Rewards
How Do Credit Card Rewards Work?
Credit cards reward your spending as points, cashback, or miles. Here's what each type means, how they're earned, and which is actually worth the most.
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Credit card rewards are a share of your spending given back to you — but how you get it back depends on the card. There are three common types: cashback, reward points, and air miles.
Cashback — the simplest
Cashback returns a percentage of your spend as money, credited to your statement. ₹1 of cashback is always worth ₹1, which makes it the easiest type to value.
Reward points — value depends on redemption
Points are earned per ₹100 (or ₹150) spent, and their worth changes based on how you redeem them — for statement credit, vouchers, or products. The same point can be worth very different amounts in different redemption options.
Air miles — best for frequent flyers
Miles are points tied to airline or hotel programmes. They can deliver strong value for travel, but only if you actually fly enough to use them.
The number that matters is the effective reward rate — the real value you get back per ₹100 spent, after accounting for how you redeem. A high "points per ₹100" means little if each point is worth very little.
Watch the fine print
Reward rates are often higher in specific categories (dining, travel, online) and lower elsewhere. Caps, exclusions, and expiry dates all affect what you actually earn, so read the rewards table before you apply.
Frequently asked questions
What is a good reward rate?
For everyday cards, anything above 1% effective value is decent; premium and co-branded cards can reach 3–5% in their bonus categories.
Do reward points expire?
Often yes. Many issuers expire points after 2–3 years, so check your card's policy and redeem before they lapse.
Sources
Written by
Velu Phule
Finance Content Writer
Finance content writer with over 6 years of experience in the BFSI sector, specialising in credit cards, credit scores and loans.
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Anup Poojary
M.Tech, MIT Manipal · Fintech & Personal Finance
Reviews BesCa's credit card and finance guides for editorial accuracy, practical clarity and consumer relevance, with hands-on experience across fintech products in credit, lending and banking.
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