In order to lure the highest number of clients, banks go all out to display their benevolent side, with the help of various offers and schemes like the reward point system or the much coveted cash back offer. While almost all banks offer the same standard of customer service and other features on their various credit cards, rewards like these help customers finally zero in on a credit card. Banks maximize their profits every single time customers flash out their cards to make payments. This is done by way of charging the merchant establishment for all transactions incurred from their bank’s credit card. Banks earn the highest profits when customers roll over their payments to the next payment cycle, as they get their chance to hike interest rates on all subsequent transactions. In order to motivate and encourage their users to frequently use their credit cards, banks come up with various lucrative deals such as cash back or the reward points system. With the help of these offers, cardholders increase their spending on such products or outlets to avail tangible benefits on a later date. Under the cash back offer, banks stand to offer a percentage of money back to the customer on the entire amount spent by him on transaction at such a mall, store, or outlet. On the other hand, under the reward points system, customers accumulate reward points every time they shop at a partner outlet or store. These points can then be redeemed against selected gifts offered by the bank, depending on the number of cumulative points. The reason why cash back is an instant favorite among credit card users is that it provides instant tangible benefits to its users. On the contrary, under the reward point system, customers may or may not get the gift of their choice.
While reward programs aren’t always the deciding factor when it comes to selecting a credit card, one cannot deny that they are quite an influential factor. In order to avail the maximum benefits off these schemes, it is mandatory that customers go through all the terms and conditions about the scheme. Sometimes, cash back will be offered to customers only when they spend a certain amount of money on their transactions at a store. Also, while you may be under the assumption that you are not required to spend any money towards the additional gifts or cash, sometimes, the reward managers of banks may impose certain handling charges on the redemption of your reward points in rupees. These additional charges may be quite an ugly surprise for the customer as they may not possess any prior knowledge on the same. Besides, with the occurrence of the global financial meltdown, banks have revised all their terms and conditions under their reward program. Now, cardholders have to shell out a greater sum of money to earn rewards, while the size and price of rewards has also considerably declined. Also remember to understand and analyze the reward program of your bank and participate only if your sure about that such a program will cater to your interest and likes. Sometimes, banks may offer the same amount of money as cash back, irrespective of the amount spent on such transactions by you. This can be quite disappointing for a customer as he may have exceeded his spending pattern merely to draw on greater benefits. You do not want to be on the losing side by opting for a loan or a personal loan to repay the debt on your credit card just because you couldn’t control your lavishness. Thus, in order to avail the maximum benefits off this scheme, it is important to thoroughly scrutinize the rewards offered by your bank and the criteria on the basis of which it is provided.