Rewards points are credited to the account of the debit/credit cardholder every time the cardholder uses the card to buy goods and/or services. The number of points earned by the cardholder on every transaction depends on the amount of transaction, the type of card used and, at times, the store at which the transaction is done. Usually, for a basic entry-level credit card, the cardholder earns one or two points for every Rs 100-150 spent, but the points earned can go up to 3 to 5 on premium and super premium cards. However, the joining and annual fees are higher for premium or super premium cards than for entry-level cards.
Then there are co-branded cards where the banks and card companies enter into a partnership with petrol companies, airlines or large stores and issue cards for specific use in these establishments. The reward points for these cards are much higher than the normal cards.
The accumulated reward points can be redeemed against the purchase of items specified in the rewards catalogue of the bank or card company. The value of reward points differ from one card to another and it can range from as low as 10 paise per point to as high as Re 1 per point. The value of each point depends on the type of card used by the cardholder. Thus, if Rs 2,000 automatic shaver is available for 10,000 points, the value of each point is 20 paise.
It must be remembered that the rewards points have to redeemed within the period specified by the bank. The period for redemption can vary from one to three years. Points not redeemed expire after the specified period. The points can be redeemed online or at the merchant outlets specified in the rewards catalogue.