Skip to main content

Credit Cards - Reward Points

IN AN economic slowdown, when the salaries are either on a freeze or going south - every penny counts. This is, in fact, a good time to review the loyalty programmes that retail chains, credit card companies and banks have on offer. If used wisely, these programmes can make purchases weigh lighter on your wallet and can even bring you a gift or two occasionally.
But to use loyalty programmes to the best of your advantage, you need to plan a bit.

To begin, you must compare the value of the rewards against your spend. The value of points can be calculated by checking worth of the reward against spends made to earn that reward. Therefore, you should chose a programme offering higher reward earning potential.

You must also compare the minimum number of points required for rewards. A programme that offers one point per Rs 100 spend and rewards start at 2,000 points, for example, is a better deal than one that offers two points per Rs 100 spent and rewards start at 20,000 points. But there’s a catch here too. For a better loyalty programme, you just might have to upgrade to a higher limit credit card. But most customers in India just don’t redeem their points. The average conversion rate in India is about 10%- 25%. The awareness level is still low. HDFC has about 26 million credit cards in circulation in the Indian market.

Check Breadth And Depth Of Reward Categories:

Most of the programmes have started offering a range of redemption options including garments, home appliances, cosmetics, gift vouchers, airline miles and donation to charities. However, you should choose the programme that offers maximum number of redemption options that suit your lifestyle needs. In this scenario of an economic slowdown, one should refrain from hefty spending. One should only buy things which add value. High ticket value items should be avoided by a credit card, unless absolutely necessary. All your hard work would go waste if your points expire. Therefore, you should select programmes offering non-expiry points. These points allows customers to accumulate points from year to year.

Make Every Day Spend On Credit Card:

Make it a habit to charge your spending and purchases on the card, especially daily spending such as in supermarkets, gas stations, cinemas. If you spend Rs 10,000 per month on these kinds of purchases and if you earn Rs 1 per Rs 100 spent you will collect 1,000 points per month which ads up to 1,200 points in a year. Even if you end up spending more, credit card companies these days offer 5% deduction through automatic clearing from your bank account to avoid late payment charges. It’s advisable to consolidate your spending with a single credit card to accumulate points faster. Big ticket items should always be consolidated into one single card.

Earn Bonus Points:

Some programmes offer bonus points, allowing customers to earn double, triple or even ten times the points for the same spend. For instance, HDFC Bank offers double reward points for purchases in the month of your birthday or some such specified period. Shoppers Stop too has such a scheme. Under our first citizen membership we offer a flat 15%-20% sale on all items two days of a year. We also offer special exchange schemes for people who buy a particular kind of product like apparel under our loyalty programs. You should look for a program that offers easy-to-use rewards redemption processes and faster delivery of rewards. Some loyalty programmes provide convenience of web-based redemption, home delivery and online order tracking. For instance, American Express offers attractive rewards on utility bill payments such as electricity, telephone and insurance.

You, however, should be wary of using credit cards to buy a large ticket item to accumulating a large number of reward points.

Popular posts from this blog

Tata Mutual Fund

Being a part of the Tata group, the fund has the backing of a very trusted brand name with strong retail connect. While the current CEO has done an excellent job in leveraging the Tata brand name to AMC's advantage, it is ironic that this was just not capitalised on at the start. Incorporated in 1995, Tata Mutual Fund remained an 'also-ran' fund house for around eight years. Till March 2003, it had a little over Rs 1,000 crore in assets and 19 AMCs were ahead of it. But soon after that the equation changed. It was the fastest growing fund house in 2004 and 2005. During these two years, it aggressively launched six equity funds, two debt funds and one MIP. The fund house as of now stands at No. 8 in terms of asset size. This fund house has a lot to offer by way of choice. And, it also has a number of well performing schemes. Tata Pure Equity, Tata Equity PE and Tata Infrastructure are all good funds. It also has quite a few good debt funds. The funds of Tata AMC are known to...

UTI Mutual Fund

Even though only a few of UTI’s funds are great performers, this public sector fund house has many advantages that its rivals do not. It has a huge base of retail equity investors and a vast distribution network. As a business, it looks stronger than ever, especially in the aftermath of credit crunch. UTI is, by a large margin, the most profitable fund company in the country. This is not surprising, since managing equity funds is more profitable than debt. Its conservative approach and stable parentage is likely to make it look more attractive to investors in times to come. UTI’s big problem is the dragging performance that many of its equity funds suffer from. In recent times, the management has made a concerted effort to improve performance. However, these moves have coincided with a disastrous phase in the stock markets and that has made it impossible to judge whether the overhaul will eventually be a success. UTI’s top performers are a few index funds, some hybrid funds and its inf...

Salary planning Article

1. The salary (basic + DA) should be low. The rest should come by way of such allowances on which the employer pays FBT and you don't pay any tax thereon. 2. Interest paid on housing loan is deductible u/s 24 up to Rs 1.5 lakh (Rs 150,000) on self-occupied property and without any limit on a commercial or rented house. 3. The repayment of housing loan from specified sources is also deductible irrespective of whether the house is self-occupied or given on rent within the overall ceiling of Rs 1 lakh of Sec. 80C. 4. Where the accommodation provided to the employee is taken on lease by the employer, the perk value is the actual amount of lease rental or 20 per cent of the salary, whichever is lower. Understandably, if the house belongs to a family member who is at a low or nil tax zone the family benefits. Yes, the maximum benefit accrues when the rent is over 20 per cent of the salary. 5. A chauffeur driven motor car provided by the employer has no perk value. True, the company would...

8 Investing Strategy

The stock market ‘meltdown’ witnessed since the start of 2005 (notwithstanding the recent marginal recovery) has once again brought to the forefront an inherent weakness existent in our markets. This is the fact that FIIs, indisputably and almost entirely, dominate the Indian stock market sentiments and consequently the market movements. In this article, we make an attempt to list down a few points that would aid an investor in mitigating the risks and curtailing the losses during times of volatility as large investors (read FIIs) enter and exit stocks. Read on Manage greed/fear: This is an important point, which every investor must keep in mind owing to its great influencing ability in equity investment decisions. This point simply means that in a bull run - control the greed factor, which could entice you, the investor, to compromise with your investment principles. By this we mean that while an investor could get lured into investing in penny and small-cap stocks owing to their eye-...

Debt Funds - Check The Expiry Date

This time we give you an insight into something that most debt fund investors would be unaware of, the Average Portfolio Maturity. As we all know, debt funds invest in bonds and securities. These instruments mature over a certain period of time, which is called maturity. The maturity is the length of time till the principal amount is returned to the security-holder or bond-holder. A debt fund invests in a number of such instruments and each of these instruments would be having different maturity times. Hence, the fund calculates a weighted average maturity, which would give a fair idea of the fund's maturity period. For example, if a fund owns three bonds of 2-year (Rs 30,000), 3-year (Rs 10,000) and 5-year (Rs 20,000) maturities, its weighted average maturity would be 3.17 years. What is the big deal about average maturity then, you may ask. Well, knowing a fund's average maturity is important because it tells you how sensitive a fund is to the change in interest rates. It is ...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now