Unlocking Rewards: Meet India’s credit card enthusiasts who are earning free foreign trips worth ₹25 lakh

Another is Ankush Dixit, 33. Over time, he has taken 15 business class flight tickets between Delhi and Dublin (Ireland) almost completely free of cost for his trips with family. “The flight ticket would have cost me around 25 lakh,” said the Gurgaon-based entrepreneur.

Dixit and Ansari are not alone. There is a growing group of individuals who sign up for multiple credit cards in order to earn enough reward points, which will form a major part of their travel budget, which includes flights and hotel stays. Cashback and vouchers for buying gadgets, shopping on e-commerce sites, watching movies and eating out are some of the other perks that credit card users can enjoy. These self-proclaimed credit card enthusiasts do one simple thing to achieve this – channeling all their spending through credit cards.

“I use credit cards for all my regular expenses, be it rent, groceries, shopping and eating out, and every transaction earns me rewards. Even so,” said Ansari, finance professor at OP Jindal University. ​That even for small expenses, like paying for rickshaws or vegetable vendors, I use a credit card. Work.”

If you run a business, your deals may be sweeter, because along with your personal expenses, you can also meet business expenses using plastic.

Take the example of Murshidabad-based entrepreneur Sumanta Mandal, whose monthly expenses through credit cards are average 2 lakhs. “My personal expenses are limited, but as a business owner, I use several business credit cards to cover my expenses, such as vendor payments, advertising costs, software subscriptions, and hosting costs,” he said.

However, the Rewards Points game is not as simple as it seems so far.

cc geeks

Minimizing the maximum benefit from one’s expense depends on a number of factors. For one, spending ability can play a significant role in the perks you can earn. Dixit’s 15 free business class flight tickets 25 lakh came for 10 lakh air-miles (equivalent to approximately 16 lakh reward points). accumulated around 80 lakhs. “In the past year, I had two major expenses: my wedding and home renovation. However, this is an exception. My annual spending on credit cards is average 30-40 lakhs,” he said. Dixit paid He took out Rs 3.5 lakh from his pocket as tax on these tickets.

Boopathy Arumugam, a businessman from Erode, Tamil Nadu, has high annual expenses 1 crore, leverages his high spending power by charging all his expenses through credit cards so as to earn enough reward points to fund his international family vacations every year. “For my trip to Greece and Austria, I booked business class tickets for my family and hotel stay using my credit card points,” said 47-year-old Arumugam. 14.75 lakhs. “I spent 480,000 miles for four business class airfares, and for hotels, I spent 190,000 points.”

Most of these credit card idiots have high annual expenses 8 lakhs. But even people who don’t spend much have a few tricks for using rewards to fund luxury vacations. Gurgaon-based Ankush Sethia is a case in point. He uses the Axis Magnus card which provides an additional 25,000 points worth 5,000 on spending 1 lakh per month. if he can’t afford 1 lakh for his regular expenses Sethia buys vouchers and sells them to friends at a discount for completing milestones.

During the sale on the e-commerce platform, he makes purchases for his family and friends on the e-commerce platform using the discount available on his card. It’s a win-win for both as shoppers get a discount, and Sethia earns rewards on purchases without actually spending her money.

Rewards depend on the type of payment on the credit card. For example, some cashback cards exclude common expenses like utilities and groceries from its benefits, and may not be useful to someone if those are major spending areas. However, there are workarounds like buying Amazon Pay vouchers or topping up Paytm wallet to pay for these items. This method might attract fees of 0.5-2%, but even if your card gives you 5% cashback, you’ll still get 4.5-3% of the sweet money.

Note, no two credit cards will offer the same value, and rewards programs are complex on different types of cards. For example, for rewards cards that allow rewards to be transferred to airmiles or hotel loyalty programs, you will need to evaluate conversion rates at two levels: one, rewards earned on each purchase and two, rewards for loyalty points. Conversion ratio of.

Sound complicated? Well this is probably for a start. But pointe nerds have mastered the art. In fact, some people have made credit card hobby their profession. Dixit and Setia are co-founders of a credit card comparison platform called Multiply, while Mandal runs a portal called Technofino for credit card recommendations and personal finance advice.

They believe in optimizing spending to the maximum, which means they all have at least 10 credit cards (see graphic). For example, Ansari uses an Axis Airtel credit card to pay his and his family’s phone bills. “We all use Airtel sim card and the only purpose of this card is to do mobile recharge. I get 25% cashback on every recharge with this card.”

Mandal has 51 active credit cards. “I strategically choose cards based on my needs and preferences. For example, when I plan to buy a gadget, I use a credit card that can be redeemed for vouchers at Croma or any other electronic store. Offers eligible reward points. Plus, I’m also accumulating air miles for future travel within the next five years.”

20% TCS on international credit card transactions is no deterrent for these CC geeks as banks offer 2X rewards on overseas spends. Dixit is already tired 7 lakh limit, beyond that TCS will start after July 1 but he is ready for it. “To get the 30% rewards that my card offers, I am fine with maintaining additional 20% additional cash flow. Also, if not credit, I will use debit card, which also attracts TCS , so it’s better to use a credit card that at least earns rewards.”

The board agreed. “In form of 7 lakh limit is not applicable on forex cards and cash, credit cards are a better option.”

is it for everyone

Most rewarding cards are premium products and carry high annual fees ranging from 10,000-1 lakh (see graphic). Chasing rewards also carries the risk of overspending. A 2021 study by the Massachusetts Institute of Technology states that credit cards motivate spending by taking advantage of reward networks. People who spoke with Mint said they don’t make additional purchases just to hold onto the rewards. Also, credit cards have the highest interest rate if one defaults on the bill payment by the due date. Therefore, the general rule is to assess your cash flow before spending on a credit card and settle all dues on time and in full. Also, award tickets (flight tickets purchased through airmiles) are limited, so one needs to book them well in advance. Ansari wants to finalize all the bookings for his world tour by June. “Earning the rewards isn’t the hard part, the hard part is making sure you get a good deal on the available dates. I’ll work out my itinerary, check out all the deals and then start transferring awards, once transferred, I’ll be bound to those airlines.”

Making payments on time becomes even more important when you have more than one card. Arumugam missed due dates several times when he was traveling abroad, but he was lucky as the banks waived off the fees considering his timely payment history. One payment of Ansari has also been missed. “The bill amount was small so the interest didn’t bother me, but my CIBIL reduced from 790 to 750. It’s not a massive downgrade as I have a long history of on-time payments. Ansari said that even a single lapse can bring down the CIBIL score by 80-90 points.