Whether you’re applying for your first credit card or already have one in your wallet, you’ve probably come across terms like reward points, 5X rewards, 10X rewards, air miles, and reward rate.
At first glance, they seem straightforward, but many people misunderstand how credit card reward points actually work. For example, a common misconception is that 10X rewards means you’ll earn 10 reward points per ₹100 spent, when in reality, it usually means 10 times your card’s regular earn rate.
In this guide, we’ll explain everything you need to know about credit card reward points, including how they’re earned, redeemed, valued, and how you can maximise them.
What Are Credit Card Reward Points?
Reward points are loyalty points that banks award whenever you make eligible purchases using your credit card.
Instead of offering an instant discount, the bank credits reward points to your rewards account. These points can later be redeemed for cashback, vouchers, flights, hotel stays, merchandise, or transferred to airline and hotel loyalty programmes.
The more eligible spending you do, the more reward points you earn.
How Do Credit Card Reward Points Work?
The process is fairly simple:
- You make an eligible purchase using your credit card.
- The bank awards reward points based on your card’s earn rate.
- The reward points accumulate in your account.
- Once you’ve earned enough points, you can redeem them for eligible rewards.
Different credit cards have different earn rates, redemption options, and reward values. This means two cards can offer very different returns even if you spend the same amount on both.
What Is an Earn Rate?
The earn rate determines how many reward points you earn for your spending.
For example:
| Card | Earn Rate |
|---|---|
| Card A | 1 Reward Point per ₹100 |
| Card B | 2 Reward Points per ₹100 |
| Card C | 5 Reward Points per ₹150 |
A higher earn rate helps you accumulate reward points faster.
However, earning more points doesn’t necessarily mean you’re getting better rewards. That’s because reward points don’t all have the same value.
That’s where the reward rate comes in.
What Is a Reward Rate?
The reward rate is the percentage of your spending that you effectively get back in rewards.
It depends on two things:
- How many reward points you earn (earn rate)
- How much each reward point is worth when redeemed
For example, suppose your card earns 2 reward points per ₹100, and each reward point is worth ₹0.50.
If you spend ₹100:
- You earn 2 reward points.
- Each point is worth ₹0.50.
- Your total rewards are worth ₹1.
Since you’ve received ₹1 worth of rewards on a ₹100 purchase, your reward rate is 1%.
This is why experienced credit card users compare reward rates, not just the number of reward points earned.
Before applying for a new card, compare its actual reward rate instead of just the number of reward points it advertises. You can explore cards by category on Great.Cards to find options that suit your spending pattern.
Are All Reward Points Worth the Same?
No. Unlike cashback, reward points don’t have a fixed value. Their value depends entirely on how you choose to redeem them.
For example:
| Redemption Option | Typical Value |
|---|---|
| Cashback | ₹0.20 – ₹1 per point |
| Gift Vouchers | ₹0.25 – ₹1 per point |
| Merchandise | ₹0.20 – ₹0.80 per point |
| Airline Miles | Depends on the transfer ratio and the value of the airline mile |
| Hotel Points | Depends on the transfer ratio and the value of the hotel point |
| Premium Flight & Hotel Redemptions | Can exceed ₹1 per point |
Because redemption values differ, two cards with identical earn rates can provide completely different reward rates.
In general, premium travel credit cards offer the best value when reward points are transferred to airline or hotel loyalty programmes.
What Are Accelerated Rewards?
Many credit cards offer accelerated rewards on specific spending categories or merchants.
Instead of earning your regular reward points, you earn bonus reward points on eligible transactions.
Common accelerated reward categories include:
- Dining
- Online shopping
- Flight bookings
- Hotel bookings
- Department stores
- International spending
These offers are commonly advertised as 2X, 5X, 10X, or even higher.
What Do 5X and 10X Rewards Actually Mean?
This is one of the biggest misconceptions among credit card users.
Many people assume that 10X rewards means they’ll earn 10 reward points per ₹100 spent.
In most cases, that’s incorrect.
A 5X or 10X offer usually means you earn 5 or 10 times your card’s regular (base) earn rate.
i) Example 1
Suppose your card normally earns 2 reward points per ₹100.
If the card offers 10X rewards, you’ll earn:
- Base earn rate: 2 reward points per ₹100
- Multiplier: 10×
- Final earn rate: 20 reward points per ₹100
Not 10 reward points.
ii) Example 2
Suppose another card normally earns 4 reward points per ₹150.
