The Welcome Bonus Isn't Always a Welcome Gift
That flashy sign-up bonus of thousands of points or a shopping voucher is often the first thing that attracts you to a new card. However, these bonuses are rarely unconditional. Most banks require you to spend a minimum amount—say, ₹15,000 to ₹50,000—within
the first 60 or 90 days of getting the card. Failing to meet this threshold means you get no bonus, and any extra spending you did to chase it was for nothing. Before you apply, find the 'minimum spend requirement' and be realistic about whether your normal, planned expenses will meet it. Encouraging overspending is how banks can profit from these offers.
Not All Spends Earn Equal Rewards
A common mistake is assuming that every rupee spent earns the same number of reward points. The reality is far more complicated. Banks often offer 'accelerated rewards' (like 5x or 10x points) only for specific categories such as online shopping, dining, or travel, and sometimes only at partner brands. Conversely, spending on categories like fuel, insurance premiums, or utility bills might earn you zero or very few points. Some cards also place a cap on the maximum bonus points you can earn in a month. Understanding which spending categories your card favours is crucial to accumulating points effectively.
The Hidden Cost of Cashing In
Earning points is only half the battle; redeeming them is where another set of rules comes into play. Many banks charge a 'reward redemption fee', often around ₹99 plus GST, every time you want to use your points. If you redeem a small number of points for a low-value voucher, this fee can wipe out a significant portion of your benefit. Furthermore, the value of a reward point is not fixed. A point might be worth ₹0.25 when redeemed for statement credit, but could be valued higher (or lower) when used for flight bookings or items in the bank's merchandise catalogue. Always check the redemption value to ensure you're getting a good deal.
Your 'Free' Points Have an Expiry Date
Many users collect reward points for years, saving up for a big-ticket redemption, only to find that their hard-earned points have vanished. Reward points almost always have an expiry date, typically two to three years from the date they were earned. Banks are required to mention this in the terms and conditions, but it's an easy detail to miss. It is wise to keep track of your points balance and their expiration timeline. Don't let your rewards become worthless simply because you forgot about them. If points are nearing expiry, it's better to redeem them for a smaller benefit than to lose them entirely.
Does the Reward Outweigh the Annual Fee?
Premium credit cards that offer the most attractive rewards often come with high annual fees, sometimes running into thousands of rupees. Before signing up, do a simple calculation: will the value of the rewards you realistically expect to earn and use in a year be significantly more than the fee you're paying? For many moderate spenders, a no-annual-fee cashback card might offer better net value than a premium rewards card. Many cards offer a fee waiver if you meet a certain annual spending milestone, which is another critical piece of fine print to be aware of.
