Boost credit card rewards: 5 insider tips for maximum benefit | Mint

Credit cards, when used wisely, can transform everyday spending into tangible savings and rewards. Some of the best credit cards in India offer up to 15% rewards, alongside benefits like travel perks, cashback, and exclusive deals. 

However, they can be a double-edged sword—smart usage can unlock incredible value, while misuse may lead to financial setbacks, like paying up to 42% interest on outstanding dues. The key is simple: pair strategic planning with financial discipline to make your credit cards work for you.

From cashback and travel points to exclusive perks, credit cards can help you save money and elevate your lifestyle. Here’s a step-by-step guide to optimising your credit card rewards and maximising benefits without falling into common pitfalls.

Match your card to your spending habits

The foundation of a rewarding credit card strategy is choosing the right card. Before choosing a credit card, analyse your spending habits. Are you a frequent traveler, a foodie, or an avid online shopper? Different cards cater to specific categories, and selecting the right one can make a significant difference. The best credit card for you is one that aligns with where and how you spend.

However, personal biases often cloud judgment. For instance, someone who doesn’t travel themselves but spends significantly on family travel might underestimate their travel expenses. Take an objective approach by evaluating your actual spending patterns and identifying key categories and merchants.

Once you understand your expenses, choose a card that offers disproportionate rewards for those categories. Some cards provide 10x or higher rewards for specific merchants or categories but may have exclusions or reward caps. Ensure you’re aware of these terms.

Some types of credit cards in India:

• Shopping: Ideal for retail, supermarket, and department store purchases. Example: Standard Chartered Manhattan Card offers 5% cashback on supermarket spends.
• Fuel: For those with high fuel expenses, offering savings at specific fuel stations.
  Example: SBI BPCL Octane Card provides 7% rewards at BPCL outlets.
• Travel: Options include general travel or co-branded cards. Example: Axis Atlas Card offers 5x miles on direct airline and hotel bookings, while SBI Air India Card provides 30x points on Air India spends.
• E-commerce: Have a favourite online website you shop most frequently at or have no preference? Worry not, there are cards which reward differently and preferentially for both categories. Example: HDFC Swiggy Card provides 10% cashback on Swiggy, and SBI Cashback Card offers 5% cashback across various merchants.
• Co-branded: Spend frequently and disproportionately at a specific merchant? Get that merchant’s co-brand card to get higher rewards on that merchant. These cards offer exclusive rewards at specific merchants like Amazon, Flipkart, Swiggy, Samsung, and Maruti Suzuki. Over 100 major co-branded credit cards are available in India.

Frequent travellers should consider opting for travel cards, grocery shoppers for cashback cards, and general spenders for flat-rate cashback cards. Also, check for categories excluded from rewards (e.g., utilities, rent, or wallet loads) to ensure your card aligns with your spending patterns.

Maximise spend milestones

Many premium credit cards offer milestone-based rewards. These rewards can be significant but require careful planning. In many cases, the highest return on a card is achieved by just hitting the milestone—spending less or exceeding the threshold can reduce your overall returns.

Examples of optimal spend milestones:

• American Express Platinum Travel: Offers 8-10% rewards on ₹4 lakh annual spending. Rewards drops below 5% at even 3.9 lakh spends and begins reducing with every incremental spend above 4 lakhs.
• Axis Atlas: Best rewards are at ₹7.5 lakhs and 15 lakhs. Spending below or above these milestones reduces your overall return rate.
• HDFC Diners Club Black Metal: Earn 10,000 reward points quarterly for spending ₹4 lakhs. Falling short forfeits the bonus; exceeding it reduces incremental returns.

Plan your spending calendar to hit milestones without exceeding them unnecessarily. For instance, time large purchases like electronics or travel bookings strategically.

Choose a card with the right rewards and benefits

An ideal credit card is the one that rewards you in the area of your choice while giving accelerated rewards in your most frequently used spend categories or merchants.

Select a credit card that aligns with your preferences and spending habits. If you prefer cashback, avoid cards geared toward travel points. Conversely, if travel is your priority, look for cards with accelerated airline or hotel rewards

For instance, millions of Indians use fuel cards despite preferring rewards in other categories. Some even use fuel cards without owning a vehicle because they were unaware of or never offered better options. Choose a card that rewards you where it matters most.

Review your card portfolio annually. If your spending habits change, consider upgrading, downgrading, or switching cards.

Optimise redemption strategies

Understanding redemption options is crucial to maximising the value of your rewards. Many cards offer varying redemption options with different values for points, often with significant value difference between options.

Examples:

• Magnus Burgundy Card: Point values range from ₹0.20 (general travel, vouchers) to ₹1.44 (Accor Hotels).
• HDFC Infinia Metal: Cashback value is ₹0.30 per point, while travel redemption offers ₹1 per point.

Avoid defaulting to the most visible redemption options, which are often the least valuable. Evaluate options to maximise value and align them with your needs. The cashback reward value is often on the lower side and travel value on the other extreme.

Redeem points before they expire to avoid losing out on benefits.

Leverage loyalty programs

While not directly linked to credit cards, loyalty programs play a significant role in enhancing rewards. Transferring credit card points to airline or hotel loyalty programs can provide exceptional value, especially during promotional offers.

For instance, Singapore Airlines frequently offers 30% discounts on redemption tickets. Pairing this with points earned from a travel card can significantly amplify the value. Stay informed about loyalty program promotions to capitalise on these opportunities.

Final takeaway

Credit cards are powerful financial tools, but only when used strategically. By aligning your card selection with your spending habits, maximising milestone rewards, and redeeming points wisely, you can turn everyday expenses into significant savings. Remember: discipline is the cornerstone of success. Pay your bills on time, avoid unnecessary debt, and watch your rewards stack up effortlessly.

Ashish lath, founder of Savesage, a credit card expert platform