Understanding Reward Points: Calculation and Strategies to Maximize Value

Have you ever wondered how your reward points translate into actual value? Understanding the calculation and strategies to maximize your points can help you get more out of your credit card usage. In this article, we will explore how reward points are calculated, the different ways to earn them, and how to leverage special offers to boost your points.

How Are Reward Points Calculated?

When your credit card bill reflects a balance of reward points, the value of these points can vary widely depending on the issuing company. Reward points are typically calculated based on the value of the gifts, products, or services available for redemption. For instance, if a wristwatch worth Rs. 1000 is offered in exchange for 10000 reward points, then each point is worth 10 paise. However, the range can be from 10 paise to Re.1 per point, which underscores the importance of understanding the specifics offered by each card issuer.

Strategies to Maximize Your Reward Points

Daily Spendings

One of the easiest ways to earn reward points is by making daily purchases, even for minimal-amount transactions. Many credit card companies reward frequent spenders with a spectrum of points ranging from 1 to 10 or even more per spend, depending on the spending frequency and other factors. This accumulation method ensures that every transaction, no matter how small, contributes to your overall point balance.

Welcome Bonus Points

Every bank offers a welcome bonus to new customers to incentivize them to use their credit cards. By understanding and adhering to the terms and conditions outlined by the bank, you can earn a substantial number of reward points right after obtaining your card. If your budget aligns with the spending threshold required for the welcome bonus, this is a fantastic opportunity to kickstart your points earning journey.

Co-Branded Cards

For supporters of specific brands or airlines, co-branded credit cards can offer significantly higher rewards. These cards are jointly launched by credit card companies in partnership with airlines, petrol pump companies, or branded stores, providing unique benefits and discounts. For example, using a co-branded card at an associated petrol pump can not only provide points but also discounts, enhancing the overall value of your spend.

Spending on Special Occasions

Festivals and significant events often come with special credit card offers, which can help you earn bonus points. During Diwali, for instance, some credit card companies might offer 50 bonus points on the first online transaction. Taking advantage of these offers can be a lucrative way to increase your points balance.

Premium Purchases

Spending on high-end items such as jewelry or international travel bookings can also fetch more reward points. For luxury items and exclusive experiences, the points accumulation tends to be higher, making it worthwhile to consider these purchases for long-term reward earning.

Using Premium Card Variants

Some card variants are specifically designed for premium spenders, and using these can significantly boost your rewards. For example, Axis Bank My Zone card members can earn around 40 reward points for every Rs 200 spent on dining during weekends. These premium cards offer enhanced benefits to match the higher spending expectations and personalization of their users' financial needs.

Conclusion

Understanding the calculation and strategies around reward points can help you maximize your points and get more value from your credit card. By opting for co-branded cards, taking advantage of special occasion offers, and leveraging premium spend, you can ensure that your points are not just accrued but also enhanced to provide significant benefits. Understand the value of your points and use them strategically to achieve your financial goals.