How do rewards and loyalty programs associated with plastic money work?

Rewards and loyalty programs associated with plastic money, such as credit cards, work by offering you incentives for using your card for purchases. Here's how they generally work in the Indian context:

1. Earning rewards: When you make eligible purchases using your credit card, you earn reward points based on the amount spent. The number of reward points earned may vary depending on the type of transaction (e.g., retail, dining, travel) and the credit card's specific rewards program.

2. Reward redemption: Accumulated reward points can be redeemed for various benefits, such as discounts, vouchers, merchandise, or even cashback. Each credit card issuer may have a different redemption process, which typically involves accessing an online rewards portal or contacting the credit card company's customer service.

3. Categories and tiers: Some credit cards offer higher rewards for specific spending categories, such as groceries, fuel, or travel. There may also be tiered rewards programs, where higher spending can unlock enhanced benefits or exclusive privileges.

4. Annual fees and reward programs: Certain credit cards may have an annual fee associated with them, which could be partially or fully offset by the rewards and benefits offered. It's important to consider the annual fee and evaluate whether the rewards program justifies the cost.

5. Terms and conditions: Rewards and loyalty programs have specific terms and conditions that govern their usage. These may include expiry dates for reward points, minimum spending requirements, blackout periods, and limitations on redemption options. It's essential to review these terms to maximize the benefits of the program.

6. Promotional offers: Credit card issuers often introduce promotional offers to incentivize card usage. These offers can include accelerated rewards, bonus points, cashback, or discounts on specific merchants or categories. Stay updated on the latest promotions to make the most of your credit card rewards.

Remember to use your credit card responsibly and pay your outstanding balance on time to avoid accumulating interest charges that could outweigh the value of the rewards. It's also advisable to compare different credit cards and their rewards programs to find the one that aligns with your spending habits and offers the most attractive benefits for you.