Explained: How to maximize card reward points without having to overspend

Don't bust your budget just for earning the reward points

A credit card is convenient and rewarding. You use them for big and mid-sized spends to get accelerated points, deals, discounts, and cashback. The more you spend the more reward points you will collect.But it is also important to not overspend in the pursuit of collecting more rewards.

Credit card reward points are the returns on the money you spend on your credit card. These are offered for a specified amount you spend, for instance, 2 reward points for every 100. Different credit cards offer varying reward rates, across specific or multiple categories, brands, etc.  For instance, if you frequently travel, you can earn points by booking flight tickets with your card and later redeem them at airport lounges, enhancing your travel experience.

 

Here are the strategies which you need to follow in order to optimize credit card rewards:

1. Don’t spend money just for the sake of earning rewards

The whole idea behind reward points is to encourage people to make more use of their credit cards. Don’t go busting your budget just for earning the reward points. In order to increase your savings, you should use your credit card for day to day expenses such as fuel and groceries, even if you have cash in hand. In this way, you can increase your rewards-earning opportunities without having to buy extra things that you don’t need.

"Many credit cards offer higher reward points without requiring you to spend more. You must choose credit cards that align with your spending habits and offer rewards that are valuable to you. Look for cards with generous reward programs, bonus categories, or cashback options that match your regular expenses. You must know where you typically spend your money and what types of rewards you would like to earn. This will help you narrow down your options and opt for a credit card that is fit for you," said Adhil Shetty, CEO of BankBazaar.

 Some cards help you earn regular reward points for minimum spends while others help you earn accelerated reward points on selected categories of spends. The categories eligible for accelerated reward points differ from one card to another and are mostly based on the credit card type. 

2. Understand the types of credit cards for higher rewards points and pick a card that offers rewards matching your lifestyle

Shetty lists out the various different cards according to your spending habits

Co-branded Cards: Co-branded credit cards are issued in partnership with specific brands. They give higher reward points or cashback for purchases made at the partnering brand’s outlets or website. For example, airline co-branded cards may offer bonus points for flight bookings or retail co-branded cards may offer extra rewards at affiliated stores.

Category-specific Cards: Certain credit cards focus on specific spending categories and offer higher rewards for those categories. For instance, you can find credit cards that provide additional points or cashback for dining, groceries, fuel, or travel-related expenses. 

Premium or Lifestyle Cards: Premium credit cards often come with higher annual fees but also offer enhanced rewards and benefits. These cards may provide elevated reward rates across various categories or exclusive privileges such as airport lounge access, concierge services, or complimentary hotel stays. 

Online Shopping Cards: Some credit cards offer higher rewards or cashback for purchases made through e-commerce platforms or specific online merchants. If you frequently shop online, these cards can help you maximise rewards without spending more.

Travel Rewards Cards: Travel-focused credit cards often offer higher rewards for flight bookings, hotel stays, or travel-related expenses. These cards may provide bonus points for specific airlines or loyalty programs, access to airport lounges, or travel insurance benefits. 

Some of the cards that can help you earn more rewards are - Standard Chartered Platinum Rewards credit card, HDFC Moneyback Credit Card, HSBC Smart Value Credit Card, YES Prosperity Reward Plus Credit Card, AU Bank Zenith Credit Card.

3. Focus on the bonus categories for accelerated earnings

If you use your credit card within the first three months after getting it, some banks may give you bonus points as a welcome gift. You can earn even more points if you spend money shopping at partner stores, eating out, or attending entertainment events. Moreover if you  add an authorized user, many credit cards give you additional bonus points, usually around 5,000, for adding an authorized user who makes purchases in the first few months.

Most credit cards offer extra rewards on select categories such as online shopping, groceries, departmental store spends, etc. When choosing a rewards credit card, users should check if the bonus categories align with their spending habits.

