Home Business What Are Credit Card Reward Points & How Do They Work?

What Are Credit Card Reward Points & How Do They Work?

by Abhay Choubey
Credit Card Reward Points

Credit cards have eased people’s lives considerably. You can use your credit card to pay for anything, from gadgets and groceries to flight tickets and hotel accommodation. Many banks and credit card issuers run reward programs through which cardholders can earn credit card reward points and redeem them for added perks, discounts, and gifts.

Once you get credit card, you are ready to earn points on your purchases. But how do these rewards points work, and how can you get value from your point redemptions? Earning reward points and redeeming them becomes easier when you know how they work. Find here a quick overview:

What are Credit Card Reward Points?

Reward points are the incentives you accumulate through loyalty, reward, and cashback programs running on your credit card. You collect these points whenever you purchase under specific categories using your credit card. The points are updated with each credit card bill, and you may view or redeem them to get the associated benefits. 

While applying for a credit card, you must consider the type of reward points the card issuer offers and whether they align with your spending habits and lifestyle. For example, if you are a frequent traveller, you must look for a credit card that offers the best deals on travel-related reward points to get discounts on airlines and hotels. Some credit cards charge an annual fee, worth the perks you get with the card.

Types of Reward Points

You may accumulate reward points by purchasing under certain categories or specific bonus promotions. Different types of reward points include:

Points: You earn these rewards by purchasing specific categories, such as dining, gas, travel, etc. Since the value of these points may vary from one issuer to the other, you must do your homework and select the right card with high-value points. 

Miles: These reward points are commonly associated with travel-related purchases. Many airlines offer branded cards that provide mile points for frequent travellers. You may earn these miles by purchasing airline tickets using your travel card or loyalty program. Once accumulated, you may use these miles to get discounted flight tickets or hotel stays. 

Cashbacks: Cashback is a percentage of your purchase amount you can earn and accumulate with each billing cycle. While you get a certain cashback for each purchase, you may use it at department stores, gas stations, and grocery stores. Some credit card issuers offer higher cashback on travel categories. 

How do Credit Card Reward Points Work?

When you use your credit card to make a purchase, you receive reward points against the same. Almost all credit card issuers offer reward points, though their worth may vary. You can talk to your bank executive to know the value of each point you earn. Credit card issuers offer points against most transactions, such as high-value purchases and travel tickets. They also put a cap on how many points you must have accumulated before redeeming them.

Some banks provide a catalogue of products you can buy using your credit card reward points. However, while purchasing from a catalogue, be sure you do not buy something just for the sake of it. Ensure that it is of use to you, and you would have purchased it anyway. 

Tips to Earn Maximum Reward Points

These tips can help you earn maximum credit card reward points:

Choose a Card Suitable to your Lifestyle: You can earn maximum points by selecting a card that suits your lifestyle. For example, if you are a frequent traveller, you can earn points with each travel-related purchase. However, if you do not travel frequently, there’s no use selecting a card that gives points on flight tickets. 

Check the Available Features: Study the features closely before getting a credit card. For instance, some useful features include easy EMIs, fuel surcharge waivers, automated bill payments, etc. These features can help you accumulate more points with the ease of payment and other benefits.

Use Cashback: If you shop online frequently, you may use your credit card to avail exciting benefits and deals. Many credit card companies collaborate with e-retailers to offer you cashbacks and other lucrative offers. Look for deals in varied categories and use cashback features to avail benefits.

Look for Seasonal Offers and Deals: Look for credit card deals and bonuses, especially during the festive season. The extra points you gain with these purchases can result in additional savings. 

Redeem Before the Expiration Date: Credit cardholders collect points and redeem them all together to get significant rewards. However, credit card reward points come with an expiration date and lose value if you do not use them before that date. Therefore, watch the expiration date of your reward points and redeem them before you lose the deal.

Your spending habits and lifestyle largely influence the value of reward points. You may accumulate them by purchasing your everyday items and redeeming points overtime to get lucrative rewards. Are you looking for a card with the best credit card reward points? Do your research and apply for the one that suits your lifestyle and meets your needs.

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