Using credit cards has become pretty common now, whether it’s for ordering food, booking a train ticket, or buying something big like a phone. A lot of people get attracted to credit cards because of the rewards they offer. Points, cashback, discounts. But have you ever stopped to check how much value you’re really getting from those rewards? Let’s break it down in a way that’s easy to understand, without all the complicated finance terms.
What Exactly are Credit Card Rewards?
Every time you swipe your credit cards, the bank gives you something back. It could be points, it could be cashback, or maybe just some partner discounts. The idea is simple: you spend money and the bank gives you a small bonus for doing so. But the real picture is often more complex than it looks on the surface.
Types of Credit Card Rewards
- Reward Points
These are the most talked-about benefits. You get a few points for every ₹100 you spend. The problem is, the value of these points isn’t always clear. Some cards may give you 1 point for every ₹100 you spend. Each of these points may be worth ₹0.20. So, in order to rack up a significant amount of loyalty points, you should remember to use your credit card for big purchases. But you should note that these points may sometimes expire.
- Cashback
Cashback is more straightforward and probably easier to use. Some credit cards give you flat cashback on specific spends like groceries, fuel, or online shopping. Some cashback cards may offer you a flat 5% cashback on purchases from select merchants. So this means, changing your spending habits such that you only shop from these select outlets, can ensure you keep getting cashback frequently. However, you should remember to read the fine print on these cashbacks.
- Co-branded Rewards
These are cards that are linked with a certain brand—like an airline, fuel company, or shopping platform. You might earn more points or discounts if you stick to that brand. This works well only if you already use that brand a lot. If not, the benefits won’t mean much to you. So, the reward might look attractive but won’t really add value in your daily life.
How to Choose the Right Card?
Before applying for a credit card, it’s better to check how the rewards match your regular expenses. Don’t just go for the one with the most exciting offer. Look at what you actually spend on.
- Start by checking the reward structure. Some cards offer extra points for online shopping, some for travel, and some for fuel. Pick the one that matches where your money usually goes. If you rarely travel, a travel card won’t do much for you.
- Also, check how easy it is to use the rewards. Some cards make you go through a long process to redeem points. If it feels like a chore, you’ll probably end up wasting them. The easier the redemption, the better.
- Always look at the annual fee and other hidden charges. If a card gives ₹500 worth of rewards but charges ₹1,000 as a yearly fee, you’re not really winning. If you’re planning to make a big purchase and convert it into instalments, it’s smart to use a credit card EMI calculator. A credit card EMI calculator helps you see how much you’ll pay every month and how much interest you’ll be charged overall. That way, you’re not caught off guard.
A Few Simple Habits That Help
Using credit cards the right way comes down to a few small but important habits.
- First, avoid spending just because there’s an offer or reward attached. If you weren’t planning to buy something, don’t let a reward push you into it.
- Second, always try to pay your bill in full every month. The interest on unpaid balances can cancel out any rewards you earned. Even one late payment can make a big difference.
- When you do need to break a payment into EMIs—like for a phone or laptop—don’t guess your monthly cost. Just use a credit card EMI calculator. It will show you how much you’ll be paying over time, including the interest. That way, you can decide if the EMI option makes sense or not.
- Also, don’t forget to keep an eye on your reward points. Make it a habit to check your points every few months and use them before they expire.
- Lastly, every year or two, compare your card with others in the market. Banks keep launching new cards with better deals. If your current card isn’t doing much for you, switching can be a good move.
Final Thoughts
Credit cards can definitely offer value, but only if you use them with a little planning. Rewards are nice, but they’re not free money. Sometimes they’re just a way to get you to spend more. Use a credit card EMI calculator to stay in control of big purchases. Focus on the cards and features that work for your lifestyle, not what just looks good in ads. If you keep things simple and don’t fall for every shiny offer, your credit cards can actually help you, not trap you.