The Silent Tax on Your Rewards
‘Devaluation’ is the polite term for when your hard-earned credit card points suddenly buy you less. Imagine saving up 1,000 points for a flight voucher, only to wake up and find it now costs 1,500 points. That’s devaluation in a nutshell. It’s a silent
tax on your loyalty, and in 2026, it has become an aggressive and widespread trend across major Indian banks like HDFC, Axis Bank, SBI Card, and ICICI Bank. These are not minor tweaks; they are significant changes that affect everything from reward earn rates and redemption values to lounge access and transfer partners. For instance, a card that gave you 4 points per ₹150 might now offer 5 points per ₹200, which is a subtle but real reduction in value.
Why Is This Happening Now?
The first half of 2026 has been particularly brutal for points collectors. It's not a coordinated conspiracy, but rather a perfect storm of factors hitting every bank's balance sheet at once. For years, banks competed fiercely for customers with generous rewards. However, the economics of this model are becoming unsustainable. A growing number of disciplined users, or 'transactors', who pay their bills in full and never incur interest, mean banks lose money on high-reward payouts funded by low interchange fees. Coupled with rising operational costs, new RBI regulations requiring banks to hold more capital against unsecured credit, and a softening in overall consumer spending, banks are forced to cut back on the most discretionary liability they have: your reward points.
Your Pre-Devaluation Audit Checklist
In this environment, passively collecting points is a losing strategy. It’s time for a quick audit. First, get a clear picture of your holdings. Tally up all your points and miles across every card and loyalty program. Second, investigate the current value. Check the bank’s portal for the value of your points for booking flights, hotels, or redeeming for vouchers. A point isn't just a point; its value can vary dramatically. Third, review the rules. Have transfer partner ratios changed? For example, Axis Bank removed key partners like Marriott Bonvoy and Qatar Airways and diluted ratios for others, which drastically changed the value proposition for many users. Finally, check for new restrictions, like HDFC Bank capping accelerated rewards on SmartBuy vouchers or many banks introducing minimum spending requirements for lounge access.
Adopt the 'Earn and Burn' Philosophy
The debate between hoarding points for a huge aspirational trip and redeeming them as you go is over. In a climate of constant devaluation, the 'Earn and Burn' strategy is the clear winner. Points are a depreciating asset; their value is unlikely to ever be higher than it is today. Hoarding them for a first-class flight to Japan in three years is a risky gamble. The airline could change its reward chart, or your bank could devalue its points, leaving you with a mountain of less-valuable rewards. A better approach is to redeem them for good-value rewards as you earn them, locking in their worth before it can be eroded. This doesn't mean redeeming recklessly for low-value merchandise, but rather having a clear, achievable goal in mind and using your points for it within a reasonable timeframe.
Smart Redemption Moves to Make Today
If your audit reveals you're sitting on a treasure trove of points, it's time to act. The most value is almost always found in travel redemptions. Look at your travel plans for the next 6-12 months. Can you book flights or hotels for an upcoming holiday or family visit? Booking early can lock in current rates before another devaluation hits. If you don't have travel plans, consider high-value vouchers for brands you regularly use, but be aware of new caps. Some cards still offer a decent value for converting points to statement credit, which can be a straightforward way to offset your monthly spending. The key is to shift from viewing points as a long-term investment to seeing them as a short-term currency that needs to be spent wisely and quickly.
