By Kamiya Jani, Moneycontrol.com
Now
that credit cards have given you the power to shop unlimited without
worrying about the cash in your pocket, you have the power to spend
money like there is no tomorrow. And since you are getting reward
points for spending your money, who would want to stop shopping
anyways?
There
has been a rage of reward programmes, which are being offered by most
credit card companies to promote card usage among customers. Each time
a card-holder uses his/her credit card, he/she earns a certain number
of points. After accumulating a minimum number of reward points, the
customer can redeem them at participating merchant establishments for a
variety of rewards/ gifts, as detailed in the rewards programme
catalogue.
For example, ICICI Bank’s credit card offers a scheme
wherein for every transaction of Rs. 200, you get one reward point.
Once you have accumulated 500 points (which further means spending Rs 1
lakh), you may get fuel vouchers or gift/sports articles.
Rewards
have started to become more significant as card providers have widened
the horizon of redeemable gifts to include not only merchandise,
apparel, dining, entertainment, gift vouchers, discount coupons and
magazine subscriptions, but also financial services, fee waivers,
credit card upgrades, air miles and so on. General Manager of ICICI
Bank, B Madhivanan says, “These reward programmes are more popular
among the co-branded cards since it is adding relevance to the
expenditure they make.”
Popular
as they maybe, reward points also do come with their share of fine
print. Make sure you know about them before splurging that card.
Delivery charges
Redeeming
gifts is fairly easy. You just have to book your gift online or over
the phone, or fill out a redemption form and submit it at the bank
branch. The gift will be delivered to your mailing address within 15-20
days of placing the order. However, you must always check with your
credit card provider if any delivery charges would be levied. While
most of the companies deliver it for free of cost, there are a few
companies that demand delivery charges.
Shell out some cash too
If
you are getting free gifts or vouchers without spending extra money, it
is definitely a good deal. But you need to be careful when asked to put
in extra cash to redeem a gift along with your points. For example, if
you may want to order a vacuum cleaner from a reward catalogue, you may
have to pay Rs 975 extra apart from contributing 2100 points. In such
cases, it would be wise to find out the actual price of the product and
then compare it with the monetary value of the points plus the extra
cash that you have to shell out. You may discover that it is cheaper to
buy a vacuum cleaner rather than wasting your points.
Lapsed points give no returns
The
reward points in your credit can lapse under two situations. One, when
the bank permanently blocks your account for non-payment of bill. The
bank can forfeit your reward points. Second situation is when you
yourself cancel your credit card. But in the second case, banks
generally give you a grace period from 15 days to a month or so to use
the balance reward points.
Restrictive points
We
might feel happy thinking that whatever transaction we make through our
credit card, we are sure to get the reward points for this. Stop! There
may be a hidden clause to this. There are a few banks like Standard
Chartered, which do not give any points when you use your card at the
petrol pump. Also, no reward points are given if you use your card for
cash withdrawals; this is the same for almost all the banks.
And
once you’ve made up your mind to accumulate points, try to find means
to maximize them. Purchasing high-value products will always help to
get more reward points in less time. Like, if you buy a television
worth Rs 40,000, and have the funds on hand to pay for it, using a
credit card can immediately get you 200 points. Similarly, if you are
planning a holiday, using your credit card wherever possible can get
you reward points. But make sure that you pay your credit card bills on
time and do not keep any dues. If you do so, you will be levied with
interest rate and later higher interest rate. And that is definitely
not a trade off for collecting reward points.
We all love free gifts and they are always welcomed. But be careful and make the most of it!
Link: http://www.moneycontrol.com/mccode/news/article/news_article.php?autono=234115