"It is also important to put the right type of spends on your credit card to maximize earnings. For example, if your credit card gives 10-times more reward points on grocery spends, you must use it for your grocery purchases. Some credit cards may also offer extra benefits with select merchants; cardholders should make the most of such co-branded features.

For instance, Airtel Axis Bank Credit Card offers 25% cashback on Airtel bills paid via the Airtel Thanks app and 10% cashback on utility bills paid via the app. So, if you pay an Airtel Mobile bill worth Rs. 1,000 and Rs. 2,500 electricity bill via the Airtel Thanks App, you will get Rs. 250 cashback for each of these payments, adding up to a saving of Rs. 500," explained Rohit Chhibbar, Head of Credit Cards, Paisabazaar.

4. Watch out for excluded categories
In addition to the bonus categories, cardholders should also know about the excluded categories where they would not get any benefits. "Utility bill payment, for instance, is excluded from the reward benefits of most credit cards. So, despite being a major part of your monthly expenditure, utility bills may not help you earn rewards. Some cards also put capping on the value-back that you can earn which is also a crucial consideration when strategizing the reward earnings," cautioned Chhibbar.

The most popular credit cards for reward earnings, according to paisabazaar:

5. There is no “best credit card” as such
One-size-fits-all approach doesn’t work in this case, as customers have varied requirements, spending behaviours and they hail from varied income categories and profiles.

"Lot of deals and discounts can be availed through credit cards such as up to 10X cashback i.e. 30% discounts on products like phones, laptops, apparel etc. One needs to check for the vouchers on the websites of these card companies.
 

The money which is in your bank account can be used to make higher yielding investments at 9-10% and generate additional returns," said Aditya Damani, Founder at Credit Fair Capital.

Damani advises the rich to explore premium and super-premium cards like HDFC Infinia or the Axis Magnus.  On HDFC Infinia, savings can be up to Rs.3 lakh annually based on its current cashback structure. Therefore, it’s advisable that customers first ascertain their spending habits and then opt for credit cards which offer reward points related to those consumption avenues.

5. Pay your rent through your credit card
You should pay your rent and other utility bills through your credit cards. For instance, websites like Cred,  NoBroker and RedGiraffe allow you to do so and you can in return earn some rewards too. Moreover,  Since credit utilisation is increased by paying the rent with your credit score, this will have an impact on your credit score. The credit utilisation ratio is an important factor to determine your credit score.

6. Use the card’s reward platform
Each time you make a purchase online, the possibilities of earning additional points also go up. Most credit card banks have their own shopping portals from which purchases can be made. Or, you can shop at online stores that offer the option of cashback.
 

Every premium credit card is linked to a reward platform that help you learn more about your card ans also tells you about all the offers and partners.  For instance,  HDFC Bank has SmartBuy, while American Express has its Rewards Multiplier platform.

The rewards you get on SmartBuy are dependent on the debit or credit card variant. You either get bonus rewards or cashback. If you book flights on Smartbuy you get 33% reward points. Instant Vouchers are the next best option. With 5X rewards on Infinia, you can rack up reward points on every purchase. Here is the list of categories that you can purchase from SmartBuy.

Flights: We can book both domestic and international flights. SmartBuy acts as an aggregator  and lists flights from OTAs EaseMyTrip, Yatra, Cleatrip, and GoIbibo.

Hotels

IRCTC Trains

Redbus

Flipkart

Apple Reseller 

IGP Gifting

Instant Vouchers

Purchasing on SmartBuy is  easy. Select the Product/Service of your choice, enter the mandatory details highlighted during checkout, review the order/product summary and pay using your HDFC Bank Credit/Debit Card, Net Banking, PayZapp or other HDFC Bank payment instruments.

6. Sign up for emails with the credit card to take advantage of specific offers.

Credit cards always send exclusive offers via emails. Sometimes they have offers like triple points for dining out or buying fuel. Often, it requires you to “sign up” for the promotion, but it’s a click at most.

India's most loved credit cards for online purchases, according to BankBazaar are: