Reward points – underlying secrets
Posted on: 12/Apr/2014 4:36:55 PM
Have you ever thought of the reason behind availing debit or credit card reward points? What is the actual need for the card company to give you such points and deduct it in case if the user did not redeem the points by some means? Is that a huge loss if you lose out on your reward points? If you haven’t been clear about answers for all these queries, here it is.
Credit or debit card reward points are actually sales pitch for the bankers.
How does the reward point work?
First of all, it is necessary to know that each and every transaction you make using a debit or credit card will fetch ‘interchange’ fee to the banker from the merchant outlet. This may be of the range 1 to 2.5 per cent. In addition to ‘interchange’ fee, the banker would also charge annual charges from the card holder and also demand for the interest rate towards unpaid bills. Such incomes will again be shared with the card holder pretending it to be a gift for banking with them. This would indirectly induce the card holder to use the card for further purchases.
How are reward points calculated?
On a very basic card, the customer would obtain one or two points for each and every purchase worth Rs 100 or 150. In case of premium or super premium cards, the customer may obtain 3 to 5 points for similar transactions. The higher the card’s range is, the higher the reward points will be. It is therefore the responsibility of the customer to be aware of how bankers drag you to buy products using the card.
It is not the reward point that matters, but how much you actually spend to collect the points.
