How to Use Credit Card Reward Points?

If you thought that the plastic money perfectly substitutes the paper money, well, think again. Besides replacing cash, there are many other advantages of credit cards, one of the obvious ones being the reward points which can be prudently used to your advantage. Imagine a scenario in which you purchase clothes for over Rs.7500 and get about 2000 points which can be converted to goods worth the points. If you were to buy an appliance that you require, your festival purchase gets subsidized!

Ways to accumulate reward points:
Before we proceed to find out the ways to accumulate the points, we must understand the concept of co-branding. Typically, co-branded cards are those that are issued in agreement between a credit card issuer; say a bank and a large store or retail chain which offers consumers a special discount or best deals on purchases at the store. For example the Signature Credit card from HSBC and MakeMyTrip give special offers on:

1. International Return Flights
2. 4 Star Plus Properties
3. Domestic Holidays
4. International Holidays

One more example of co-branding is the Jet Privilege HDFC Bank World Card offered by the HDFC bank. This card offers 6 JPMiles on Rs 150/- retail spends and also discounts and privileges on Jet Airways.

Most of the cards give reward points in proportion to the amount spent using the card. The reward point awarded to the consumer depends on the type of card and the issuer. For example, a gold card of a particular issuer may get a reward point of 1 for every Rs.100 spent. In case of a normal card the reward point may be 1 for every Rs. 200 spent.

Here, it is important to note that you should opt for only those cards that offer you best discounts and more points for every Rs. 100/200 spent but you must also remember not to get those cards which have yearly charge as the higher reward points may not hold good if you have to pay an annual fee.

Similarly, the reward points also depend upon the issuer or the bank. The reward points on cards issued by SBI may differ from that awarded by ICICI bank. A noteworthy point in this regard, though, is that the point system can be changed by the issuer and no reward points are issued for use of the credit card for cash withdrawals. Now, that we know the ways to accumulate more points let us further look at how these points can be redeemed.

Ways to redeem reward points: 

• There are many options to redeem the reward points that one accumulates on purchase through credit cards. These days the number of options open to consumers is growing. 
• From gadgets to jewelry, clothes to furniture, the range includes many household goods. 
• Some of the issuers offer the facility of exchanging the points for gift vouchers, which can be used at eateries, groceries and the like. 
• When you buy goods using the cards, remember to note down the reward points that are accumulated each time you use the card. 
• In case of co-branded cards, you can redeem the points as soon as they get accumulated. Nevertheless, in these cases you can only redeem the points in the designated outlets.
• Co-branded cards like the Signature Credit Card from HSBC and MakeMyTrip allow you to redeem your points on your travel.
• Some of the banks allow you to redeem your points in exchange for cash also. 

They say choice brings confusion. To be honest, it is very difficult to choose between the various options that are available in the growing market today. Still, there are a few ways by which you can choose the card that may best suit you. 

• For example, if your monthly expenses are heavy on the groceries part, you may want to buy a co-branded card which has a tie up with a grocery retailer.  
• If you are the holidaying sort, then try the one that has a tie up with a travel planner like MakeMyTrip.  
• If you prefer cash, then choose the one that gives you a cash back offer on the reward points. 
• If you require something that is not on offer don’t hesitate to negotiate. Some banks will give you what you want to keep you happy. 
• There are special cards for women which give attractive offers for the fairer sex! For example the HDFC bank’s Woman’s Gold Credit Card offers the following lucrative features.

  1. They give the consumer an array of redemption opportunities for the points earned; the consumer can choose from microwaves to refrigerators, Barbie dolls to the latest fashion labels.
  
  2. They also offer the consumer the choice of redeeming the accumulated reward points for air miles on leading airlines including Jet Airways, Air India and others. 

• Many of the banks these days offer exchange of reward points for air miles which may come in handy for the frequent fliers. 

Choosing the right card requires an analysis of your requirements and then finding out the issuer or the bank that offers a card that best suits you. Spending wisely and redeeming smartly is a trend that is catching up these days. And do not forget to pay the credit card bills on time, every time!