lower the annual fee, the better since you get to save quite a bit.
Rewards Offered
The type of rewards that a credit card offers is another major factor that you should use to compare different cards. Look for cards that offer rewards that are in line with your requirements.
Interest Rates
The interest rate applicable on a card may vary depending on the type of card. The lower the interest rate, the better.
Some of the best cashback credit cards that you can currently get in India are the Axis Bank ACE credit card and the Amazon Pay ICICI credit card. That said, you can also consider the HDFC Millennia credit card or the Flipkart Axis Bank credit card as well.
The Citi PremierMiles credit card, HDFC Regalia credit card and the SBI card ELITE are three of the best credit cards that offer the most number of rewards.
There are multiple highly rewarding credit cards in India. Look into the type of rewards these cards have to decide which ones are best for you. Here are some of the most rewarding credit cards -
1. SBI Prime Credit Card
2. Standard Chartered Platinum Rewards Credit Card
3. American Express SmartEarn™ Credit Card
4. IDFC FIRST Select Credit Card
5. HDFC Regalia Credit Card
The three main types of credit cards are -
1. Cashback rewards
2. Reward Points
3. Travel Rewards
