Your credit card is changing: Here's how to maximize benefits
What's the story
Leading Indian banks, including Axis Bank, HDFC Bank, SBI Card, and YES Bank have recently revised their credit card fees and regulations. These changes mainly impact charges, reward points, and spending limits. The modifications are part of an ongoing trend in the banking sector to reassess credit card benefits for sustained profitability. More adjustments are expected throughout 2025 as this evaluation process continues.
Fee changes
Axis Bank introduces new redemption fee
Axis Bank introduced a new redemption fee for EDGE Rewards and Miles. It also revised its interest rates, penalty charges, and transaction fees. Additional charges now apply on wallet loads, fuel transactions, and rent payments. HDFC Bank charged 1% on utility bills above ₹50,000 and 1% on fuel transactions above ₹15,000. It also introduced a reward redemption fee for statement credits and increased annual fees for 6E Rewards cards.
Reward adjustments
SBI Card and YES Bank revise reward points
SBI Card has discontinued reward points on rental transactions and on select cards for government transactions. There are no changes done to reward point accrual on education or Bharat Bill Payment System (BBPS) transactions. If the total utility payments made during a billing cycle exceed ₹50,000, a 1% fee will be charged. YES Bank has revised its rewards structure by capping reward points on flight and hotel redemptions. It has also introduced new spending thresholds for complimentary lounge access.
Revision rationale
Why are banks revising their credit card fees and rewards?
The increase in high-value payments through credit cards, like rent, education fees, and utilities, has made it difficult for banks to sustain the lucrative rewards. Raj Khosla, founder and managing director of MyMoneyMantra.com, explains that "with increasing avenues of spending via credit card, it is quite hard for a bank to continue rewarding customers in a similar fashion from the onset of card membership."
Reward misuse
Banks are also tightening reward programs to prevent misuse
Banks are also tightening their reward programs to avoid misuse. Some users exploit loopholes by spending huge amounts on select categories or merchant partners to maximize rewards. "Any scope of reduction or modification in rewards on credit cards by the banks is being done to keep a thorough check on loopholes through which users are exhausting the reward point program," Khosla said.
User impact
Impact of changes on frequent credit card users
The changes in credit card fees and rewards are bound to affect frequent travelers, diners, and cashback seekers. They will now have to rethink their spending patterns. Some premium benefits such as airport lounge access now have stricter eligibility criteria. Khosla recommends that "you can always apply for a new credit card that amplifies rewards on travel, dining, and cashback categories."
Card strategy
The need for multiple credit cards
Khosla recommends holding multiple credit cards to ensure access to the best rewards across different spending categories. For instance, a card offering 2-4 complimentary lounge visits per quarter with a ₹50,000-₹1 lakh quarterly spend threshold can be valuable. This way, you could maximize your benefits amid the ongoing changes in credit card fees and rewards.
Review necessity
Importance of annual credit card review
With all the changes going on, an annual review of credit cards is imperative. "A yearly review of your credit cards is not a bad idea at all. You should do it irrespective of the changes announced by banks and the RBI," Khosla advised. Cardholders should compare the total perceived return of their existing cards against newer options to ensure they are getting the best possible benefits.