The benefits offered by the cards Aryan is considering should be something he can use. Some cards offer higher prize points For every rupee spent towards expenses such as airline travel or e-commerce usage or purchase of fuel or expenses associated with specific outlets. There is no point in taking these cards for Aryan unless he expects to spend more on these items or at such outlets. If he doesn’t have such a specific requirement, ideally he should be looking for a card that will reward any spending made on the card. The reward points earned on such cards may be less, but they will benefit as they will accrue reward points regardless of where or when they are using their card. Once Aryan decides on the type of card, he should evaluate the reward program itself. First, he has to see how much every rupee spent is converted into reward points and second, how the accumulated points can be redeemed.
Cards associated with most establishments or services may limit the use of rewards to specific outlets or spends. If it is a card with a normal rewards program, Aryan should choose the card that gives him the most flexibility in spending his reward points. Cards that offer a percentage of the amount spent as cashback are the best in this regard. Cards that allow him to spend reward points across a cross-section of outlets and services should be given priority over cards that require him to select products from a catalogue. These are not only overpriced but may also not be essential products for Aryans. He should keep track of the reward points accumulated and redeem them from time to time. If he is saving for a big purchase, he should remember that the reward points may have an expiry date.
whereas evaluation of awardsAryan should not overlook the costs associated with the card. Many cards co-branded and offering higher rewards come with higher annual fees or renewal fee, The interest charged on the outstanding balance may be higher as compared to other cards. There is no point in paying high recurring charges if he/she does not make extensive use of the benefits offered by the card. If he is clear about his needs and what his spending habits are going to be, then he can plan on the right card and make the best use of it.
Content on this page is courtesy of Center for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.