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How Do Credit Card Points Work?


One of the ways credit card issuers reward you for using the card, besides discounts and cashback, is with credit card points. The way in which you can earn these points can vary from one finance company to another. Some will reward you one point for every purchase worth Rs 100, some many offer two points, some points you may earn on shopping at a particular store.


There are even points achieved on making purchases of a certain limit within a certain period while another credit card company may reward you for referring a friend.

Further, these reward points can be redeemed to make more purchases towards travel or entertainment (like movie tickets) or can even be redeemed in cash.

How Do Credit Card Points Work?

How to redeem credit card points?

You can visit the bank or finance company's official website to access your account information and check the number of points you have earned. There may be a limit on points or limit on the time period set to suggest when you can redeem them.
You will have to call the customer care if you are not aware of how to access this information on the bank's website.


These are some of the forms in which a bank may allow you redeem the credit card points:

  • Voucher: Your bank will be associated with some retail brands and will provide you with vouchers to make purchases at these stores, online or offline.
  • Catalogue: It will be a catalogue of products or services from various categories like clothing, footwear or crockery. This may however not prove very useful as the options will be limited and you feel complied to purchase something you don't need.
  • Cashback: This is transaction specific and you will be rewarded with cashback for making a purchase with a retailer that the bank is tied up with.
  • Miles: Banks that are tied up with travel booking portals or an airline will give you travel related benefits. On using the card, the user will earn air miles which can be used to book flight tickets. This option is beneficial for frequent fliers.
  • Cash: Some banks allow reward points to be converted into cash and credit it to your account.

How to earn credit card points efficiently?

A credit card is good only when used responsibly, or you could run into debt chasing those reward points. One of the thumb rules in credit card usage is to use only 30 percent of your monthly credit limit. Over-utilisation or under-utilisation could hurt your credit score.

Further, pay the credit card bill on time and choose a card that gives the kind of rewards that could be used to make useful purchases. Additionally, the card should also allow you to earn points on purchases that would be helpful as well. For example, choose a card that helps you earn points on day-to-day grocery purchases at your local supermarket.

Another thing to remember is these reward points aren't exactly free. There will be certain kinds of costs or charges attached to it. Additionally, if you are only partially covered for an expense, it means you need to take out some extra money to fend that purchase. For example, if you get a free flight ticket, you still have to spend on stay and other vacation expenditure.

Read more about: credit card
Story first published: Monday, July 8, 2019, 17:30 [IST]
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