The 'Earn and Burn' Philosophy
Unlike Rupees in your savings account, Credit Card points do not earn interest. In fact, they suffer from Internal Inflation. Banks frequently change transfer ratios or redemption options. The first rule of credit card rewards is: Don't hoard; Redeem.
If you have enough points for a flight or a luxury hotel stay, book it now. Holding points for a 2026 trip is a risky bet—by then, the bank might have removed that hotel partner or doubled the points required.
Why are Banks Devaluing Cards?
The "Golden Age" of Indian credit cards (2020-2023) was fueled by venture-like customer acquisition where banks gave away huge rewards to capture premium users. Now, as profitability becomes the focus, banks like Axis, HDFC, and ICICI are tightening the belt by:
- Excluding government payments, rent, and utilities from reward calculations.
- Capping the number of points you can earn on high-reward categories (like Gyftr or SmartBuy).
- Increasing the conversion ratio for airline partners and hotel programs (e.g., from 1:1 to 5:2).
The 'Reward Rate' Reality Check:
Always calculate your card's "Net Reward Rate". If you spend ₹1,00,000 and get ₹2,000 back in vouchers, that's 2%. But if your annual fee is ₹5,000, you are actually in a negative rewards zone until you've spent ₹2,50,000. For many users, a high-fee "Prestige" card is actually a net loss.
Strategies to Protect Your Points Value
- Switch to Cashback Cards: If you aren't a frequent flyer, a pure cashback card like SBI CashBack or Axis Ace is vastly superior. Cashback is credited as Rupees to your statement—it cannot be "devalued" by changing a redemption table.
- Diversify Your Partners: Don't keep all your points in one bank's portal. Transfer them to diversified programs like AirVistara, Marriott Bonvoy, or Singapore KrisFlyer if you see a good redemption available.
- Watch the MCC (Merchant Category Code): Banks are getting smarter. If you use a personal card for business expenses or pay huge taxes via third-party portals, you might get zero points or even have your card blocked.
Professional Hack: Transfer Bonuses
"Patience pays off." Loyalty programs like Accor or Marriot often offer a 20-30% extra points bonus for transfers once a year. If you can time your bank-to-partner transfer during these windows, you effectively negate a devaluation!
Check Your Points Value
Is your card still worth its annual fee? Use our calculator to find your exact reward rate after accounting for devaluations and caps.
Ashu Yadav
Senior Associate EngineerAshu Yadav is a Senior Associate Engineer at CalcGuide, specializing in financial software architecture and precision-math implementations. With over 6 years of experience in full-stack development and algorithmic design, he leads the technical strategy for CalcGuide's suite of 50+ financial tools. His focus is on making complex Indian taxation and investment rules accessible through clean code and user-centric design.