Utopia: Rewards every day, everywhere!

Remember the last time you rewarded your kid with the latest PlayStation for cracking Grade 5 exams? Or further back, when motorcycle keys magically appeared at your bedside, on the morning of your graduation! Or the smile and kiss rewarded for the fantastic 4-course meal set by your beloved, on a dreary Wednesday evening.

Rewards as a means to re-inforce good behavior has existed from time immemorial, studied by psychologists and mastered by lovers, teachers and parents. Now imagine rewards being changed from once a blue moon to a regular i.e. monthly, weekly or even, daily affair? This is what the credit cards industry has honed over the past few decades. But the industry has also made credit cards complicated in the process.

If you can’t tell them, confuse them!

The attitude of most card companies to rewards is, “You want rewards? Here they are. Now just figure it out.” The reward structures are poorly aligned with what consumers need, so many don’t follow it and many don’t know how to maximize it and, over a period of time lose their motivation to redeem it, let alone track it. The strength in the reward structure isn’t only about earning rewards as many believe – it’s only half the battle, indeed the power lies mostly in its convenient and un-limited redemptions – just ask yourself how many times did you redeem your credit card points or do you actually know how to redeem? Painful, isn’t it? Not everybody knows how to maximize their credit card rewards, and not everybody knows what a good reward credit card can do for them?

So let’s clear the murky waters today to make rewards crystal clear:

1. Type of rewards and how do you earn them?

Various models have been tried, but the three which have stood the test of time are Points, Miles and Cashback.

POINTS: Every single transaction you make, earns you a fixed number of reward points which can be redeemed for goods/services at a later stage. Bonus rewards might be awarded for specific merchant category/ merchants to drive better online or contactless spends at merchant outlets.

MILES: Originally miles-based rewards program, were associated with airline co-brands, and were for affluent consumer segments who traveled frequently. Regular non-travel transactions would typically earn lower miles. Bonus miles were awarded for travel category and further accelerated miles for specific airline partner. Now though, there are several issuers who offer Miles cards which are more or less like regular reward points for transactions across categories and not tied to any specific co-brand and in some cases not even tied in to travel. The pandemic, however, has affected travel and reduced the sheen of mile programs.

CASHBACK: The simplest and the most well-perceived of the lot, cashback programs are generally easy for cardholders to calculate though tier-based cashback % might be awarded basis various parameters which the Card issuer might set.

2. What about redemption of the points earned?

As specified earlier, earning rewards is only half the battle. Like all good things in life, reward points in the credit cards space also come with a host of rules, making the entire redemption process layered and tedious for cardholders. Here are a few examples:

• If rewards are not redeemed within a stipulated time, they expire
• Cards offering you high reward points charge high annual fees
• To redeem reward points, you need to read through and understand terms and conditions that are complicated.
• Reward earn and burn (redemption) have different structures
• Limited set of redemption options which the card issuing company decides– one is mostly saddled with things that you don’t need               
• Different values back on different options
• Fees on every redemption transaction
• 100% redemption is not allowed- combination of Points+pay

Like a complicated maze, reward programs have complex structures – making it confusing to navigate the card’s reward program

3. What is the process to earn and redeem rewards?

Rewards are automatically earned for every transaction, but the credit usually happens only after every billing.

Further, these reward points get purged if the account goes delinquent, i.e. the cardholder hasn’t paid the minimum amount due by the payment due date.

Most issuers have a rewards portal, which is a one stop shop to view and redeem your rewards. A few have also started allowing redemption at point-of-sale at your favorite merchants or in some cases even against online purchases.

4. What are then the value of these points?

Most Indian credit card issuers give you reward points which are equivalent to 10 to 25 paise, when you exchange them for goods and services. Each reward point is usually awarded for spend equivalent to Rs. 100.

Every IDFC FIRST Bank credit card reward point is worth 25 paise. And you earn a minimum 3X, i.e 75 paise, which can go up to 10X, i.e. 2.5% equivalent of spends! Now isn’t that fantastic value for your money.

5. Any tips on how to maximize?

You can easily shave off your monthly spend by more than a couple of percentage points, by utilizing the reward points program of the best credit cards in the market. And compared to traditional payment methods, it’s a no-brainer that credit cards are extremely beneficial from a rewards perspective.

But reward points should never become an inducement to spend more – treat them as an auxiliary benefit of staying loyal/using the card. Ensure that your income, monthly expenses & debt are accounted for in your credit card spends to enjoy the rewards judiciously.

So what next?

If you’re new to the world of credit cards or are unhappy with the confusing rewards program of your existing card, feel free to give the IDFC FIRST Bank Credit Cards a try. The reward points are as good as cash and are with you for a lifetime.

You can pay using points for no fee, online or offline at a merchant of your choice and of course the old catalog-based redemption options still remain available. Every single transaction done on an IDFC FIRST Bank credit card earns you 3X reward points, which double up for online spends (6X). And there’s also the accelerator program to help you earn up to 10X reward points.

So what are you waiting for? Visit our Credit Cards page and start your super-rewarding journey today!

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.