The Golden Rule: Never Pay Interest
Before chasing rewards, the most critical rule is to always pay your credit card bill in full and on time. Banks charge exorbitant interest rates, often between 18% and 40%, on outstanding balances. Paying interest even once can wipe out the value of any
points you've earned. The goal is to be a "transactor," someone who pays the bill off monthly, not a "revolver," who carries a balance and pays interest. If you cannot commit to this, sticking with debit cards or cash is a safer financial choice.
Choose the Right Credit Card
Not all credit cards are created equal. For earning flights, you generally have two options: general travel rewards cards and airline co-branded cards. General travel cards from banks like HDFC, Axis, or American Express offer flexibility, allowing you to transfer your points to multiple airline partners. This is often the better choice as you aren't locked into a single airline. Co-branded cards (e.g., an airline-specific card like Vistara or Air India) are best for loyalists who fly one airline almost exclusively. Look for premium cards like the Axis Atlas, HDFC Diners Club Black, or IndusInd Avios Visa Infinite, which are designed for travel rewards. For beginners, a card with no annual fee that still offers lounge access and rewards, like the IDFC FIRST Select, can be a good starting point.
Maximise Earnings on Everyday Spending
The core of the strategy is to channel all your predictable, regular expenses through your rewards credit card. Instead of using a debit card or UPI for groceries, utility bills, fuel, and online shopping, use your credit card. This way, spending you would have done anyway starts generating points. Some cards offer accelerated rewards on specific categories like dining or travel bookings. It's wise to use the right card for the right purchase; the card that gives you 5x points on flights might only give 1x on insurance payments. Also, look for sign-up bonuses, which often provide a large chunk of points for meeting a spending target in the first few months and can be the fastest way to a free ticket.
The Smart Way to Redeem Points
Earning points is only half the battle; redeeming them wisely is where you unlock the most value. You have two main options: booking directly through your bank's travel portal or transferring points to an airline's frequent flyer program. Booking via a bank portal like HDFC's SmartBuy is simple, as points act like cash with a fixed value. However, transferring points to airline partners like Singapore Airlines KrisFlyer or British Airways Avios often provides significantly more value, especially for business class tickets. For example, points worth ₹10,000 in a bank portal might get you a flight ticket worth ₹30,000 or more when transferred and redeemed smartly. Avoid redeeming points for merchandise or low-value cashback, as this is the costliest mistake you can make.
Avoid Common Pitfalls
While rewards are attractive, stay mindful of the potential downsides. High Annual Fees: Premium travel cards come with fees. Ensure the benefits you get (lounge access, bonus points, insurance) are worth more than the fee you pay. Foreign Transaction Fees: Many cards charge a markup of 2-3.5% on international transactions. If you travel abroad, consider a card with zero or low forex markup fees. Points Expiry: Keep track of when your points expire. Some policies require minimal activity on the card to keep your entire points balance safe. Never buy points just for the sake of it, unless it's a small amount to top-up for a specific high-value redemption.
