It is a great feeling when you see notifications that say, you have won some cash back or a gift from your credit card. But what is the story behind it? Do they really mean what they say? Are you indirectly paying the credit card company, for the gifts that you win through cash back offers and gifts?

While there are genuine companies, who complement their customers with gifts, cash back offers or discounts, a huge chunk of companies charge their customers via hidden charges in the form of interest rates or a service fee. So, the next time you think of using your credit card for increasing your reward points, consider the following:

• Does your credit card company, encourage your spending amount, so as to increase your limit and also charge you an annual fee for it? Consider this and steer clear, it’s not worth it.

• Most card companies would encourage you to spend huge amounts [in thousands mostly] and give you a cash back of a few tens at the end of the year, (apart from charging you an annual one- time fee on top of it). This does not make your ‘few tens’ of cash back worthy enough. Re-think, if you are one of those keen ‘cash back’ focused customer.
Do ‘Reward Points’ really work?

Some companies are genuine with their ‘Reward Points’ program and their customers have a truly rewarding experience through such incentives. Often companies get to retain their good customers and attract new customers.
According to a report given by Joe L. Harris, Goldfish cards are very popular among its customers, who get reward points for every pound spent online or on the high street and get to redeem gifts from top shopping centres in the country.

Air Miles gives one point for every $20 spent on their product and one point for every $5 spent through Air Miles Travel Agency. Their customers are very happy with the incentives they get, due to the fact that they get rewarded for their travel plans which are necessary and not luxury.

Similarly, Morgan & Stanley customers get some fantastic holiday options through their Reward Points program, whereas General Motors customers use the GM card to gather reward points for a rebate or cash back.
Though there are arguments on whether cash back is better than reward points program or vice versa, the ultimate decision lies with the customer. You can choose to spend and then wait to get a gift from a trimmed gift catalogue or you can choose to save money without spending and get to buy what you feel like buying.

Did you find this blog useful? Write to us and let us know. We would be happy to hear from you.