During a 5X rewards offer, you’ll earn:
- Base earn rate: 4 reward points per ₹150
- Multiplier: 5×
- Final earn rate: 20 reward points per ₹150
Again, the multiplier is applied to the base earn rate.
| Base Earn Rate | Offer | Final Earn Rate |
|---|---|---|
| 1 RP per ₹100 | 5X | 5 RP per ₹100 |
| 2 RP per ₹100 | 10X | 20 RP per ₹100 |
| 4 RP per ₹150 | 5X | 20 RP per ₹150 |
| 5 RP per ₹100 | 10X | 50 RP per ₹100 |
Important: Some banks advertise promotions like “10 reward points per ₹100 spent” instead of “10X rewards.” These are fixed earn rates, not multipliers. Always read the offer’s terms and conditions carefully.
Also remember that most accelerated reward offers come with monthly, quarterly, or annual caps. Once you reach the specified limit, additional spending usually earns only your card’s regular earn rate.
Do All Transactions Earn Reward Points?
No. Banks exclude certain transactions from earning reward points.
Common exclusions include:
- Fuel purchases (on many cards)
- Rent payments
- Wallet loading
- Cash withdrawals
- EMI conversions
- Government transactions (on some cards)
- Education payments (card-issuer specific)
- Insurance premiums (card-issuer specific)
- Utility bill payments (card-issuer specific)
Always check your credit card’s terms and conditions before assuming every transaction earns reward points.
What Can Reward Points Be Redeemed For?
Depending on your card issuer, reward points can usually be redeemed for:
- Cashback
- Statement credit
- Gift vouchers
- Shopping vouchers
- Flight bookings
- Hotel bookings
- Air miles
- Hotel loyalty points
- Merchandise
- Product catalogues
Premium travel cards generally provide the highest value when reward points are transferred to airline or hotel loyalty programmes.
Can Reward Points Be Transferred?
Many premium credit cards allow you to transfer reward points to airline and hotel loyalty partners.
Popular transfer partners include:
- Air India Maharaja Club
- Singapore Airlines KrisFlyer
- Air France-KLM Flying Blue
- British Airways Club
- Emirates Skywards
- Marriott Bonvoy
- Accor Live Limitless (ALL)
Every bank has its own transfer ratios.
For example:
- 1 credit card point = 1 airline mile
- 2 credit card points = 1 hotel point
In many cases, transferring reward points provides significantly better value than redeeming them for cashback.
Do Reward Points Expire?
Sometimes. The expiry policy depends on your bank.
Reward points may:
- Never expire
- Expire after 2 or 3 years
- Expire when your credit card is closed
If you’re saving points for a large redemption, keep track of their expiry date.
Tips to Maximise Your Reward Points
To get the most from your credit card rewards:
- Use the right credit card for each spending category.
- Take advantage of accelerated reward offers.
- Redeem points for high-value travel or partner transfers whenever possible.
- Avoid spending in categories that don’t earn reward points.
- Pay your credit card bill in full every month to avoid interest charges.
- Keep track of reward point expiry dates and redemption offers.
How to Choose the Right Rewards Credit Card
Understanding how reward points work is only half the battle. The other half is choosing a credit card whose rewards match your spending habits.
For example, someone who spends heavily on travel may benefit more from a card that offers airline or hotel point transfers, while someone who shops online frequently may get better value from a card with accelerated rewards on e-commerce platforms. Likewise, if you prefer simple savings, a cashback card may be a better fit than a rewards card.
Rather than comparing dozens of cards individually, you can explore credit cards by category on Great.Cards. Whether you’re looking for the best cashback cards, travel cards, fuel cards, shopping cards, or premium rewards cards, you’ll find options tailored to different spending patterns and requirements, making it easier to shortlist the right card for you.
Frequently Asked Questions
Are reward points and cashback the same?
No. Cashback is credited directly to your account or statement, while reward points must first be redeemed.
Can reward points be converted into cash?
Some banks allow cashback or statement credit redemptions, although these often provide a lower value than travel redemptions.
Do reward points affect my credit score?
No. Earning or redeeming reward points has no impact on your credit score.
What happens to my reward points if I close my credit card?
Most banks forfeit any unused reward points when the card is closed. Always redeem them before cancelling your card.
Final Thoughts
Credit card reward points can be an excellent way to earn value from your everyday spending, but only if you understand how they work.
Instead of comparing cards based solely on the number of reward points they advertise, consider the complete picture: the earn rate, reward rate, redemption options, transfer partners, accelerated reward categories, reward caps, and point expiry policy.
A card that earns fewer reward points can sometimes provide significantly better value than one that earns more, simply because its points are worth more when redeemed.
The best credit card isn’t necessarily the one with the highest earn rate, it’s the one that delivers the highest overall reward rate based on your spending habits and preferred redemption method.