What is Rewards Credit Card: Application, Features & Benefits

Rewards credit cards have become an integral part of modern financial strategies, offering many benefits to users who leverage them wisely. Understanding its meaning is essential for making informed decisions. It is crucial to know its application process, benefits, documentation eligibility criteria required and parameters to choose the best one.

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What is a Rewards Credit Card?

A Rewards Credit Card is a financial tool that offers users incentives and benefits based on their spending. The more a cardholder spends, the more rewards they accumulate, creating an opportunity for savings or gaining additional benefits.

These cards are designed and have different rewards to meet diverse preferences, offering a range of options from cashback rewards to exclusive travel benefits.

What Benefits are Offered by a Rewards Credit Card?

A Rewards Credit Card is a sub-category of a credit card that offers benefits to its users for using the card, such as:

Accelerated Rewards: Some rewards credit cards offer higher reward rates on certain spending categories, such as apparel, department stores, dining, travel, etc. This can help you earn more rewards for the purchases you make frequently.
Milestone Benefits: It offers bonus rewards or other perks when you reach a certain spending threshold in a statement cycle or a year. For example, you may get extra reward points, membership benefits, etc., when you spend a certain amount.
Welcome Benefit: Rewards credit cards offer a sign-up bonus or a welcome benefit when you apply for the card and match the minimum spending requirement within a specified period. This can be a lump sum of reward points or a gift voucher.
Fuel Surcharge Waiver: These cards also offer a fuel surcharge waiver on different fuel purchases across all fuel stations across India. This can help you save money on your fuel expenses and also earn reward points on them.
Insurance Benefits: Some rewards credit cards offer insurance benefits such as purchase protection, credit shield, travel insurance, and many more. These benefits can protect you from unforeseen losses or damages.
Dining Delights: Another benefit offered by the rewards credit card is dining delights. Some cards offer discounts or cash back on dining at partner restaurants in India. With this, you can enjoy your meals and save money on them.
Complimentary Lounge Access: Some rewards credit cards offer complimentary lounge access at select domestic or international airports. This can help you relax and enjoy the amenities at the lounge before your flight.

How to Apply for a Rewards Credit Card?

The procedure to apply for a rewards credit card involves the following seven common steps:

Step 1: Research and Choose: Consider the types of rewards offered, annual fees, interest rates, and other features. Opt for a card that aligns with your lifestyle and spending habits.
Step 2: Check Eligibility: Ensure you meet the credit card issuer's criteria, including minimum income and credit score requirements, to boost your approval chances.
Step 3: Application: Obtain the application form from the issuer's website or branch, providing accurate details, financial information, and employment history to avoid processing delays.
Step 4: Review Terms and Conditions: Thoroughly understand the credit card's terms to align your decision with your financial goals and make an informed choice.
Step 5: Submit Your Application: After completing the form and reviewing the terms, submit your application, considering varying approval times among issuers.
Step 6: Credit Check: Expect a credit check from the issuer to assess your creditworthiness, a standard procedure in evaluating responsible credit management.
Step 7: Wait for Approval: You'll be notified of the decision through email or mail. If approved, you'll receive your new card, which you can activate later.

What are the Eligibility Criteria for Rewards Credit Cards?

You need to meet the following eligibility criteria to qualify for a Rewards card:

You should be between 18 and 70 years old (for primary cardholders) and above 18 years old (for supplementary cardholders).
You should be a resident of India.
You should have a good credit score (at least 670) and a clean credit history.
You should have a stable income source and meet the issuer's minimum income requirement.

What are the Documents Required for Rewards Credit Cards?

You may need to provide some documents, including:

PAN card photocopy
Colour photograph
Identity proof (such as voter card, Passport, Aadhaar card, etc.)
Address proof (such as Passport, utility bills, Aadhaar card, etc.)
Income proof (including latest payslip, bank statement, Form 16, IT return copy, etc.)

How to Choose the Best Rewards Credit Cards?

Choosing the most suitable rewards credit card requires a careful examination of the following six factors:

Assess Lifestyle Compatibility: Understand your lifestyle and preferences to select a rewards credit card that offers benefits aligned with your interests, whether it's travel, dining, or everyday purchases.
Determine Redemption Value: Evaluate the actual value of rewards by considering redemption options. Choose a card where rewards can be redeemed easily and effectively, ensuring maximum value for your spending.
Factor in Annual Fees: Look closely at the annual fees and weigh them against the potential benefits. Ensure the perks and rewards justify the cost, optimising the Rewards credit card's overall value.
Consider Introductory Offers: Explore introductory offers beyond sign-up bonuses. Some cards may provide special promotions or elevated reward rates for an initial period, boosting the card's initial value.
Review Customer Service and Support: Assess the quality of customer service the credit card issuer offers. A helpful customer support system can significantly enhance your overall experience with the card.
Check for Flexible Redemption Periods: Look for cards with flexible redemption periods. Some cards come with expiration dates on rewards, so opt for those that allow ample time to redeem your hard-earned benefits.

From cashback on everyday purchases to travel rewards, these cards align with diverse lifestyles. However, responsible usage is paramount. By diligently researching, understanding terms, and making informed choices, users can maximize rewards and ensure a positive impact on their overall financial well-being.

FAQs about Rewards Credit Cards

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What is the major disadvantage of Rewards Credit Cards?

The major drawback of Rewards Credit Cards is that they tempt individuals to spend beyond their affordable limit to maximise rewards or secure sign-up bonuses.

How does a Rewards Card differ from a credit card?

A rewards card is a credit card type that offers spending incentives, like cashback or travel points. In contrast, a credit card is a broader term encompassing various types, including rewards cards, and is primarily a financial tool for making purchases with a revolving credit limit.

What are the most common types of Rewards Card?

The most common rewards cards include cashback cards, travel rewards cards, and points-based cards.