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How Do Credit Card Points Work?

A credit card is one of the most important pieces of plastic in your wallet. When used right, a credit card can give you a credit period as well as rewards, discounts and benefits.

How do credit cards work?

Credit cards are extremely popular because they offer you a credit period. This means unlike a debit card or internet banking; you do not have to pay the expense immediately. You can pay the credit card bill around 20 days after the end of the month and get a significant credit period. This credit period comes in handy to manage funds.

However, if you’re late paying the credit card bill, the credit card company will charge you interest on your bill amount till the time the dues are completely paid off. In return for the credit period that the company gives you, you are charged an annual fee. However, some credit cards will waive off the annual fee if you spend a certain amount on the card.

After knowing how credit cards works let’s look at its benefits. There are many credit cards benefits but the biggest benefit are the rewards that you can get for simply using the card. The credit period itself can help you earn interest on your funds before you pay off the bills.

What are credit card points?

Credit cards reward the user in different ways:

  • Discounts on online purchases at merchant websites
  • Rewards or cashbacks
  • Credit card points

Credit card points are one of the most important reasons why people get a credit card. In fact, accumulating credit card points can help in getting free airline tickets and other benefits depending on the card. This is why it is very important to understand what credit card points are and how they work.

Credit card points are the company’s reward system for each rupee spent on the card. This reward system is not uniform and depends from card issuer to card issuer. 1 card point will not always equal Re.1. You have to understand how credit card points accrue before opting for the credit card.

For example, if you earn 10 points on spending Rs. 200, then each point costs you Rs. 20. Some activities or spends may earn you points at an accelerated pace i.e. if you spend on flights on a travel card, you will earn points at a faster rate.

How do credit card points work?

Credit card points can be accumulated and redeemed for different uses. The credit card company clearly specifies where the points can be redeemed. Some card companies allow you to convert points into airline miles which can be redeemed for free hotel stays or free airline tickets.

You can also redeem the points for discounts or offers at merchants. Some card companies give vouchers for hotel stays or experiences in lieu of credit card point redemption. Once you accumulate a particular number of points, they can be redeemed wherever you want to use them for.

One of the important things to consider while opting for a credit card is the reward system i.e. how quickly you earn points and the redemption opportunities. This can help you pick the card that gives you maximum benefits for the spends you make.

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