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What Are Rewards in Credit Cards?

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Created on
March 8, 2023


What’s Inside

Apart from being the preferred ‘buy now pay later’ payment instrument, credit cards are famous for their rewards.

Credit card rewards include freebies, gifts, cashback, or vouchers offered in exchange for transactions made using the card. While rewards offered by cards may vary, they remain sure-shot tools to maximise benefits from the card. 

What are rewards in credit cards?

Credit card rewards are incentives offered by credit card companies to encourage cardholders to make purchases using their credit cards. These rewards often come in the form of points, miles, or cashback, which can be redeemed for various benefits such as travel discounts, merchandise, statement credits, or gift cards.

What’s so great about credit card rewards?

  • Every purchase you make using the card is rewarded with points. When stacked up, these points can be used to claim various benefits - from air miles and merchandise to cashback. Apart from expense rewards, the best rewards credit cards offer welcome bonuses and renewal rewards to increase sign-ups.
  • Some credit card issuers provide an extensive catalogue of reward point categories to choose a reward you like.
  • You might wonder, ‘how do credit card rewards help me?’ Well, the rationale behind credit card rewards is simple. Reward points help you claim rebates and discounts on purchases. So collecting more rewards and claiming them might lower your future shopping expenses.
  • Additionally, since more transactions equal more rewards, you’ll be more likely to use your credit card for purchases. This system makes you swipe your card more.

Advantages of having more credit card points

If you’re looking for the best credit card for reward points, you should review the following -

  • The redemption value of credit card rewards may vary among the categories your issuer lists. 
  • Some credit cards allow you to convert reward points and earn cashback. You can use that cashback to shop or clear your credit card dues. 
  • Certain credit cards may have higher annual charges for their premium rewards. 
  • To encourage spending, many credit card issuers offer milestone-based rewards. 
  • The transaction value of a spend determines the number of reward points due. A high-value transaction will generally fetch you more reward points. However, this may vary depending on your card issuer's policy. 
  • Some issuers provide limited-time offers to earn accelerated reward points. You can earn these points by spending on partner stores. 
  • Claiming rewards is generally easy, as most credit card issuers provide online and in-store redemption options. 

While credit card rewards bring you tons of exciting perks, reading the fine print attached to these rewards is essential to make the most out of them. For instance, some credit card reward points have an expiration date and must be used within their validity period. Similarly, depending on your credit card issuer, you may face a monthly or yearly cap on reward points and pay a redemption fee to claim your rewards. 

Fi: A truly rewarding experience

While credit card rewards can be used to your advantage, you shouldn’t overspend just to collect more rewards. Doing so can lead to piling dues and missed payments, affecting your credit score. With Fi Money, you can get a credit card that gives you as much as 5X the value of your spends as rewards, as well as the flexibility to choose the rewards by redeeming those reward points.

Frequently Asked Questions (FAQs)

1. What are examples of credit card rewards?

Air miles, hotel bookings, merchandise purchases, gift vouchers, and cashback are common examples of credit card rewards. 

2. What are credit card rewards, and how do they work?

Credit card rewards are perks card issuers offer for using the card to make purchases. Thus, every time you use the card, you earn reward points. You earn reward points which can then be used to claim rewards from a variety of categories like shopping, travel, bookings, etc.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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