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.
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.
